What Is a Checkless Society?
The term "checkless society", also known as "cashless society", refers to a hypothetical future in which all financial transactions are processed electronically. This would eliminate the need for any paper transactions, whether they be paper bills, checks, or even metal coinage.
Many observers have predicted the arrival of a checkless society for some time, yet actual progress toward this state has been slower than expected. While the prospect of losing a national, physical currency may seem dramatic, proponents of a no-cash economy aren’t just fans of the latest cryptocurrency to flood the market. Some experts believe that cash actually assists some of the darker corners of our economy, and eliminating it could help cut down on crime that relies on traceless financial transactions.
Key Takeaways
- A checkless society is a hypothetical future state in which all transactions are conducted digitally.
- In such a future, physical means of payment, such as cash or checks, would cease to exist.
- Such a future could have benefits for transaction speeds, reduced overhead costs, and fraud reduction.
Understanding Checkless Societies
Today, checks remain a widely used method for making larger payments, such as rent, payroll, and real estate purchases. For individual consumers and small business owners, checks are a more accessible form of payment than wire transfers, which often involve large fees. Checks also have the advantage of providing an evidentiary trail, which can be beneficial for consumers or businesses who may need to prove that the given payment was made.
Yet despite these advantages, many financial institutions would prefer operating purely through electronic means. Doing so could enable substantially faster processing times and could help reduce overhead costs by reducing the need for human personnel.
From a regulatory perspective, a checkless society could also allow greater oversight of transactions by allowing government bodies to monitor all transactions electronically. The Federal Reserve, for instance, has stated its desire to expand access to electronic fund transfers (EFTs) and wire transfers so that these kinds of transactions can gradually take the place of checks in the economy.
Although checks and other physical methods of payment remain widespread, there is evidence of their long-term decline. For example, a 2013 survey conducted by the online payment platform WePay found that over 50% of millennials do not use checks at all, and that more than 60% of consumers write fewer than three checks per month. That same year, the U.S. Postal Service (USPS) reported that, while 91% of USPS customers receive their bills in the mail, only 37% of those customers pay their bills through the mail.
The Rise of Crypto
Cryptocurrencies like bitcoin seem like a good alternative, but they present practical, technical, and regulatory challenges. Cryptocurrencies are systems that allow for secure payments online which are denominated in terms of virtual "tokens," which are represented by ledger entries internal to the system. "Crypto" refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.
Designed with privacy in mind, these currencies are not beholden to any specific country and are thereforetrickier to regulate. When new regulationsareimplemented, they could be subject to increased volatility which can—at least temporarily—make them potentially riskier than cash or check.
Examples of a Checkless Society
Scholars, financial experts, and others have been predicting the onset of a checkless society for decades. Writing in 1968 for the American Business Law Journal, for example, Indiana University professor James A. Barnes spoke of the legal ramifications of a society in which consumers no longer used cash or checks to pay for purchases. In 1996, the U.S. government reported on the growing impetus to replace paper checks with electronic payments.
The current transition to a checkless society has not been as fast and easy as many had anticipated. It has taken decades for many older customers to warm up to current automated services, such as automated teller machines (ATMs) and chip-enabled debit cards.
Many elderly consumers continue to rely on checks simply because they do not understand newer payment technologies, or they regard them with suspicion. For instance, a U.K. plan to phase out checks in the country was discontinued when it was discovered that 46% of the nation's elderly still relied on checks as a form of payment. And checks are still used in business-to-business (B2B) transactions; as of 2019, checks continued to account for 42% of B2B payments, but down substantially from 81% in 2004. For personal expenditures, a 2020 report commissioned by the Fed found that only 7% of transactions overall in 2017 and 2018 were carried out by check.
FAQs
The term "checkless society", also known as "cashless society", refers to a hypothetical future in which all financial transactions are processed electronically. This would eliminate the need for any paper transactions, whether they be paper bills, checks, or even metal coinage.
