The Move to a Cashless Society

AI in Finance Nov 30, 2020

The ubiquitous use of digital payments, as accelerated by COVID-19, has brought the move towards a ‘cashless society’ even closer. A.T. Kearney has, in fact, reported that “the first truly cashless society could be a reality by 2023” [1]. The next three years, therefore, will mark a significant turning point in the way we have historically transacted with one another.

Primary technologies involved:

According to Lifewire, some of the primary technologies involved in the use of digital payments, and the consequent move towards a cashless society, are as follows. The existence of apps in the process is key given their ability to manage both payments and transfers [2]. As a pre-requisite, therefore, users must also have access to either a smartphone or smartwatch to carry out these activities [3] via. apps. Further, two-factor authentication is required to “keep…funds secure…if your phone or watch is stolen” [4]. The use of mobile payments in this way is already commonplace – in China for example, only one out of five payments is not made digitally [5]. With “87% of consumers using fintech services”, it is likely that China will, in fact, be the first cashless society to exist [6].

Importantly, artificial intelligence (Ai) plays a crucial role in ensuring the security of these technologies. For example, it has been reported that Ai can “make our cashless payments safer and secured”, can “prevent and detect fraud” and can “monitor unusual behaviours in staff” [7]. Artificial intelligence must, therefore, be leveraged in conjunction with existing technologies to secure the use of digital payments moving forwards.

Benefits and associated risks:

The eradication of physical payments comes with clear benefits that are hard to overstate. Notably, digital transactions are recorded – the unavoidable trail that therefore comes with such transactions renders illegal and fraudulent monetary activity harder to carry out. In other words, all potentially illegal activity will be traceable [8]: “money laundering [and alike] becomes much harder if the source of funds is always clearly identifiable” [9]. As such, governments will have far better oversight on the likes of tax evasion attempts [10] and such activity should, in theory, see a decline.

However, reliance on technology alone makes the digital divide ever clearer. In doing so, those who lack access to technology or lack the means to open bank accounts [11] will struggle to transact and therefore subsist. The homeless, in particular, will suffer the most in this regard [12], given their day-to-day reliance on physical currency. Whilst Sweden, for example, has seen success in its move towards paperless dealings, it has “struggled to address how the marginalized will fare in a 100% cashless society” [13]. Further, the existence of digital footprints renders abuse of data collection easier to carry out [14]. The ethical use of data, therefore, is a necessity for companies and governments with access to payment records and information inferred from this activity [15].

The way forwards:

The emergence of the contactless era, where financial technologies and digital payments are commonplace, has resulted in the move towards a ‘cashless’ society becoming a very real possibility – with COVID-19 only speeding up the process.

Whilst there are undoubtedly efficiency and transparency benefits to this move, reliance on technology comes with associated drawbacks. Ai, however, plays a vital role in the safe and secure deployment of the relevant tools. Whilst safe deployment protects those with access to smartphones and alike, many of the most vulnerable in society lack access to these devices and therefore risk being shut out from the ability to transact [16]. Consequently, this paradigm shift, inevitable as it is, must be one that occurs gradually [17].

Written by Anjali Kapila


[7] Cubent. (2020, July 29). How Artificial Intelligence can play a role for safer and secured cashless society. Retrieved from Cubent :

[5] [6] Finextra. (2020, November 2). Will China be the world's first cashless society? Retrieved from Finextra:

[1] High, M. (2020, September 27). Will we see a cashless society by 2023? Retrieved from FinTech Magazine:

[8] [11] Howat, E. (2020, September 4). Coronavirus and a cashless society. Retrieved from FinTech Magazine:

[9] [13] Pritchard, J. (2020, June 10). The Pros and Cons of Moving to a Cashless Society. Retrieved from The Balance:

[2] [3] [4] Slack, S. (2020, August 6). The Tech You Actually Need in a Cashless Society. Retrieved from Lifewire:

[10] [12] [14] [15] [16] [17] The Economist. (2019, August 23). What does a cashless future mean? Retrieved from YouTube:

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