Skip to main content

The cashless society: What it means for merchants

couple paying at outdoor market

The disappearance of cash—and the world’s full conversion to digital payments—has been forecast since the electronic transfer of funds was introduced in the ‘60s. It then seemed inevitable by the time the internet came along in the ‘80s.

Now, decades later, it may have finally arrived. Thanks to rapid advances in fintech, blockchain and the impact of the recent COVID-19 pandemic, a much-anticipated cashless society is getting closer at hand.

In 2020, for example, 855.3 billion cashless payments were made worldwide, representing an increase of 7% from 2019, according to a 2021 report by RBR.1 In part, this growth reflects new business models being embraced by fintechs and banks, which are working to bring unbanked customers into the cashless ecosystem.2

And landmark developments in cashless technologies, including a recent push by card networks toward settling payments in cryptocurrencies, “could ultimately have a big impact on the way consumers and merchants make transactions.3

While a fully cashless economy doesn’t exist yet, many consumers and businesses are looking forward to the benefits it could bring—including easy cross-border payments, seamless transactions at the point of sale and better transaction tracing.

What is a cashless economy?

Digital and contactless payments are more popular than ever. Consumers appreciate the convenience of shopping from anywhere, at any time, and paying with their method of choice—whether that’s a smartphone, contactless card or wearable payment device. But a cashless society, is one where bills and coins aren’t used at all.

Instead, consumers purchase goods and services with a credit or debit card, mobile wallet, digital currency or via electronic funds transfer, such as with electronic person-to-person (P2P) payments (e.g., Zelle, PayPal, Venmo, WeChat Pay, Alipay and Cash App).

Pros and cons of a cashless society

For tech-savvy consumers and businesses looking to streamline their operations, the main advantage of a cashless society is convenience. Real-time payments made at the touch of a button beat fumbling with bills and coins for the time-pressed shopper and cost-minded merchant.

And now that smartphones have become payment terminals, even smaller merchants in emerging markets can benefit from digital payments. While they might not have traditional bank accounts, many of these merchants do have access to fast, frictionless tap on mobile technology installed on smartphones or tablets.

In addition, cashless economies appeal to governments seeking to reduce tax avoidance and financial crime, as digital payments are more easily tracked than cash. For these reasons, Discover® Global Network is listening to the growing consumer and merchant demand for digital asset solutions and will continue to evaluate its participation in digital assets—including cryptocurrencies—as consumers begin to use these technologies and as the payments ecosystem moves toward ubiquitous acceptance.

Discover and other industry organizations are proceeding cautiously, however, in part because there are important drawbacks that could come with eliminating cash altogether. Security risks are top-of-mind, as are barriers to access for the unbanked.

For example, consumers whose identities are stolen could find themselves without any purchasing power at all. Aside from security risks, some might have trouble adapting to the technologies required for cashless payments, like mobile wallets or QR codes. And in case of power outages, merchants could have trouble accepting payments—bringing the potential for significant disruptions to businesses and consumers alike.

Pros and cons of a cashless society infographic

The move to a cashless society varies by geography

While a cashless society is looking more plausible amid changing consumer attitudes and the advent of new payment technologies, progress around the globe is anything but uniform. Some markets, such as Sweden, the U.K. and several Asia-Pacific (APAC) countries, have adopted cashless payments in a relatively seamless manner.

Sweden’s approach has been to take advantage of its existing digital national identification and bank account system, called BankID. With nearly 80% of the Swedish population signed up for BankID, the Swish mobile wallet has been able to piggyback on this enrollment. And cashless progression in the U.K. has been aided by comprehensive NFC payment acceptance and adoption by consumers, especially contactless payment cards, according to PaymentsJournal.

But other regions, such as Latin America, Eastern Europe, and the Middle East and Africa, are progressing more slowly.5 In many cases, cash continues to dominate in these developing markets due to a large proportion of unbanked and underserved individuals. As a result, industry and government efforts are focused on encouraging the adoption and acceptance of mobile payments, with the goal of including financially underserved individuals in the formal economy.5

Countries embracing a cashless society infographic

The role of digital currencies in a cashless society

Blockchain and various digital currencies are also disrupting the payments industry and challenging consumers and central banks to rethink the benefits of (and need for) cash. In particular, the development of Central Bank Digital Currencies (CBDC) can directly address government objectives around financial inclusion and better transaction tracing.

China was the first country to develop a digital version of its currency, and the People’s Bank of China and Central Bank of the United Arab Emirates have now joined the Hong Kong Monetary Authority and the Bank of Thailand to explore the use of CBDCs via distributed ledger technologies to facilitate real-time, cross-border foreign exchange payments.

In 2020, Sweden launched a pilot project to simulate the workings of its digital currency, e-Krona, in daily-life use cases in a controlled test environment and to study the effect of a CBDC on its economy. The EU has also accelerated work on a digital currency, while the U.S. Federal Reserve is signaling a potential role for a digital dollar, using blockchain technology.6

A cashless society is coming—the question is simply when

New technology has transformed many industries, and payments is no exception. Governments, fintechs, banks and merchants are all actively exploring opportunities to improve the payment experience, address the needs of unbanked individuals and limit crime and corruption.

Moving toward a cashless society could be a vital part of the solution, but it’s critical that merchants stay informed—to minimize disruptions while maximizing the benefits of switching to purely digital transactions. For example, less regulatory oversight in this area currently leaves more room for identity theft, and even money laundering, than with traditional banking systems.

As a result, merchants and issuers must stay alert. Discover® Global Network is here to help, which is why we’re working to develop the necessary governance, policies and procedures to help ensure digital asset transactions can occur in a safe and secure manner.


Download Article



1 RBR Analysis, September 2021. “Global Payment Cards Data and Forecasts to 2026—International overview.” Viewed 7 April 2022.

2 Passport, May 2021. “Where does cash stand in the era of cashless?” Viewed 8 April 2022.

3 Wall Street Journal, July 2022. “Cryptocurrency Is Coming to Your Credit Cards.” Viewed 11 July 2022.

4 PaymentsJournal, 2021. “A Cashless World is Still a Long Way from Reality, Says GlobalData.” Viewed 8 April 2022.

5 Passport, May 2021. “Where does cash stand in the era of cashless?” Viewed 8 April 2022.


The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.