Pros and cons of living in a cashless society





The Covid-19 pandemic has taken us another step closer to becoming a cashless society. Indeed, in some countries, such as Sweden, only 2% of all payments now involve cash. And many retailers now refuse to take cash at all.  

Certainly, there are clear advantages for getting rid of cash, the big question is, what are the disadvantages?  



The benefits of going cashless 


For businesses, handling cash is a cost and comes with risk. Without cash, there’s no chance of physical theft, missing notes or coins. With cash, you need to pay someone to handle it and cash up at the end of the day and that comes with the risk of error. If that isn’t inconvenient enough, the cash then needs to be taken to the bank to be paid in. With payments going direct to a business bank account, the risk of errors is significantly reduced and accounting becomes much easier.  

A cashless society also makes it easier for state authorities to track money for taxation or legal purposes. Police bodies have greater visibility over money laundering and profits from crime. However, there is a possible downside here. Data protection and privacy laws may need to be updated for state authorities to track and record every transaction. 

If you travel a lot, carrying around a lot of cash isn’t the best idea. It’s also much simpler when it comes to converting cash, as your credit card issuer, or bank, does it for you. With KoalaPays account, you can convert money from over 20 currencies and we’re adding more all the time. 

A cashless society also means that the inconvenience of carrying around coins would become a thing of the past. As an added benefit, the need to mint notes and coins would be eliminated. 

And finally, let’s not forget why fewer people are using cash right now. Removing cash from society makes for a more hygienic society. 



Reasons for holding onto cash 


What would we miss if cash disappeared? Certainly, when it comes to personal expenditure, people tend to have more control over their spending if they can see and count their cash before paying. If you’re trying to stick to a budget, it can be easier to overspend or make mistakes is you’re using a card. However, as more people adopt mobile banking apps, this can be avoided. At the same time, some people, such as the older generation, may not be as tech-savvy, preferring cash.  

For others, cash can have an emotional value. Paying cash into a child’s bank account for a birthday gift really isn’t the same as giving physical cash. 

Even today, not everyone has access to a bank account. If you can only pay by card or online, then some people may not be able to pay at all. Fortunately, new fintech companies such as KoalaPays are making it easier for people to make payments without even having access to a bank account.  

One big disadvantage of a cashless society is that you would need to have some form of bank account. Theoretically, this would give banks a monopoly on money. Without more competition, financial institutions could charge more punitive fees for holding funds and allowing customers to carry out transactions. It’s envisaged that competition from new fintech companies would prevent this, but central banks too could impose onerous monetary policies for customers such as negative interest rates on savings.  

While a cashless society removes the risk of physical theft, fraudsters are finding ever more sophisticated ways to steal money digitally, whether that’s cybercrime, hacking or phishing bank/card details. There’s also the risk of system failures, meaning you can’t access your money when you need to 

A cashless society clearly offers a lot of advantages to businesses and individuals alike. However, there are still drawbacks to overcome. Contactless has certainly done a lot for speeding up queuing and making it more convenient for fast, low cost payments, but consumers are emotionally attached to cash, so we’re not likely to see the end of cash just yet. However, with financial technology getting better all the time and new services appearing from companies such as KoalaPays, the cashless society may not be too far away.  

Fintech: revolutionising the way we do business



Fintech might be still a relatively new phenomenon, but, already, it has radically changed the way we do business and in the coming years is set to do much more.  

The accelerating uptake in mobile banking, peer-to-peer (P2P) and omnichannel payments are all prime examples of how fintech firms, such as KoalaPays, are offering businesses and their customers much more when it comes to managing their finances.  

And, this is only the beginning. Hardly a month goes by when we don’t see a new services and innovations being brought to market by fintech firms committed to adding value for businesses looking to succeed in the marketplace. 



Cross border payments 


One of the biggest pain points for businesses has been the costs and inconvenience of sending and receiving cross-border payments, especially in different currencies. Fintech is providing more end-to-end services that are making this easier, cheaper and faster. Finally, the constraints of time zones and normal business hours have ended. Now it’s possible to do business with whoever you want, wherever you customer is, around the clock.  

In the case of KoalaPays, we constantly strive to give more choice, flexibility and functionality to our business customers. We already offer our clients the ability to hold more than 20 currencies at once, and we’re always looking to add more. 



