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By Alex Vavilov, Chief Commercial Officer for Stenn International 


While no nation has forgone cash yet, it is becoming an increasingly popular idea around the world, with many developed countries making progressive strides to becoming cashless. In Sweden, for example, less than one in ten were using cash in 2020, with the country planning to go totally cashless by 2023.  

Cash is still the widely preferred payment option of choice in developing countries but there is a shift. One report predicts that emerging markets will be at the forefront of the transformation to a cashless society.


I explore how a cashless society can help boost economies and local businesses in developing nations.  

#1 Promoting economic recovery


While many issues play a role in financial exclusion, individuals and SMEs running in areas with more of an informal economy find it extremely challenging to access and use formal financial offerings.

The share of small firms with a loan from a financial institution is smaller in bigger informal markets, while the use of cash and informal borrowing are more common when the informal economy signifies a larger percentage of the total economy.

Digitisation, or the adoption of digital technologies and approaches – like cashless payment options – offers a transformational solution to financial exclusion driven by informality.

Several global examples demonstrate how cashless payments are economic  style=”font-weight: 400;”>drivers. Bangladesh’s bKash enables mobile phone transfers, which has prompted growth and enhanced financial presence in that country. The benefits come not from more money but from digital’s role in streamlining the method of sending and receiving payments.

Another possible benefit of a cashless society is the opportunity this creates for alternate currencies, like hyper-local currencies. These aim to encourage spending in local markets and are already developing worldwide, with the likes of TEM (Alternative Monetary Unit) in Greece.


#2 Fighting corruption


Physical cash can be unsigned and undetectable, allowing it to play a large role in crime, including tax evasion, bribery, corruption, and counterfeiting. However, cashless payments leave behind traceable records, making it difficult to disguise income, hide transactions and evade taxes.

Offering a new range of payment options helps SMEs entice a new tech-savvy group of customers and allows them to compete with larger businesses, as their audiences become more familiar with digitised payments.

With technologies like voice and face-recognition, being inbuilt into payment technologies, transactions also have the potential to become more secure, while payments can be guarded by end-to-end encryption and fraud-preventing technology.


#3 Reducing costs

Reducing cash payments eliminates the costs associated with handling and transporting cash.

For one thing, counting cash can take time, both for the customer and the employee. Research shows that cashless businesses report benefits like faster transactions with approximately 5 to 15 percent more transactions recorded per hour. Faster, cashless transactions mean fewer employees are needed to count and manage register balances during the day, so staff can spend more time helping customers instead.

Costs for transporting and handling cash decline too as cashless businesses are not required to pay bank fees to deposit and process cash, nor do they need to pay for armoured carriers to transfer money to and from the bank.

#4 Remaining competitive

The growth in digitised payments is likely to be uneven across continents and will depend on infrastructure readiness, e-commerce and mobile-money penetration, and regulatory changes among other factors, in each emerging market.

To find competitive financial service rates businesses in developing countries need to understand which payment mechanisms are available for their expenditure types and intentionally re-balance payment processes towards digital structures which will deliver the desired benefits for a reasonable cost.

Digital invoice-related services open new revenue streams and cost saving opportunities for SMEs hoping to remain competitive. These businesses need easy-to-use products for their day-to-day financial administration and management like issuing customer invoices, processing, and payments of supplier invoices.

Such services can be a real-time and single source of information for the SME owner about payables, receivables, and forecasted cash-flow position of the company, which increases efficiency and reduces credit risk. Digital invoice-related services also save time and money, by eliminating potentially costly mistakes by using automated processes.

As we move through 2022, financing for small businesses in developing countries will be transformed by digital practices that continue to grow in importance.  By promoting global economic recovery and making it easier for these places to embrace the future of a cashless society, local businesses will move from surviving…to thriving.


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