How long will it take banks to phase out physical cash completely?

[deisik]

As I see it, if you should include the costs of using Visa or MasterCard in the price of goods and services you offer as they are just costs like any other, regardless of the actual payment method your clients might use. Then your profit margins should remain more or less intact. In other words, you will have to close the shop if you are going to pay so much out of your profits provided everyone pays with Visa or MasterCard, of course. What am I missing here?

In my country, the fee charged by Visa/Master is 1.8% plus GST, which comes to 2%. So if you sell something worth $1,000, then you need to pay Visa $20. In a way, what you are saying is correct. This $20 should be added to the "price of goods and services". In such cases, the profit margin for the merchant is $30, or 3%. Now the complexity comes in, because the merchant accept several modes of payment. He accepts physical cash, he accept payment from mobile wallets and he also accept Visa/Master. So here, the "price of goods and services" is not a uniform figure. It can range from $950 to $970

But any merchant knows his figures

He knows that, say, 70% are paying in hard cash and the rest with plastic. Sound accounting says that a) he can't ask more from those who pay with cards, and b) he can't lower his margins lest he should get thrown out of business. This leaves him with only one avenue to follow that would let him escape this rip-off, and that is to socialize the card payment costs, then privatize the gains (if there are any)

[bits4books]

You initially put the question incorrectly. The question is not how quickly banks will be able to switch to a full cashless payment,

i dont know about you but i thinnk both are the same   . to phase out mean there is nothing left and if theres nothing left they can decide to switch cashless now but they can only do that if they wont print money anymore  .

but whether all and even the smallest entrepreneurs will want to give up cash payments. Whether all old people will want to switch to plastic cards. Plus, do not forget that all this needs to be serviced somehow, and this is a big cost for master systems (Visa, MC) to expand capacity and improve stability.

big companies are already integrated with visa and master card  . they are also already paying for the maintenance cost because they already have thier online versions  . for small entrepreneurs , its easy to setup digital payments and they can do this on thier own   .

All the same, there are a number of difficulties that can not be simply ignored by saying that "just start accepting cashless payments".
This is a fairly long process that involves a lot of factors-as I said above, starting from the expansion of the infrastructure of payment systems and ending with old people with dollars under the sofa - as well as the fact that for some businesses, payment for cash and settlement service (annual) can be totally unprofitable because there is not such a number of payments that would have at least some logic. Any micro-business for the production of things-furniture, for example-some piece production and so on. There are many factors, and such a transition also needs to be coordinated with a lot of authorities, from the state authorities to the Federal government. Plus do not forget that in the US any attempt to force something can end in complete failure and downgrades so it's like stepping into a minefield except that.

[Heart18]

Phasing out physical cash is so impossible to be implemented. Even in more decades, I still believe that Physical Cash will stay in the world. Because a lot of people, especially the elderly doesn't know about digital transactions and other people in uncivilized places in the globe have no access to the internet, nor have the high technology powered gadgets. Physical Cash will remain as our traditional way of buying goods in daily living and other financial transactions, no matter how modernized the World is.

[deisik]

Decentralized cryptocurrencies like Bitcoin and Ethereum will become an "escape route" for those looking for privacy and censorship resistance. It'll be a never-ending battle between the centralized and decentralized economy in the future

If you haven't looked into this topic, it may be the right time to read it

Well, at least read the part about how CBDCs may turn out beneficial for cryptocurrencies down the road. The utter irony is that the more the governments crack down on cash, with CBDCs or other tools, or all available means combined, the greater number of people will be using cryptocurrencies (Newton's third law applied to finance). And the mother of all ironies would be when crypto emerges as a single winner in the cash wars that central banks are going to unleash upon us

[South Park]

Much as I love the cashless system, it is not so easy to out-rightly go cashless. There are several reasons which have been mentioned by some of the posts. One big reason is mentioned by Jackg: you think politicians are going to want to get rid of cash?. Another reason is the ease with which you could loose all your money in a second. Hackers are not sleeping.  Thirdly, the issue of availability of internet and the ability for all to be able to afford it.

Politicians do not really care, you need to understand that the bankers are their friends so even if seemingly out of nowhere they got really rich after being elected to an important position they can get away with that corruption, or at least that is the way it works on my country, the biggest hurdle in my opinion is the third point you raise, even if the cost of technology is going down and more people have access to the Internet at the same time there is still a great deal of people with no access to it and they will still need to use cash for the time being.

