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How a Cashless Society Would Harm the Poor

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Businesses and governments are going cashless. Anti-poverty advocates say the change is problematic for low-income people, but they disagree on how to solve it.

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Wearables, hearables and implantables; is this the future of financial transactions? Paid and presented by OFX.

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For the 2.5 billion adults who transact exclusively in cash due to lack of effective access to formal financial services, having digital access to financial services may be transformational. The benefits of digital financial inclusion for the financially excluded and underserved are the following, among others:

access to formal financial services - payments, transfers, savings, credit, insurance, securities, etc. Migration to account-based services typically expands over time as customers gain familiarity with - and trust in - a digital transactional platform. Government-to-person payments, such as conditional cash transfers, that can enable digital stored-value accounts may provide a path for the financially excluded into the financial system

typically lower costs of digital transactional platforms - both to the provider and thereby the customer - allow customers to transact locally in irregular, tiny amounts, helping them to manage their characteristically uneven income and expenses

additional financial services tailored to customers' needs and financial circumstances are made possible by the payment, transfer, and value storage services embedded in the digital transaction platform itself, and the data generated within it

reduced risks of loss, theft, and other financial crimes posed by cash-based transactions, as well as the reduced costs associated with transacting in cash and using informal providers

it can also promote economic empowerment by enabling asset accumulation and, for women in particular, increasing their economic participation

Digital financial inclusion also carries risks for the same vulnerable financially excluded and underserved customers that benefit from the opportunities, mainly:

novelty risks for customers due to their lack of familiarity with the products, services, and providers and their resulting vulnerability to exploitation and abuse.

agent-related risks due to the new providers offering services are not subject to the consumer protection provisions that apply to banks and other traditional financial institutions

digital technology-related risks can cause disrupted service and loss of data, including payment instructions (for example, due to dropped messages), as well as the risk of a privacy or security breach resulting from digital transmittal and storage of data

Customer uptake of digital financial services in many markets suggests that on balance these risks may not be perceived to outweigh the benefits of being financially included. Nonetheless, the case is strong for appropriate regulation and supervision.

The key regulatory issues raised by digital financial inclusion relate to agents, anti-money laundering and countering financing of terrorism (AML/CFT) rules, regulation of e-money, consumer protection, payment system regulation, and competition. Many of these issues fall within multiple regulators' competencies, requiring effective communication and collaboration among them.

The models of digital financial inclusion emerging in countries around the world introduce new market participants and allocate roles and risks (both new and well known) differently from the traditional approaches to retail financial service delivery. Some risks are common to most or all approaches to digital financial inclusion. The engagement of mobile network operators (MNOs), whether as e-money issuers or as a channel for a bank or similar provider, presents certain potential risks that differ from approaches without MNOs. Some risks are triggered by the model of the digital transactional platform in question. Finally, some risks relate to the provision of additional financial services beyond the payments, transfers, and value storage services offered by the digital transactional platform itself.

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This publication summary is based on the G20 GPFI Issues Paper (PDF, 24 pages) disseminated for the 2nd GPFI Conference on Standard-Setting Bodies and Financial Inclusion that was held on October 30-31, 2014 in Basel, Switzerland.

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Cash is disappearing. Here’s what that means for tips | CNN Business

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Gone are the days of running to the ATM in order to get cash to tip your server or hair stylist. If cash was going out of style before the pandemic, consider its reputation ruined by infection concerns that have pushed consumers toward cashless alternatives — especially when it comes to tipping.

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Cashless payments exclude older people, committee hears

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People aged 60 or older are disproportionately likely to experience digital and social exclusion as a result of society relying more on cashless payments, Age Action has said.

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NY legislature backs bill to protect cash

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The state’s two chambers voted in favor of a bill that requires New York retailers to accept cash, following a trend set by other states and cities.

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A cashless society: what are the pros and cons?

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Here we explore the pros and cons, impacts, and effects of a cashless society and look to a future where traditional currency may eventually be history.

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Middlesbrough’s cashless plan risks ‘digital exclusion’ - BBC News

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Middlesbrough Council’s cash office is now closed following a “significant reduction” in demand.