What is the meaning of cashless society? ›
A cashless society is a concept in which money changes hands through digital means rather than physical banknotes or coins. In practice, this would look like customers going about their day—buying coffee, paying bills, shopping for groceries—without ever touching a bill or coin.
What would a cashless society look like? ›
In a cashless society, all payments are processed through digital networks. Banks keep an electronic record of transactions and people access their funds through electronic systems.
Why should we have a cashless society? ›
Supporters of cashless transactions also point to greater ease in the everyday management of money, for individuals and businesses. The need to store, protect, withdraw and deposit physical money disappears. International travel would also be more convenient without the exchange of paper currencies.
How close are we to a cashless society? ›
11% of US adults have completely stopped using cash, up from 5% five years ago (Source: Gallup) The average number of cash payments fell from 26% in 2019 to 20% in 2021 (Source: Federal Reserve) Between 2012 and 2022, cheque transactions declined by almost half (Source: Federal Reserve)
Will we become a cashless society? ›
Nearly half of people expect to see a cashless society in their lifetime, a survey has found. One in six people said they never carry cash on their person, a figure which is more than triple the 4% of people who said this in 2019.
Is cashless good or bad? ›
The downsides of going cashless include less privacy, greater exposure to hacking, technological dependency, magnifying economic inequality, and more. Credit and debit cards, electronic payment apps, mobile payment services, and virtual currencies in use today could pave the way to a fully cashless society.
Which country is the most cashless? ›
And, if you're interested in going cashless, we can help you compare quotes from EPOS system providers. Just fill in our quick form. Norways is the most cashless country, with only around 2% of payments being made by cash, and 100% of the population having a bank account.
Are banks going cashless? ›
More than half of all bank branches no longer handle cash. Seven out of ten consumers say they can manage without cash, while half of all merchants expect to stop accepting cash by 2025 (Arvidsson, Hedman, and Segendorf 2018).
Why do banks want to get rid of cash? ›
Why Eliminate Cash? Cash can be used in criminal activities such as money laundering and tax evasion because it is difficult to trace. Digital transactions or electronic money create an audit trail for law enforcement and financial institutions and can aid governments in economic policymaking.
A cashless society offers a range of benefits such as convenience, transparency and stability. However, there are concerns about financial exclusion , privacy and security. It has been suggested that disadvantaged groups are most likely to be disproportionately affected by the transition away from cash.
How to protect yourself from cashless society? ›
But if you're worried about risks that cashless payments might pose, there's a simple way you can protect your sensitive data when you shop online: by using a virtual card.
Should America go cashless? ›
The Drawbacks of a Cashless Society
Without cash, we would be forced to leave a record of everything we buy. While this may not bother some, there are many who worry that governments and/or corporations could use our purchasing histories as a way to track us, monitor us, and even intimidate us.
What is an example of a cashless society? ›
Sweden. Sweden is often regarded as the closest to becoming a truly cashless society. Here, the cash transactions account for less than 10% of the total value of payments made. The widespread adoption of mobile payment apps like Swish and the ability to make card payments virtually everywhere has driven this shift.
How does a cashless society affect the poor? ›
Crucially, this substitution has significant consequences for social inequality: while people with higher incomes typically benefit from cashless payments through easy and frictionless payments and access to short-term credit, people with lower incomes become increasingly dependent on financial services for which they ...
Is the USA going cashless? ›
Summary: Americans are using cash less frequently and making payments more often by credit card or through payment apps. Yet, many CFI customers still like having cash as an option.
Is cash going to be obsolete? ›
If it's been a long time since you pulled out actual dollars and coins to pay for something — here's a conversation for you. It might seem like cash is slowly becoming obsolete. But, Brett Scott says it's a false narrative that we're all pining for a cashless society.
Will cash be phased out? ›
While the future demand for cash is uncertain, it is unlikely that cash will die out any time soon.
What is checkless banking? ›
What is a checkless checking account? A checkless checking is a type of bank account that does not allow you to write checks against the account. This account can help you avoid overdraft fees by limiting your ability to spend more than your available account balance.