[Abiky]

If you haven't looked into this topic, it may be the right time to read it

Well, at least read the part about how CBDCs may turn out beneficial for cryptocurrencies down the road. The utter irony is that the more the governments crack down on cash, with CBDCs or other tools, or all available means combined, the greater number of people will be using cryptocurrencies (Newton's third law applied to finance). And the mother of all ironies would be when crypto emerges as a single winner in the cash wars that central banks are going to unleash upon us

Good point. CBDCs will bring increased adoption of cryptocurrencies in the mainstream world. It's like the "network effect" in my own opinion. Both crypto and Fiat might as well live alongside each other for the foreseeable future. People will find crypto more attractive than Fiat because of its decentralized and censorship-resistant nature. No matter how government's efforts may be, they'll be unable to stop people from using crypto in its entirety. How long it'll take to switch from physical to digital cash, will entirely depend on people themselves. I think it'll be decades before the world goes fully cashless. Banks won't be going anywhere, since they'll benefit the most with CBDCs. The new monetary system will be even better than the current one, as it'll give central banks and governments more power/control over the economy. They can track & trace every single transaction performed on the digital ledger. With physical cash being "phased out", people will resort to crypto for privacy/anonymity. After that, it'll be a never-ending battle as governments do everything in their power to try to stop people from using an alternative monetary system. But then, it'll be too late.

Nonetheless, I think there's no rush for banks to switch to CBDCs. After all, credit/debit cards, and in some cases, physical cash are being used in these times of turmoil. Research and development for the launch of a new monetary system, will take a long time in order to ensure everything works as intended. CBDCs will be gradually introduced alongside physical cash, until the latter stops being used by people worldwide. That's because old people still use physical cash for daily payments. Millennials will quickly adapt to cashless payments, paving the way for a cashless society in the future. Just my thoughts

[cryptoboss2020]

they dont have a plan to kill cash yet ...as they are printing it more and more.
now they give out even more cash , btc will go away faster then fiat currency.
btc is not protected by any laws it doestnt belong to any goverment if one day the btc is just gone who blame for?? nobody !


i dont think the btc could be the cash money cant be so sacred btc is bad as money as gold.

gold is physical and not rational to use it as a money btc is slow and the creator is still unknown btc is still wild west.

[Bezobraznike]

they dont have a plan to kill cash yet ...as they are printing it more and more.
now they give out even more cash , btc will go away faster then fiat currency.
btc is not protected by any laws it doestnt belong to any goverment if one day the btc is just gone who blame for?? nobody !


i dont think the btc could be the cash money cant be so sacred btc is bad as money as gold.

gold is physical and not rational to use it as a money btc is slow and the creator is still unknown btc is still wild west.

   Cryptoboss2020 I don't think we can talk in general about banks phasing out physical cash, every country is
different. While some countries are far from phasing out cash, some advanced countries are very close to that.
And it's what we will see first, advanced countries going cashless in near future. It's all about how developed
a country is.

[cryptoboss2020]

they dont have a plan to kill cash yet ...as they are printing it more and more.
now they give out even more cash , btc will go away faster then fiat currency.
btc is not protected by any laws it doestnt belong to any goverment if one day the btc is just gone who blame for?? nobody !


i dont think the btc could be the cash money cant be so sacred btc is bad as money as gold.

gold is physical and not rational to use it as a money btc is slow and the creator is still unknown btc is still wild west.

   Cryptoboss2020 I don't think we can talk in general about banks phasing out physical cash, every country is
different. While some countries are far from phasing out cash, some advanced countries are very close to that.
And it's what we will see first, advanced countries going cashless in near future. It's all about how developed
a country is.

If they go cashless we should have all ready some idea what the curreny will be?? 

[DooMAD]

If they go cashless we should have all ready some idea what the curreny will be?? 

Exactly the same national currency you're using now.  Just without the coins and notes.  Then they can monitor every single transaction, dictate where and when you can spend your money and freeze payments if they want to.

[AjithBtc]

It isn't a simple thing to be done overnight, first thing such a plan will make the country a step above other countries. For some reason there will be devaluation in the money, and if this is taken to the public opinion. It won't get support. Maybe a generation of technology dependent can initiate a change, and for sure it isn't gonna happen in the next fifty years.

[BuNga_cute]

I can't be sure how long it will take to remove physical cash completely, and replace it with digital cash. Besides, I doubt we can
all switch to using digital cash totally, if you see that some people are not tech savvy. Especially for old people, they still choose
to use physical cash compared to digital cash. It could take several decades to be able to switch from physical cash to digital cash
perfectly.

[Twinkledoe]

I can't be sure how long it will take to remove physical cash completely, and replace it with digital cash. Besides, I doubt we can
all switch to using digital cash totally, if you see that some people are not tech savvy. Especially for old people, they still choose
to use physical cash compared to digital cash. It could take several decades to be able to switch from physical cash to digital cash
perfectly.

Aside from that, most people in the rural areas prefer the traditional fiat method. So I am not seeing in our lifetime that we will convert fully to digital cash. Maybe a large percentage of people will use digital cash in the years to come but I am not seeing that total phase out of fiat money. Maybe we will see the full conversion to digital cash in some progressive areas but not in rural to remote areas.

[Abiky]

Exactly the same national currency you're using now.  Just without the coins and notes.  Then they can monitor every single transaction, dictate where and when you can spend your money and freeze payments if they want to.

