Can Trinidad and Tobago become a cashless society?

Part One

As more countries adopt digital payment systems, places like Norway, China and Thailand have significantly reduced cash transactions, reaping the benefits of a more efficient and secure economy. TT can follow this path, aiming to lower cash usage to under 20 per cent, but we have a long way to go.

In TT, even going paperless is a challenge – many government ministries and major institutions still rely on copybooks for record-keeping.

If we can't eliminate paper, reducing cash will require significant work. Still, it’s essential for the population to understand why the world is moving away from cash and how this shift can benefit our country.

This article explores the reasons behind this global trend, the challenges we face and the lessons we can learn from nations that have successfully transitioned to a less cash-reliant society.

Why are countries going cashless?

The global shift toward cashless economies is driven by convenience – digital transactions are faster, more secure and cheaper than cash.

They also enhance transparency, reducing fraud and corruption. Countries like Norway and China have streamlined transactions and lowered costs by cutting back on cash handling.

Digital payments also promote financial inclusion, especially for rural and low-income groups. However, in TT, distrust in financial institutions and political fear-mongering have slowed adoption.

Fears of government control over accounts exist even in cash-based systems, as the government can already freeze assets through legal processes.

Digital systems don't create new risks, they simply change the format.

Benefits of reducing cash usage

There are numerous benefits to reducing the reliance on cash in any economy.

• Increased efficiency: Digital payments are quicker than cash transactions, making them more efficient for both businesses and consumers.

This can also reduce long lines in retail environments and improve the overall customer experience.

• Reduced crime: Cash-based societies are more vulnerable to theft, robbery and other forms of criminal activity.

Digital transactions, by contrast, are traceable and reduce the likelihood of illicit activities such as money laundering and tax evasion.

• Greater transparency and accountability: Digital payments create records that are easy to track, making it harder to hide corrupt practices or tax fraud.

For governments, this can mean higher tax compliance and more accurate data on economic activities.

• Enhanced financial inclusion: In regions where people may not have access to traditional banks, digital payment solutions can provide a way to engage in the economy through mobile banking or fintech platforms.

Challenges of a cash-heavy society

Countries that rely heavily on cash face several distinct challenges.

• Higher operational costs: Cash is expensive to print, distribute and manage.

Banks and businesses spend significant amounts of money on security and logistics to handle cash transactions.

• Increased criminal activity: A cash-based society is more prone to robberies and other cash-related crimes.

This includes not just individual theft but also organised crime, which often depends on cash to operate undetected.

• Lack of financial inclusion: Cash-based societies can exclude those who don’t have access to physical banking locations.

A significant percentage of people in rural areas or low-income groups may be unbanked, limiting their access to financial services.

Lessons from Norway, China and Thailand

Countries around the world have taken different approaches to reducing their reliance on cash.

Here are some key takeaways that TT could apply.

• Norway: A cashless pioneer, Norway has been at the forefront of the cashless movement, with more than 95 per cent of its transactions now conducted electronically.

The country achieved this by investing heavily in digital infrastructure and encouraging businesses to adopt card payments.

TT could follow Norway's example by focusing on expanding digital payment options and incentivising businesses to reduce cash transactions.

• China: The country's transition to digital payments has been driven by mobile payment platforms such as WeChat Pay and Alipay.

These platforms are widely used, even by street vendors, making digital transactions accessible to all levels of society.

For TT, mobile payment systems could be an effective way to promote financial inclusion and make digital transactions easier for small businesses and vendors.

• Thailand: Balancing tradition and modernity, Thailand has embraced digital payments while maintaining a small percentage of cash transactions, achieving a balanced approach. Government policies such as tax incentives for businesses that adopt digital payments and campaigns to promote digital literacy among the population have been critical in this transition.

TT could consider similar tax incentives and public education campaigns to ease the transition toward digital payments.

While these countries have successfully reduced their reliance on cash, the journey for TT will require time, effort and education.

The goal isn’t to eliminate cash completely but to minimise its use, creating a more efficient and secure economy.

Next week, we will dive into the practical steps TT can take to reduce cash usage and embrace digital solutions.

It's important to remember that this transition is about striking a balance, ensuring cash remains an option while reducing its dominance in daily transactions.

Stay tuned!

Keron Rose is a digital strategist who works with businesses to build their digital presence and monetise their platforms.

Learn more at KeronRose.com or listen to the Digipreneur FM podcast on Apple podcast, Spotify, or Google podcasts.