Business has never been so efficient 

The two big benefits being offered by fintech are ‘accessibility’ and ‘speed’. That means efficiency, and an efficient business is a cost-effective business. Compared to older slow, expensive and bureaucratic banking systems, fintech is giving businesses the opportunity to automate labour-intensive tasks, cut costs and save time on a host of business processes. 

Additionally, by reducing or completely eliminating the need for bricks and mortar premises, fintech is allowing small businesses to access and compete in global markets. 



Upwardly mobile  

But probably the biggest innovation as a result of fintech has been the rise in mobile payment apps, along with scan-and-pay features. While this has been good for consumers, it has been even better for businesses who are able to give their customers more options when it comes to payments. As a result, they’ve seen sales and revenues accelerate through this ever-growing niche of e-commerce. A recent survey showed that mobile payments crossed the $1 trillion mark in 2019.  

Millions of people around the world may not have a bank account, but they have a Smartphone and this enables them to purchase and pay, opening up huge new markets for businesses in every conceivable niche. 

Fintech has become a key game changer for start-ups and entrepreneurs, making it easier to secure loans, manage payroll, and process payments.  

What does fintech have in store for businesses down the line is anyone’s guess, but here, at KoalaPays, we’re always looking at new ways of adding value for our business customers. Right now, we’re already looking at a new generation of features that will make it even easier for our customers to attract business, take payments, provide better customer service and manage every aspect of their business finances.  

Understanding Open Banking and APIs



Open Banking has come about as a result of the EU PSD2 directive – a piece of legislation devised to standardise payments services across Europe, protect consumers and improve the speed and cost of cross-border payments in the EU. APIs (or Application Programming Interfaces) allow third party developers to build apps, websites and services around banks and financial institutions. These APIs are used as a secure method of communication between Trusted Third Parties (TPPs) and online banking systems.  


What exactly is an API? 

Typically, these APIs are developed by FinTechs in order to offer their own technology and services to traditional financial institutions, as well as to their own customers. In effect, the API gives these third parties access to account information, as well as balances and transactions, at the customer’s primary bank.  


While there are three types of APIs: Private APIs, Partner APIs, and Open APIs; it’s the Open APIs that are responsible for making data available to third parties. At their most basic, APIs allow different computer programs to talk to one another in a language they both understand. This is vital for banks, as it allows their older systems to integrate with newer ones developed by FinTechs, so they can offer more products, and ultimately, more value to their customers. 


In fact, APIs have been around a long time, but it’s only really since January 2018 when PSD2 came into effect that their usage has increased among the financial institutions, as they see the need to keep up with the services offered by FinTech. 


Benefits of APIs 

While banking institutions benefit from being able to offer more services to their customers, these APIs can mean big benefits for businesses too. This is because banks are able to offer access to third party services making it easier for businesses to carry out certain transactions, such as making and receiving cross-border payments. The benefits don’t stop there. Platforms such as KoalaPays are developing new tools that can help businesses in terms of reporting, cashflow, payroll management and other functions. 


While the move to Open Banking has been great for start-ups and FinTechs, it’s online businesses and their customers that are seeing the advantages. Typically, this has meant faster, more efficient and secure services, especially in terms of cross-border payments. SMEs are now able to accept payments from across the world quickly and efficiently, at less cost, so cashflow moves faster through the business. 


A good example of this would be a Payment Initiation Service Provider (PISP) connecting directly to a customer’s bank account to make a transaction. This means an online retailer can take a payment directly in real-time rather than authorising a credit card. 


The future for APIs and Open Banking 

 APIs are driving industry innovation, disruption and connectivity. Here, at KoalaPays, we’re using the technology to make it easier for customers to do business with our own clients’ ventures. But there’s much more to come. APIs will continue to evolve and incorporate additional features that will offer more functionality and usefulness for businesses in every sector. 


Even though PSD2 is a pan-European initiative, other developments are taking shape outside of Europe in places such as South America, the United States and Australia. These should lead to further co-operation between financial institutions in other regions of the world, affecting services like cross-border payments.  


APIs transfer information securely and conveniently and therefore enable financial institutions to connect with businesses and consumers instantly. This allows banks and financial service providers to boost the scope of products and services they can offer.  


When bank accounts were invented, they weren’t built for an online world. APIs are making that happen and, ultimately, will have a profound transformative effect on the future of banking. For businesses to reap the rewards, companies should look to payment solutions providers such as KoalaPays to understand the real business benefits these platforms can offer. 



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