We have talked about the resistance to a cashless society in places like the United States and Germany. However, in Africa, this phenomenon is much more widespread.
For example, in a landlocked African country like Zimbabwe, where inflation has soared as high as 79.6 billion percent, banknotes have become obsolete and most places accept payment in kind.
The locals no longer trust the banks and banknotes. In the end, the US dollar as a currency of settlement has helped to resolve this longstanding problem.
At the same time, electronic payments have become more popular in Zimbabwe. Churches, instead of passing collection plates, use card-reading machines to accept tithes through debit or credit cards.
In March, I paid a visit to Somaliland in Africa. An “independent” country without international recognition, Somaliland grapples with inflation that is as bad as in Zimbabwe.
There, you might need a cartload of banknotes to pay for a loaf of bread. Electronic payments have become popular as a result. And so, despite the low living standards, Somaliland has become a cashless society.
The popularity of electronic payments in Africa is also closely related to the livelihood of refugees. Jacqueline Musiitwa, a financial and legal expert in Uganda, has proposed stronger support for refugees through blockchain technology and biometric data for identity verification in financial transactions.
Musiitwa felt that having a financial identity and a bank account can help refugees better integrate in society. In other words, in Africa, electronic payments have a social impact.
An electronic wallet provides a digital footprint. While this may raise privacy issues for some people, it is a godsend for those refugees who have an urgent need for personal identification.
Indeed, many African countries and companies have benefited much from electronic payments.
India is another major country that embraces electronic or cashless payments. Since he came to power, Prime Minister Narendra Modi has been promoting cashless financial transactions in regions.
Apart from financial and social reasons, Modi hopes that a digital economy will enable the central government to exert more control over regional economies and lessen the role of the “gray economy”.
Even today, many people in India are still unaccustomed to going to banks, owing to cultural, geographical and gender factors. For them, virtual banking offers a lot of convenience.
With the huge potential of electronic payments in India, it is no wonder that apps like Paytm have become hugely popular among the masses.
A cashless society is an inevitable global trend given the continued development of blockchain and other technologies.
This article appeared in the Hong Kong Economic Journal on May 10