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Are we sleepwalking towards a cashless future? – Lessons from Sweden | Visa Navigate

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Insights on future of money from Visa Navigate

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The Emerging Technologies of Digital Payments and Associated Challenges: A Systematic Literature Review

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The interplay between finance and technology with the use of the internet triggered the emergence of digital payment technologies. Such technological innovation in the payment industry is the foundation for financial inclusion. However, despite the continuous progress and potential of moving the payment landscape towards digital payments and connecting the population to the ubiquitous digital environment, some critical issues need to be addressed to achieve a more harmonious inclusive and sustainable cashless society. The study aims to provide a comprehensive literature review on the emerging digital payment technologies and associated challenges. By systematically reviewing existing empirical studies, this study puts forward the state-of-the-art classification of digital payment technologies and presents four categories of digital payment technologies: card payment, e-payment,mobile payment and cryptocurrencies. Subsequently, the paper presents the key challenges in digital payment technologies categorized into broad themes: social, economic, technical, awareness and legal. The classification and categorization of payment technologies and associated challenges can be useful to both researchers and practitioners to understand, elucidate and develop a coherent digital payment strategy.

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Many financial experts are predicting the death of cash as a means of paying for the goods and services we enjoy. As contactless cards, mobile payment platforms, and Open Banking drive faster development of digital payment options, the need to carry cash is significantly diminished.

Only 34 percent of payments in the UK are now made using cash and, in 2017, debit cards overtook cash as the most popular payment method for the first time. Likewise, in Sweden, cash now accounts for only two percent of all transaction values, with that number predicted to fall to one percent by next year.

The situation will likely soon arise where the cost of maintaining a cash-based system will outweigh its value, and this is the point at which we may see cash becoming a thing of the past.

Cashless Society

It's highly probable that businesses will lead the drive to a cashless society with rising bank charges and the rapid closure of significant portions of the physical branch network (something we've discussed at length in previous articles) being the most likely motivator.

However, if businesses force the switch to a cashless society before consumers are prepared for it, there could be devastating consequences. A rush to a cashless society could lead to large swathes of the population becoming financially excluded and at risk of exploitation as they find themselves unable to adjust to the new status quo. The elderly members of society are at particular risk, as they are often not confident using digital payment methods or online banking services.

According to Which?, the UK is likely to go cashless in the next 15 years, but nearly 50 percent of the population would struggle if access to physical money was removed - that's around 25 million people.
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Banks, FinTechs, and government organizations need to work together to ensure the switch to a cashless society is as smooth and gradual as it needs to be, and that no sections of society are left out in the cold and financially vulnerable as a result.

There are plenty of other potential issues with a cashless society which must be considered in order to establish an appropriate state of preparedness.

Digital transactions are easily tracked and recorded, which raises questions about data security. There have been several high profile data breaches in recent years - including Visa and Mastercard becoming compromised during the 2017 Equifax intrusion - meaning the industry still has a long way to go before it can effectively guarantee protection. With no cash system to fall back on, these kinds of security threats could potentially be devastating in a cashless society. The risk of other crimes such as identity theft, account takeovers, and fraudulent transactions will also increase when digital payments become the only option.

Many banks are also relying on outdated infrastructure with decades-old IT systems increasing the risk of glitches, crashes, and mistakes. This could potentially leave people without access to their money at crucial times, so significant investment would be required by financial brands to bring their systems up to date before switching to cashless.

The inability to withdraw cash from the financial system would also give governments and banks greater control of the economy via monetary policy. There would have to be significant legislation drawn up to make sure that no organization is able to abuse such a system in this way.

It's Not All Bad Though

It may seem like there is a lot of risk associated with switching to a cashless society, but there are positives to be found as well.

The anonymous and untraceable nature of physical cash makes it the ideal format for organized criminals to use. Those involved in bribery, tax evasion, money laundering, counterfeiting, corruption, and terrorist financing all rely on this aspect of cash to carry out their crimes, which would become significantly more difficult with trackable and traceable digital payment systems. Concealing income and tax evasion also becomes even more difficult without the "cash in hand" option of receiving payment.

While the potential for data breaches will be present, the range of tech-based authorization methods can also make digital banking more secure than cash. Biometrics, such as retinal scans, facial recognition, and voice, can all make your smartphone-based payment options more safe and secure than your wallet ever could be.

Final Thoughts

There are many risks inherent in the switch to a cashless society. However, with the change being considered all but inevitable, it becomes crucial for all organizations involved in the economy to work together responsibly and make sure no person is left behind and the vulnerabilities in a cashless system cannot be exploited by those with nefarious intentions.
The risks and opportunities of a cashless society are set to hot topics at for more information and insights. Future Branches 2019, taking place this November at the Hilton Austin, Austin, TX.

