How Digital Payments Going Viral?

The rapid spread of the coronavirus over the past few weeks has forced most governments to lockdown on day-to-day public life. Globally, the only things spreading faster than the virus is fear itself and the use of digital services. In a way, the virus and screen time going out of control together.

Around the world, grocery stores, pharmacies and petrol stations remain the few places where one can still spend money. But this money can often harbour not only bacteria but also the virus. According to studies, pathogens can survive up to 17 days on paper money. The Bank of Korea is putting currency notes through a high-heat ‘laundering’ process to get rid of any traces of the virus before releasing them for circulation. China has advised lenders to disinfect and isolate banknotes. While some experts insist that it is not proven whether you can really get infected with the coronavirus via banknotes, all experts agree that paying with cards or a mobile phone are safer options.

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Public transport in Switzerland and Germany has accordingly changed payment methods. Customers are no longer asked to buy a ticket from the bus driver but only via an app or at the machine.

A cashless society in Pakistan might sound stretched bit far off, but it is already on its way. Around the world several powerful forces are behind the move towards becoming cash-free, including governments and the largest financial services companies. In Pakistan the government has paved the road with an even more inclusive approach, targeting the 85% of the adult populations with no bank account to open one through a simple feature phone. Encouraged by the World Bank the State Bank (SBP) has a big agenda on digital payments, it’s “financial inclusion” goal is to exponentially increase the reliance on digital payments with its Asaan (Easy) Mobile Account (AMA) Scheme.

Credit and debit cards are among the most popular cash alternatives in use today. But for Pakistan, cards alone are not enough and mobile phone devices may will become the primary tool for payments

Sweden is leading the race to become the world’s first almost cashless society. Over 80% of all payments are digital – cash is no longer king. In most shops signs say “No cash accepted”, and unprepared tourists may face a challenging situation. Digital payments via card or mobile apps are the “new normal”. Cash withdrawals have been declining by 10% a year and accordingly less people carry it. Cash represents only 1% of the GDP. It seems the majority of the Swedish population is happy with the move to a cash-free society. The older, less tech-savvy generation is not entirely thrilled with such an electronic world and the new ways to perform bank services. Before giving up on cash entirely – and beyond all aspects of viral transmissions – we must address several logistical and social issues. Benefits and disadvantages provide an idea of the myriad of effects going cashless can have on money and banking systems we currently know.

There is little to no doubt that benefits of a cashless society and digital payments lead to less crime, as theft or illegal transactions typically take place with cash leaving record. The same is true for financial crime: digital records of every payment make it much harder to hide income and evade taxes, money laundering will be limited as well. Costs for society could be reduced by printing a minimum of notes and coins, not more costs and risks for business to store or deposit money and transfer it. Every tourist will welcome cashless transactions on the mobile device instead of figuring out another currency or queuing to exchange money.

There are a few disadvantages to electronic payments, data privacy concerns being the most valid. Private payment information could turn up in unexpected ways that are impossible to predict while cash allows one to spend and receive money anonymously. Hackers are the bank robbers and thieves of this “new digital world order”. Consequences of cybercrime or technology problems (such as glitches, outages, and innocent mistakes) are more serious and significantly more inconvenient – think about not acceptance of a card or a dead phone battery.

Nations like China, India and a few European countries are already making big efforts to eliminate cash, with the push coming from both consumers and government bodies. Electronic payments in Pakistan might still be small in scale but is continually on the rise. The logistics are still in development, but there are some clues on how a cashless Pakistan might evolve. Credit and debit cards are among the most popular cash alternatives in use today. But for Pakistan, cards alone are not enough and mobile phone devices may will become the primary tool for payments. A society with such a young demography and increasingly tech-savvy generations ensures a unique role for mobile payment services.

In times of social distancing the “digital society” is moving closer together every day. Schools change their mode of education to e-learning and virtual classrooms. It can be expected that after this coronavirus-crises everyone will have learned and understood the advantages of digital technology. Not only Pakistan will witness the viral spread of digital payment technology at the beginning of this new decade. But it suggests that going cashless is possible with sufficient infrastructure and gradual progress – and to overcome inequalities by providing financial inclusion to everyone between the Karakoram and the Arabian Sea.

The rich use credit/debit cards and electronic means, the poor can only rely on soiled notes possible infected by the coronavirus. Following China’s lead, emulated immediately by an increasing number of countries, SBP has promised to provide “disinfected” and/or “quarantined” cash, ie cash that is free of virus. This will take some doing! In this day and age where bureaucratic barriers are being taken down to contain both the health and subsequent economic crisis, there is a lot of rhetoric about AMA put no real action to put words into deeds. Why does not the govt simultaneously expedite the activation of the AMA Scheme eliminating/reducing all bureaucratic hurdles?



Amin Lalani is a subject matter specialist in Internet Retailer with several articles and research paper published so far. He has done M.Phil from IoBM in Marketing with emphasis on Internet Retailing. Besides academia he has various other certification like SAP, Google Analytic, Microsoft Small Business Solution Provider and more.

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