Part One
As more countries adopt digital payment systems, places like Norway, China and Thailand have significantly reduced cash transactions, reaping the benefits of a more efficient and secure economy. TT can follow this path, aiming to lower cash usage to under 20 per cent, but we have a long way to go.
In TT, even going paperless is a challenge – many government ministries and major institutions still rely on copybooks for record-keeping.
If we can't eliminate paper, reducing cash will require significant work. Still, it’s essential for the population to understand why the world is moving away from cash and how this shift can benefit our country.
This article explores the reasons behind this global trend, the challenges we face and the lessons we can learn from nations that have successfully transitioned to a less cash-reliant society.
Why are countries going cashless?
The global shift toward cashless economies is driven by convenience – digital transactions are faster, more secure and cheaper than cash.
They also enhance transparency, reducing fraud and corruption. Countries like Norway and China have streamlined transactions and lowered costs by cutting back on cash handling.
Digital payments also promote financial inclusion, especially for rural and low-income groups. However, in TT, distrust in financial institutions and political fear-mongering have slowed adoption.
Fears of government control over accounts exist even in cash-based systems, as the government can already freeze assets through legal processes.
Digital systems don't create new risks, they simply change the format.
Benefits of reducing cash usage
There are numerous benefits to reducing the reliance on cash in any economy.
• Increased efficiency: Digital payments are quicker than cash transactions, making them more efficient for both businesses and consumers.
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This can also reduce long lines in retail environments and improve the overall customer experience.
• Reduced crime: Cash-based societies are more vulnerable to theft, robbery and other forms of criminal activity.
Digital transactions, by contrast, are traceable and reduce the likelihood of illicit activities such as money laundering and tax evasion.
• Greater transparency and accountability: Digital payments create records that are easy to track, making it harder to hide corrupt practices or tax fraud.
For governments, this can mean higher tax compliance and more accurate data on economic activities.
• Enhanced financial inclusion: In regions where people may not have access to traditional banks, digital payment solutions can provide a way to engage in the economy through mobile banking or fintech platforms.
Challenges of a cash-heavy society
Countries that rely heavily on cash face several distinct challenges.
• Higher operational costs: Cash is expensive to print, distribute and manage.
Banks and businesses spend significant amounts of money on security