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Here's How a Cashless Society Will Impact the World

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Many financial experts are predicting the death of cash as a means of paying for the goods and services we enjoy. As contactless cards, mobile payment platforms, and Open Banking drive faster development of digital payment options, the need to carry cash is significantly diminished.

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Exclusion in a cashless society is becoming our reality, with eWallets, cards and bank transfers surviving as the most popular payment methods in 2018

The Analysis has revealed that if current trajectories towards digitisation continue, 8.17 million vulnerable members of society would suffer exclusion in a cashless society due to their dependence on physical payment methods. This includes 5.2 million households, or 80% of elderly homes, that rely on cash.

Also at risk of digital exclusion in the UK are the 320,000 estimated people living rough on the streets, 1.3 million adults without bank accounts and 1.352 million people with physical or mental health issues.

Global Payment Methods collates official reports to reveal the potential societal repercussions of digital exclusivity, whereby coins, banknotes and cheques are replaced by eWallets, cryptocurrencies and bank cards.

This rise in alternative payment methods has also led to a decline in ATMs, with the number in the UK dropping from 54,000 to 49,700 between January 2018 and July 2019 alone.

Since 2015, digital payment methods have risen to meet the needs of online shoppers, with eWallets and bank transfers the most popular in 2018. Cash is forecasted to be replaced by debit card as the leading payment method by the end of this year.

This predicted shift would have detrimental societal impacts worldwide, with 1.7 billion adults without access to a bank account, 100 million people reported to be homeless and 617 million people aged 65 and over around the globe - many of whom will struggle to go digital.

There are 450 million people currently suffering from mental or neurological disorders according to the World Health Organization (WHO), with one in four people predicted to be affected by mental illness at some point in their lives.

These figures mean that a staggering 1.875 billion people could be isolated from a digitised society at any one time, due to mental health problems alone.

WHO has pleaded for governments to provide affordable treatments for mental health, as two-thirds (67%) of people with a known disorder never seek help from a health professional. Currently, at least 40% of countries have no mental health policy and over 30% have no mental health legislation.

Establishing affordable and equal access to mental health treatments is more important now than ever before, with the latest figures implying that debit cards, credit cards and eWallets will eradicate cash usage by 2022. Exclusion in a cashless society is an immediate prospect, not a theory.

Helen Undy, Chief Executive of the Money and Mental Health Institute, said:

"When you're struggling with your mental health it can be much harder to stay in work or manage your spending, while being in debt can cause huge stress and anxiety - so the two issues feed off each other, creating a vicious cycle which can destroy lives.

"Ensuring that money advice is routinely offered to people using mental health services would increase recovery rates, as well as improving the financial wellbeing of the 1.5 million people currently dealing with this terrifying combination of problems."

To read more about the impacts of digital exclusion in Global Payment Methods, look here.

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King County Council Considers Banning Cashless Retailers

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A cashless society might sound like something out of science fiction, but it's on its way. Many present-day financial practices and transactions already happen without cash, and many financial institutions, service companies, and even governments are proponents of the shift.

Key Takeaways

What Is a Cashless Society?

A cashless society is one where cash-paper and coin currency-isn't used for financial transactions. Instead, all transactions are electronic, using debit or credit cards or payment services like PayPal, Zelle, Venmo, and Apple Pay. Many countries are moving in this direction, but it's difficult to tell which ones will eliminate cash altogether.

In addition to logistical challenges, several social issues need to be addressed before a society can give up on cash entirely.

The benefits and disadvantages below can give you an idea of the myriad of effects going cashless can have on money and banking as you know it.

Benefits of a Cashless Society

Those with the technological ability to take advantage of a cashless society will likely find that it's more convenient. As long as you have your card or phone, you have instantaneous access to all your cash holdings. Convenience isn't the only benefit. Here are some other benefits.

Lower Crime Rates

Carrying cash makes you an easy target for criminals. Once the money is taken from your wallet and put into a criminal's wallet, it'll be difficult to track that cash or prove that it's yours. One study by American and German researchers found that crime in Missouri dropped by 9.8% as the state replaced cash welfare benefits with Electronic Benefit Transfer (EBT) cards.

