The Move to Cashless Societies

October 5 2021

Wael Saghir

The evolution of money as a payment method goes back to 5th century B.C. where what we know as coins today were first used. This transition from the old form of payment through bartering to the use of a universal payment method was industrialised in the ancient European continent in a region called Lydia where coinage manufacturing (minting) first took place.

Coins became the predominant method of payment for centuries. However, though more convenient than bartering, carrying coins proved to be challenging at times due to their weight. This prompted the Tang dynasty in 7th century China to devise a new form of payment that is yet more convenient than coins. This new form of payment is what is referred to as “paper money” or “banknotes”.

Today, coins and banknotes are commonly referred to as cash payment and have been the preferred method of payment for many throughout the years. However, innovation continued, and new methods of payments were further introduced that are more convenient than cash. These non-cash payment methods started with cheques in 13th century Venice allowing further mobility to international traders. Back then, as Europe was still using coins, silver and gold as a method of payments, merchants found in cheques a more convenient way to facilitate their trade.

The use of this early form of widely acceptable, and available, cashless payment, continued for centuries until the 1950s where cash cards and credit cards were first introduced. The Diner’s Club company and American Express both pioneered this new form of non-cash payment. Though, prior to the introduction of these cards there were notable non-cash innovations, however, they were not as widely used. Few decades later, innovation in non-cash payments, particularly card payments, further evolved with the introduction of Debit Card in the 1970s. These Debit Cards were tied up to an individual’s bank account thus differing from their earlier predecessor, credit cards.

Non-cash payment continued its evolution as technology evolved. Nowadays, the overdependency on smart devices like mobile phones and wearables further facilitated the  innovation in payment methods. Today users of smart devices have the option to make contactless payments without the need for their physical cards using applications like Apple Pay. Through these applications, users can link their credit/debit cards to their smart device and purchase goods and services.  In addition, the introduction of digital currencies has given us a glimpse into a cashless future particularly as Central Banks began to consider issuing their own digital currencies known as Central Bank Digital Currencies or CBDCs to counter the rise of digital currencies like BitCoin and Ethereum.

In the pre-pandemic world, studies by UK Finance showed that the use of cash as a payment method was in decline since 2012 and that the preferred method of payment in 2019 was credit/debit cards. The decline in the use of cash continued in 2020 further highlighting the overdependence on technology particularly in post-pandemic world were cashless payments gained stronger foothold.

As the marriage between technology and finance deepens, one may wonder if the transition to purely cashless societies is foreseeable in our lifetime and how such transition could fuel societal marginalisation. Additionally, one could question the role that Tech companies can play in combatting digital poverty in the age of cashless societies. These are the main topics we’ll address in this month’s blog series.


UK Payment Markets Summery 2020 (UK Finance; June 2020)

Available at: Accessed: October 3rd 2021

UK Payment Markets Summery 2021 (UK Finance; June 2021)

Available at: < Accessed: October 3rd 2021