Payment is the volunteer action of exchanging money from one individual to another via physical cash or by the electronic transfer. There is continuous evaluation of the payment system which can be witnessed by the cashless society. People nowadays hate the handling of physical money, which paves the wave for developing a cashless society (cash-free world). Technology advanced countries, like Sweden, were now taking a lead in developing a cashless society. The nation is expecting to become fully cashless by 2023 stated in a report from BBC News. Several multinational corporate companies like Google, Facebook, PayPal, and famous e-commerce companies like Alibaba and Amazon have proposed an interest in replacing the cash payments with electronic payments. Merchants (payment receiver) and consumer (payer) both benefit in this process of the cashless payment system. A cashless society is a new era in which the financial transaction is simplified in the form of digital information transfer instead of physical money.
There are several methods in practice for the cashless money transfer that includes credit card cards, debit cards, mobile wallet apps, cashless point-of-sale (POS), mobile banking and internet banking, etc.
Although the cashless digital payment system is good for enhancing human life, it has a potential threat when it comes to security and cybercrimes. Security is one of the major concerns here and it is continuously evolving. According to the Qualcomm report in the Times of India, none of the mobile banking application in India has the low-level hardware-level security. Those data and protection layers can be easily breached by hackers for the volunteer action of illegal use.
To mitigate this issue the new way of payment is emerging with the Near Field Communication NFC and IoT payment infrastructure. Where the Tokenized payment comes into the role to reduce the skimming and to increase the comfort level. The NFC embedded wearables holding the reference of a payment card as a primary account number (PAN) called token. This encrypted secure element present in the wearables can be limited by the user to its particular use case.
In the growing digital commerce environment, the Internet of Things – IoT play a crucial role. With the use of that technology, the cashless payment method is still pushing the limits to contactless payment. It is still another milestone where the financial transaction is done in a cashless and contactless manner. Contactless payment gives the new level of comfort to the consumers without the need for swiping or dipping the physical cards in the payment process taking place at the POS terminal. Point of sale POS is the device (a combination of hardware and software) where the consumer pays for the purchase made with the merchant, the purpose of the POS is to read the electronic information (data) from the payer by some means, i.e. cards, NFC in mobile phone or wearables. If you have seen somebody chilling in the beach restaurant tap their bracelet at the checkout counter to pay for everything that he/she bought, then you have likely witnessed a technology in action.
There are several advantages of the cashless and contactless transaction that includes,
- Lowers the crime rate and business risks
- Transaction speed
- International reach
- Reduced tax evasion and money laundering
- Data – to manage spending habits
- Great support during a pandemic
During this tough situation of a pandemic – Covid-19, the World Health Organization WHO has warned people that the banknotes are capable of carrying/spreading this lethal virus. This issue had given a strong push for the rise in a cashless society. According to the Forbes report, the contactless payment has risen to 150% since March 2019.