Automatic Paper Trails

Similarly, financial crime should also dry up in a cashless society. Illegal transactions, such as illegal gambling or drug operations, typically use cash so that there isn't a record of the transaction and the money is easier to launder. Money laundering becomes much harder if the source of funds is always clearly identifiable. It is harder to hide income and evade taxes when there's a record of every payment you receive.

Cash Management Costs Money

Going cashless isn't just convenient. It costs money to print bills and mint coins. Businesses need to store the money, get more when they run out, deposit cash when they have too much on hand, and in some cases, hire companies to transport cash safely. Banks hire large security teams to protect branches against physical bank robberies. Spending time and resources moving money around and protecting large sums of cash could become a thing of the past in a cashless future.

International Payments Become Much Easier

When you travel, you may need to exchange your dollars for local currency. However, if you're traveling in a country that accepts cashless transactions, you don't need to worry about how much of the local currency you'll need to withdraw. Instead, your mobile device handles everything for you.

Disadvantages of a Cash-Free World

Depending on your perspective, going cashless might be more problematic than beneficial. Here are some of the major downsides associated with a cashless financial system.

Digital Transactions Sacrifice Privacy

Electronic payments aren't as private as cash payments. You might trust the organizations that handle your data, and you might have nothing to hide. However, the more information you have floating around online, the more likely it is to wind up in malicious hands. Cash allows you to spend money and receive funds anonymously.

Cashless Transactions Are Exposed to Hacking Risks

Hackers are the bank robbers and muggers of the electronic world. In a cashless society, you're more exposed to hackers. If you are targeted and somebody drains your account, you may not have any alternative ways to spend money. Even if you're protected under federal law, it will still be inconvenient to restore your financial standing after a breach.

Technology Problems Could Impact Your Access to Funds

Glitches, outages, and innocent mistakes can also cause problems, leaving you unable to buy things when you need to. Likewise, merchants have no way to accept payments when systems malfunction. Even something as simple as a dead phone battery could leave you "penniless," in a sense.

Economic Inequality Could Become Exacerbated

Unless special outreach efforts are made, the poor and unbanked will likely have an even harder time in a cashless society. If smartphone purchases become the standard way to transact, for example, those who can't afford smartphones will be left behind. The UK is experimenting with contactless ways to donate to charities and homeless individuals, but these efforts may not be developed enough yet to substitute cash donations.

Payment Providers Could Charge Fees

If society is forced to choose from just a few payment methods, or if one app becomes the standard payment app, the companies who develop these services might not offer them for free. Payment processors may cash in on the high volumes by imposing fees, which would eliminate the savings that should come from less cash handling.

The Temptation To Overspend May Increase

When you spend with cash, you recognize the financial impact by physically taking the cash out of your pocket and giving it to someone else. With electronic payments, on the other hand, it's easy to swipe, tap, or click without noticing how much you spend. Consumers may have to rethink the ways they manage their spending.

Negative Interest Rates Could Be Passed Onto Customers

When all money is electronic, negative interest rates could have a more direct effect on consumers. Countries like Denmark, Japan, and Switzerland have already experimented with negative interest rates.

Note

According to the International Monetary Fund, negative interest rates reduce bank profitability, and banks could be tempted to hike fees on customers to make up that deficit. Banks are limited in their ability to pass on those costs because customers can simply withdraw their cash from the bank if they don't like the fees. In the future, if customers can't withdraw cash from the bank, they may have to accept any additional fees.

What Does a Cashless Society Look Like?

Without cash, payments happen electronically. Instead of using paper and coins to exchange value, you authorize a transfer of funds from a bank account to another person or business. The logistics are still developing, but there are some hints as to how a cashless society might evolve.

Credit and debit cards: Cards are among the most popular cash alternatives in use today, but cards alone might not be enough to support a 100% cashless society. Mobile devices could become a primary tool for payments instead.

Electronic payment apps: Apps like Zelle, PayPal, and Venmo are helpful for person-to-person payments (P2P payments). In addition, bill-splitting apps allow friends to split their bills easily and fairly. Fintech companies like Stripe, Adyen, and Fiserv support business-to-consumer (B2C), business-to-business (B2B), or what they now merge into account-to-account (A2A) online payments in a reliable and speedy fashion.

Mobile payment services: These services, along with mobile wallets like Apple Pay, provide secure, cash-free payments. Many nations that use cash sparingly have already seen mobile devices become common tools for payments.

Virtual currencies: Cryptocurrency is already part of the discussion. Crypto is used for money transfers, and it introduces competition and innovation that may help keep costs low. However, there are risks and regulatory hurdles that make cryptocurrencies impractical for most consumers, so they might not yet be ready for widespread use.

