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 a cashless society in your own words? ›
A cashless society is one where all physical money (cash and coins) is totally replaced by a digital currency. In a cashless society, you can't spend or save paper dollars, because they aren't accepted as payment.
Why is a cashless society good? ›
Banks keep an electronic record of transactions, and people access their funds through electronic systems. The advantages to cashless societies might include reduced physical crime (since there's no tangible money to steal), lower transaction costs, and the convenience of not needing to carry cash.
What are the effects of a cashless society? ›
This could lead to a reduction in crime rates, particularly for crimes such as drug dealing and tax evasion. Increased economic efficiency: A cashless society could make the economy more efficient by reducing the need for cash handling and storage. This could save businesses and individuals time and money.
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.
Are there still individuals in our society that are unbanked? ›
The latest FDIC data shows almost six million unbanked and 19 million underbanked U.S. households. Given that 2.5 people live in the average household, this means there are over 15 million people living in a home with no connection to banks, and 48 million more in homes with only a tenuous connection to banks.
Will we ever live in a cashless society? ›
When Will Society Become Cashless? While it's impossible to accurately predict when the US will move to a fully cashless society, a Gallup survey reveals that 64% of Americans believe that all payments will become electronic at some point in their lifetime, with the figure jumping to 70% for those under 50.
Is the United States going to a cashless society? ›
Though a cashless society may eventually come, it isn't in a huge hurry. The most important step for CFIs right now is to cater to all of the transaction types that their customer demographics prefer in order to provide well-rounded services that address the needs of all customers in the meantime.
Who would suffer in a cashless society? ›
The elderly members of society are at particular risk, as they are often not confident using digital payment methods or online banking services.
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.
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.
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).
Will we ever go cashless? ›
From paper to polymer banknotes. We have been issuing banknotes for over 300 years and make sure the banknotes we all use are of high quality. While the future demand for cash is uncertain, it is unlikely that cash will die out any time soon.
Is China cashless? ›
China's cashless evolution is a remarkable story, as the country transitioned in less than two decades from a cash-first society to one with an 86% mobile payments penetration rate.
How does a cashless society affect the poor? ›
It can affect anyone - but those living in poverty are particularly vulnerable. Those with poor health and disabilities or caring responsibilities can be disproportionately affected by financial exclusion. Caroline told BBC Scotland News: "I have become very dependent upon delivery services but they charge you as well.
Why do people not want a cashless society? ›
Cashless society: disadvantages
Rural communities could also be left vulnerable, because of poor broadband and mobile connectivity. People with low income or debt tend to find cash easier to manage too. Another potential disadvantage concerns security.
What is an example sentence for cashless society? ›
We live in an increasingly cashless society. We shall inevitably have electronic mail, electronic shopping from home, the chequeless and cashless society and the electronic transfer of funds, but all that could well be impaired.
What does cashless mean? ›
: not having or involving cash. specifically : relying largely or entirely on monetary transactions that use electronic means rather than cash.
How long until cashless society? ›
Even in a growing global economy, that means more than $2 trillion dollars of cash that was in global circulation in 2020 won't be around in 2024. In North America, cash is projected to account for only 8.7% of all POS transactions by 2024. If you're looking for a cashless society, it's increasingly easy to find.
