The recent Coronavirus disease 2019 (COVID-19) pandemic has led to an increase in the use of electronic commerce (e-commerce) platforms as countries began to implement preventive measures such as lockdowns that restricted society’s mobility. This has led to a surge in cashless payments, which require zero contact, to curb the spread of the disease. Cashless payments which are also known as digital payments and electronic payments (e-payments) are rapidly replacing the traditional medium of exchange, money (Tee & Ong, 2016). The realisation that cashless payments provide numerous benefits has led to a global shift towards a cashless society. Despite this, some countries are slower than others in adopting cashless transactions. For instance, Arango et al. (2020) claimed that the lowest digital payment rates per capita (per person) in 2015 are in developing countries, notably Bulgaria, Colombia, Mexico, and Romania. This is reasonable considering that the economies of these countries are progressing slower than other countries such as Norway and Sweden, where the prevalence of cash is declining while digital payments are increasing. Additionally, the elevated level of socioeconomic inequalities in some countries is another contributing factor to their continued reliance on cash transactions. According to Srouji (2020), socioeconomic inequality and dependency on cash have a positive correlation. It was emphasised that widespread inequality causes more challenges when introducing the usage of monetary payments. Though it may be impossible to eliminate cash payments, cashless payments should be the main payment method globally because cashless transactions can lower transaction costs, enable transparency, and drive economic growth & development.

Cash payments have been the primary form of payment for many years and are still widely utilised today. However, there are many hidden costs associated with it. These can be reduced through cashless payments.

2.1 Reduction of Cash Management Costs

An article by Yakean (2020) stated that the costs of processing, transporting, and storing cash will be minimised if cash payments were reduced. Digital payments decrease the need for physical infrastructure and equipment. For example, banks no longer need to hire armoured vehicles to transport cash from one place to another. Similarly, as fewer money vaults are constructed, the cost of recruiting security personnel is likewise reduced. A study stated that the development of digital payments could result in yearly cost savings for Malaysia of up to 1% of its gross domestic product (GDP) (Bank Negara, 2010, as cited in Ishak, 2020). This is because electronic payment can drastically lower cash and cheque handling costs while also allowing resources and labour to be reallocated.

2.2 Influence of the COVID-19 Pandemic on the Implementation of Cashless Payments

Although many businesses accept digital payments, cash is still the main payment method used and very few have gone completely cashless. This is because cash has existed for a long time and customers are accustomed to using cash. However, this started to change when the COVID-19 pandemic forced lockdowns worldwide. Online shopping platforms and delivery services grew popular, increasing the use of digital payments. According to research conducted by Tripathi and Dave (2022), the second wave of COVID-19 in India caused an increment of 260% in the usage of digital payments for e-commerce (electronic commerce) and retail. As society progressed and the pandemic became endemic, businesses continued to implement cashless payments. Businesses realised it was convenient and cost-effective. As the volume of digital payment increases, the unit cost of transactions decreases because the initial investment is spread over many more transactions. Ananda et al. (2020) reported that cashless payments made through the internet and e-wallets cost less than cash-based transactions.

2.3 Prevention of Employee Theft

Furthermore, businesses that implement cash payments are at risk of employee theft. According to the Australian Federal Police, employee theft costs businesses approximately 2 billion AUD annually (James, 2014, as cited in Goh & Kong, 2018). Cashless payments greatly reduce the risk of employee theft as the customer pays directly into the system. No tangible cash is involved in the transaction as the payment is performed digitally. Consequently, the rate of theft decreases as employees do not have direct access to physical cash earned by the business. Businesses will save costs as the use of digital payment reduces the businesses’ expenditure on anti-employee theft measures.

Hence, countries should implement cashless payments as they can increase efficiency and lower the costs of doing business.

Besides reducing costs overall, implementing cashless payment as a habit can enable transparency in society.

3.1 Crimes Decrease as Transparency Increases

Primarily, Vimal et al. (2021) suggested that as transparency increases, the prevalence of hawala activities, tax evasion, money laundering, bribery, and corruption would drastically decline. Hence, a cashless society prevents money laundering and terrorism financing because these crimes mainly require financial transactions. To illustrate, Rudresha (2019) asserted that a cashless economy substantially lowers the crimes of pickpocketing and cash robbery in populated areas and large cities. Henceforth, it is evident that financial crimes would decline and diminish over time.

3.2 Easy Identification of Fraud Cases

Additionally, according to Jain and Jain (2017), the major advantage of a digital society is that it eventually leads to a reduction in crime. This is emphasized because online transactions are easy to keep track of, which makes it more convenient to identify fraud scenarios. Rudresha (2019) also suggests that the disclosure and accountability of a country would strengthen as electronic payments are visible, transparent and can be monitored. Most significantly, this enhances the creditability of a corrupt-free society.