The fact that banks will be able to track and trace every single transaction performed with digital Fiat, gives me the "creeps". A CBDC powered by a government-owned Blockchain network, could undermine people's privacy as we speak. I believe that governments and central banks will accelerate the process of phasing out cash from mainstream use, in order to have greater control over people's money. While it's possible to surveil transactions on credit/debit card providers, it's not easy to do that with physical cash. That's why governments and central banks have become so interested in launching CBDCs of their own lately.

Of course, it'll be quite challenging to make everyone use the new digital version of Fiat. The elderly will not want to give up physical cash to a CBDC that easily. Only teens and young adults will. As long as this is the case, it might take a couple of decades from now before the world's economy becomes fully cashless. Once that happens, most people might adopt decentralized cryptocurrencies at a large scale as their privacy will be put at risk with a CBDC. Since CBDCs haven't materialized yet, all we can do is speculate what their outcome will be after launch. Just my thoughts

[bayu7adi]

If the bank did, I'm sure it would be very fast. Especially with the support of the government as an official agency that can make everyone believe. Trust me, with just 2 years, banking can make digital money with a very large user and can be understood by 80% of people in the country.
We know that every leader in this nation has a branch to the smallest degree is a leader who arranges in units of 50 houses. And it is not difficult for the government and banking safely according to applicable health protocols

[blckhawk]

Really?

Phase out cash? and what for?

When the time where a vaccine already exists, do you think that we still need to have a contact less payment? As we are already immune to the virus when we are injected by the vaccine, there is no need to worry about transmitting the disease because everything will go back to normal once it happened soon. It is not that bad to promote cashless payment but we should give the people an option on what platform will they use to pay their bills or expenses. Let them choose on what kind of transaction they are comfortable with.

Exactly. Cashless payment was indeed being encourage right now because of the pandemic, this was the countermeasure of our government to prevent the transmission of the disease. However, as soon as the vaccine is made and release in the market I believe that most of the people are getting back to what they are more accustomed. Perhaps the use of online paymetn method may continue in rich countries but I doubt that it will work on third world countries. Therefore, I think it will take several decades before the world become ready for these kind of paying method.

[Eugenar]

We're still far from cashless societies. Physical money is a part of a country's history and they will not easily abandon it just because cashless transactions are more convenient. Also, there are still difficulties regarding tbis cashless transactions. In some areas,  internet connection is a problem which limits transaction of this kind. So maybe, if further developments will occur, which is more likely to happen in the future, things might rely more on the technology. But I doubt it will only be cryptos which will be the center of every transactions in the future for the reason that there are many digital currencies coexisting with cryptos. For sure, major changes are needed as well as developments in financial system before this thing happen.

[DooMAD]

I believe that governments and central banks will accelerate the process of phasing out cash from mainstream use, in order to have greater control over people's money.

They'll certainly try.  So it's up to the people like us, who understand the motives behind their actions, to inform other people that it's in their interests to resist this change.

We're still far from cashless societies. Physical money is a part of a country's history and they will not easily abandon it just because cashless transactions are more convenient. Also, there are still difficulties regarding tbis cashless transactions.

Indeed.  It's not always convenient.  I can recall two occasions in the last couple of years where card systems have had major outages.  For those that relied primarily on card payments and didn't have sufficient cash on them, this caused serious disruption to their day.  I suspect even those people would now have reservations about eliminating cash entirely, having experienced how potentially fragile a centralised digital system with single points of failure can be.

[deisik]

Nonetheless, I think there's no rush for banks to switch to CBDCs. After all, credit/debit cards, and in some cases, physical cash are being used in these times of turmoil

Nothing can beat hard cash

However, CBDCs will be a step forward from payment cards issued by banks. Right now we can't directly communicate with a central bank, only through middlemen like regular banks. You know, as the saying goes, when you talk to God it's prayer, but when God talks to you, it's schizophrenia. As it turns out, now you can send curses to the central bank, then with a CBDC the central bank will be able to send curses back to you directly

[lumeire]

It will take a long while to phase out physical cash completely, although alternative digital payments method are becoming more widely accepted and used. Just like debit card payments method I believe that in near future bitcoin will follow suite when it adoption has been vastly accepted

We won't be able to see sudden mass adaption of digital payments and the fall of fiat currencies would also be a step by step process rather than a sudden one. We can see people are already using digital payment methods and also there is huge  growth in the number of people transacting with digital payment methods rather than cash and once there will be a majority of people doing digital payments we can then see a shift from these digital payment methods to cryptocurrencies or maybe national cryptocurrencies in the far future. Pretty surely the fiat currencies will remain for at least half a decade more from now.
Before trying to shift people from fiat to digital currencies we have to first develop that kind of infrastructure to support the digital payments everywhere and also the telecommunication system has to be upgraded to keep up with the increasing demand and then only we can see the future where digital currencies will rule the world.