Recent developments in Canada, Sweden, and China have revived hopes that cashless paper payments will soon be a reality. These three countries, as well as others, are seriously considering introducing centralized government digital cash to replace (or at least partially replace) traditional notes and coins. Here are three of the countries that are most likely to implement such a system in the near future:
Sweden has long had some of the most progressive banking practices in Europe. In 2020, it became the first country in the world to introduce cashless debit and credit cards. It also introduced a national digital cash system called Mofo. The card is basically an electronic version of a credit card and allows consumers to make purchases by entering their PIN numbers. Mofo is expected to be the first cashless debit card to be accepted by major U.S. retailers like Wal-Mart and Target.
The Chinese government is currently working to implement a nationwide system that will replace paper notes with electronic ones. They’re also exploring other areas such as virtual banking and online banking. In fact, they recently released draft legislation for electronic currency transfer, which could potentially replace existing paper cash.
In China, the government recently launched the country’s first major digital transaction network. The new system will allow retailers and financial institutions to process payments in real time via mobile devices.
If implemented, the governments of Canada and Sweden hope that electronic paper payment instruments will reduce the need to print paper notes. However, not everyone is convinced that paperless money is a good idea. There’s no denying the fact that paper currency tends to depreciate in value in response to the rising value of electronic cash, but a paperless financial system would also allow users to pay each other with “fake” bills that appear and disappear in any number of circumstances.
This doesn’t mean that paperless money is necessarily bad – simply that it is difficult to prove in the face of physical money. For instance, it is unclear whether or not electronic paper currency can be “forfeited if it disappears from circulation.
The governments of Canada and Sweden have yet to release details about which new cashless payment systems will work well in the U.S., but it appears likely that they will both incorporate biometric technology in their payment systems. For example, Canada plans to introduce an ID-based access control for ATM machines; Sweden plans to include an infrared sensor in ATM machines that scan the eyes of customers as they use the machine.
Although the goal of these two systems is to cut costs and increase security, it’s not clear that they’ll succeed without a strong public education campaign. It also remains a mystery whether or not card readers will be widely used as most people don’t see the benefits. For example, many businesses still view debit and credit cards as a nuisance and aren’t likely to adopt them.
While the debate rages on, the governments of both Canada and Sweden are encouraging the adoption of Visa and MasterCard debit or credit card systems over their existing credit or debit cards. These two companies have long been the industry standard, so it is only natural that they will continue to dominate the marketplace and consumers should make the switch when their alternatives become available.
In addition to the security issues, credit, and debit cards are much more difficult to understand. For instance, they often carry a logo that looks like a card that you can swipe right through your mail slot. Many consumers find this confusing and are hesitant to use.
Plastic-based payment systems also have drawbacks. For example, they are more difficult to use for individuals who travel frequently.
With these facts in mind, the governments of both Canada and Sweden are now encouraging their citizens to try out these payment instruments before they commit to using them. It appears clear that these countries have a lot of work ahead of them. As with all new technologies, more research needs to be done and the government of Canada has taken a proactive approach by holding demonstrations in major cities around the world.