3.3 Increased Security for Better Transparency

At the present time, Markiewicz and Sullivan (2017) highlighted that digital transaction security is being strengthened to maintain transparency. One-time password (OTP) authentication and 3D Secure (3DS) are two methods that are incorporated for better security. Users are verified by a security system called 3DS during transactions and this allows the likelihood of fraud to significantly decrease. In addition, Moon et al. (2022) clarified that more strategies, such as credible password patterns, proper system software maintenance, secure network selection, biometrics alternatives, sandbox mechanisms against forceful transactions, two-factor authentication, and two-level security implementation, have improved protection against unauthorised data and cybercrimes. As a result of greater security, cybercrimes may gradually decline, and digital payments may become safer to use.

Consequently, a cashless society promotes transparency and crime rates will decrease due to reduced risk of fraud, theft, and other crimes.

While cashless payments can play an essential role in crime reduction, they are also one of the leading factors that drive economies today as they assist in simplifying the means of money exchange.

4.1 Minimizing Expenses of Banknote Production

Additional expenditure for producing currency will be imposed when paper money serves as the principal means of exchange for goods (Aminata & Sjarif, 2020). For instance, Meena (2017) noted that The Reserve Bank of India (RBI) incurred a cost of 27 billion Indian Rupees to print money in 2015. Moreover, Thirupathi et al. (2019) stated that implementing cashless payment systems lowers the spending on printing currency notes. Considering that the system eliminates the cost incurred by the government for identifying counterfeit notes, they provide a boost to the country’s economy.

4.2 Enhance the Efficiency of Fund Transactions

Moreover, efficiency gains result from eliminating the need to count and sort money as well as the reduced time consumed in collecting funds (Kumari & Khana, 2017). This is evident when GDP increases by 0.4% for every 1% decrease in the amount of cash in circulation in the economy (Zandi et al., 2013 as cited in Ishak, 2020). The government will have better tax control as a cashless economy stipulates transparency in business operations which reduces the occurrence of tax evasion. Therefore, it allows an increase in tax revenue for infrastructure development, both of which are vital for economic growth (Ha, 2020).

4.3 Encourage Consumer Expenditure

Besides, cashless transactions offer consumers access to instant credit, facilitating smoother consumption of goods (Wong et al., 2020). The overall amount of consumer spending on Visa and the volume of transactions have grown by double-digit percentages annually. Large shopping malls (65%), supermarkets (60%), and bill payments (57%), among other merchants, are predicted to use digital payments more frequently (Kee et al., 2021). As a result, an increase in consumer spending follows as the ease of purchasing goods and services is granted.

Cashless payments provide simplicity and convenience to users which promote a nation's economic growth and development of the country.

As cashless transactions continued to be implemented in many countries, the public has become more concerned about security and privacy issues, such as hacking, stolen personal identification number (PIN), and duplication of cards, faced by cashless payments.

5.1 Security Software and Applications

Contrary to their concerns, many preventive steps have been taken as new software and have been created to combat this issue. This includes two-step authentication, facial recognition and passwords consisting of digits, uppercase and lowercase letters, and symbols. Saxena et al., (2019) stated that applications take additional measures to stop scammers, identity thieves and privacy violations. For example, two-factor authentication has been included in many devices as a security protocol to defend against privacy breaches. This security measure adds another layer of protection as it requires the user to perform a step to gain access. For instance, a new device logging into the user’s Google Drive account would result in a push notification sent to the user. The user has the authority to allow or deny access to the new device.

5.2 Security Measures for Cyber Theft

Moreover, platforms that include payment methods are equipped with various security measures to prevent cyber theft. Certain well-known platforms include electronic commerce websites such as Shopee and Lazada. These platforms have many security features as money is constantly being debited and credited in the user’s account. According to Kumari (2018), an online transaction is a password-protected payment system that transfers money upon the request of the user. To illustrate, before a user can make a payment online, they must log in to their account with the correct username and password. After the user logs in and selects the desired payment method, they would be redirected to a payment gateway such as Financial Process Exchange (FPX) to make the payment. This requires a one-time passcode (OTP) from the bank. Once the passcode has been entered, the platform will notify the user of the status of their purchase.

This extensive layer of security makes it difficult for hackers to gain access to a user’s account as any step performed wrongly would cause a time-out on the user’s account. Therefore, it is evident that many preventive measures have been implemented to ensure the security and privacy of the user.

In conclusion, this research has investigated the issue of whether cashless transactions should be the main form of payment worldwide from various angles. It provides insight into cashless transactions by considering the benefits yielded such as reducing costs, enabling transparency, and encouraging economic growth and development of a country. It is undeniable that cashless transactions have played a leading role in the advancement of both local businesses and the e-commerce industry. Cashless transactions have allowed businesses to save costs and resources that are associated with the management of physical cash. Financial crimes are minimised as cashless transactions provide greater transparency. Cashless transactions also facilitate the economic growth and development of a country. Although there are numerous concerns over the security and privacy of cashless transactions, multiple security measures have been developed to address these issues. Consequently, the authors of this paper have come to a unanimous conclusion that cashless transactions will soon become the primary method of payment worldwide. Therefore, it is society’s responsibility to utilise the various payment methods available appropriately without exploiting their security flaws.

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