For security or comfort, to have greater control of our finances, and in the case of governments, to avoid tax evasion, it is promoted around the world. the elimination of cash as a means of paymentbecause electronic transfers and the use of cards promote the economic growth of nations, and are factors that help reduce poverty.
According to the World Bank, the development of any business is closely related to the acceptance of electronic payments. In fact, this could be verified with the Covid-19 pandemic, since the companies with the most losses, and many of those that did not manage to survive, were consortia that did not accept these means of payment.
That is why it is worth asking ourselves: How are we doing on this issue in Mexico? Is it really possible to live without cash?
Cashless What are its benefits?
Currently, 76% of adults in the world already have a bank account, according to the World Bank, which indicates an acceptable level of financial inclusion.
Countries such as Belgium, Holland, the United Kingdom and China, among others, are the most advanced in the implementation of the so-called cashless, an English word used to describe the absence of cash payments as an economic policy of the States.
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In Mexico alone 50% of Mexicans over 18 years of age have at least one account in some financial institutionsays the most recent report from the National Banking and Securities Commission (CNBV).
Regarding card payments, this institution details that only 16% of the Mexican population between 18 and 59 years old uses some plastic for purchases over 500 pesos.
For its part, the Bank of Mexico (Banxico) calculated in 2022 that 82% of citizens in our country used cash as a means of paymentbehavior that was reduced 5% compared to the previous year, when 87% of Mexicans settled their purchases in cash.
With these figures, it is evident that our country is still very far from eliminating cash. The same happens in most Latin American countries, since in this region 65% of transactions are carried out using bills and coins.
Mexican companies, which are mostly micro, small and medium-sized businesses, prefer cash payments because they consider that their profits are reduced by applying the commissions that banks charge for the use of their point-of-sale terminals.
However, the latter is a misconception, since cash management implies higher administration costsamong which stands out allocating a good part of the firm's budget for security, in addition to the fact that the measures that must be taken to prevent theft are becoming more and more onerous.
Additionally, “it is estimated that 50% of cash payments hide illicit or informal transactions,” so replacing their use with digital payments has a positive impact on people, companies and governments, considers the study “Impacts of financial inclusion” by the CNBV.
This analysis adds that the positive effects of reducing payments on
effective are:
- Lower transaction costs
- Reduction of risk and insecurity
- Transparency and better transaction recording
- Creation of credit history
- Increase in private savings
Does cash have a future?
In contrast, the organization CashEssentialsa non-profit association registered in France, considers that the use of cash guarantees “the individual's right to anonymity and privacy”, in the face of a culture of surveillance with which governments and other institutions collect a large amount of citizen data.
Even if a cashless future is possible, it is not likely as it would create a number of negative outcomes.” in terms of efficiency, inclusion, equity, resilience and privacy protection, CashEssentials points out.
This organization adds that the future of cash is not simply a competition between it and electronic or digital payments: “The discussion should not focus on the technology (form) but on the social and economic role (function) of money.”
From this perspective, cash “must coexist with alternative forms of money”because people benefit from such diversification, in addition to the fact that banknotes and coins are “a safeguard against some of the threats and challenges posed by digitalization.”
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Surya Palacios Journalist and lawyer, specialist in legal and human rights analysis. She has been a reporter, radio host and editor.