July 2023
Physical money will soon become a relic. Smartphones are displacing billfolds and physical wallets, not unlike how we no longer use cameras and GPS devices.
The impact on high-rise communities will be less than on much of society. Communities already require payment of condo fees via digital means which currently includes cheque, credit or debit cards, and electronic transfer of funds.
Canadians relied on cash for only one-sixth of their payment transactions in 2020 which is down from nearly half of all transactions in 2008. Cash transactions have nearly disappeared in Sweden. The only exceptions to the decline in use of cash among wealthy countries are Japan and Switzerland. In China, even the smallest of transactions are now conducted primarily through smartphone apps.
Benefits of digital payments are many. They are faster and cheaper for consumers. Businesses inclusive of condominium corporations don’t deal with managing, counting and depositing large amounts of cash, or the risks of physical theft or robbery. Governments are better able to trace and audit transactions, and to reduce tax evasion. The disappearance of cash might not be a bad thing.
Yet cash has advantages. It is easily accessible and can be used without an electronic device, wireless network or the internet. It can be used if the power goes out and by those without financial accounts.
Digital payment services in the form of credit and debit cards have been popular for a long time. Newer services, such as PayPal and Apple Pay, are growing in popularity. Most households have a bank account and one or more payment card options. The cost of most payment systems is paid by merchants who build the cost into what they sell. Those who utilize cash back or point features add to the costs paid by merchants which are ultimately passed on to consumers.
Cryptocurrency bitcoin was once thought to offer a solution for digital payments ensuring anonymity. This is no longer considered viable because of its volatility, risks and popularity for laundering funds.
The Bank of Canada is currently looking into the viability of a digital version of the loonie. This would help ensure Canadians have easy access to a safe, secure and efficient digital payment system. It would offer new opportunities and a tool for government surveillance. Government funds could come with expiration dates to encourage spending within a specified time. There may be limitations on the use of funds preventing them from being spent to purchase pornography, narcotics or ammunition.
The arrival of digital currency and elimination of cash is undesirable for those concerned with the intrusiveness of corporations and governments.
The days of cash are not yet gone. During Covid, in 2020, the amount of cash in circulation rose as more held it for emergency use. If or when cash does disappear, payments will become easier and cheaper with national borders being less relevant.