Examples of Cashless Societies

Several nations are already making moves to eliminate cash, with the push coming from both consumers and government bodies. Sweden and India are two notable examples with two different outcomes.

It's not uncommon to see signs that say, "No Cash Accepted" in Swedish shops. According to the European Payments Council, cash transactions accounted for just 1% of Sweden's GDP in 2019, and cash withdrawals have been steadily declining by about 10% per year. Consumers are mostly happy with this situation, but those who struggle to keep up with technological developments continue to rely on cash.

Sweden is gearing up to become the first cashless nation in the world, with an economy 100% digital by 2023.

The Indian government banned 500 and 1,000 rupee notes in November 2016 in an effort to catch criminals and those working in the informal economy. The implementation was controversial, in part, because these notes made up 86% of currency in circulation. However, criminals weren't punished for hoarding untraceable cash, which had been the intent of the move.

The Economic Times cited the Reserve Bank of India as it reported that electronic transactions had increased temporarily, but cash returned to pre-demonetization levels by the end of 2017.

Note

The Bottom Line

With the many technological and societal moves towards digital and virtual financial transactions, cash currency is becoming less and less common. However, the shift to a fully cashless society has many potential drawbacks, and only time will tell whether cash holds a special niche.

Frequently Asked Questions (FAQs)

What happens to the cash in circulation if a society goes cashless?

Who wants a cashless society?

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A cashless society might sound like something out of science fiction, but it's on its way. Many present-day financial practices and transactions already happen without cash, and many financial institutions, service companies, and even governments are proponents of the shift. A cashless society is one where cash-paper and coin currency-isn't used for financial transactions.

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Explore the pros and cons of a cashless society, from convenience and transparency to financial exclusion and cybersecurity risks.

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Lawmakers in the state are considering legislation that would require merchants to accept cash payments.

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Digital spending is reaching new heights in 2025 - but does this mean going cashless is right for your business?

We may receive a commission from our partners if you click on a link to review or purchase a product or service. Click to Learn More

The concept of a cashless society has been around for decades. But with 84% of payments in the US being made digitally in 2025 (according to Clearly Payments), the transition from physical currency could take place sooner than we once thought. For businesses adapting to this shift, the best mobile POS systems can help streamline digital transactions and ensure a seamless cash-free experience.

Yet, while the convenience of contactless POS payments remains unmatched, many Americans aren't on board with going fully cashless. This poses a pressing question for businesses: Is 2025 too soon to consider going cash-free?

We've spoken to financial experts to gauge how likely it is that the US will switch to a fully digital economy in the near future. We've also weighed up the benefits and drawbacks associated with going cashless, to help you decide if it's the right move for your business.

Looking for a new POS system? Toast is tech.co's top-rated option for hospitality businesses. It delivers powerful tools to boost restaurant efficiency and profits.

Key Takeaways

A cashless society is coming: Due to the influence of COVID-19 and the growing popularity of digital payment methods like digital wallets, digital payment apps, and cryptocurrency, the US is well on its way to becoming a cashless society.

The US won't be the first cashless society: The US isn't as quick to adopt digital payment methods as the Asia-Pacific region, with countries like South Korea and China currently leading the pack when it comes to cashless living.

Going cashless pays for businesses: There are tons of incentives for businesses to go cashless. For example, ditching physical tender can reduce fraud and theft, increase convenience for buyers and vendors, and boost consumer spending as a result.

Ditching cash isn't without its risks: Going fully digital can make businesses more vulnerable to cybercrime, while also excluding members of the unbanked population from accessing your goods or services.

Investing in the right tech matters: If you're considering taking the plunge, we recommend investing in a POS system that's able to accept a wide range of digital payment methods, before carefully selecting which options will best serve your customer base - be it chip-and-pin, contactless, or even cryptocurrency.

What Is a Cashless Society?

A cashless society is one where neither cash, coins, nor other forms of physical tender are used for financial transactions. Instead, payments are made through digital payment methods like debit cards, credit cards, mobile wallets, and mobile payment apps.

A card reader from SumUp, which takes payments via debit or credit card, mobile, or other forms of digital payment. Source: Tech.co original imagery
Cashless Society Statistics

To present a clearer picture of where society is heading, here are some statistics about cashless societies:

Two-fifths of Americans used no cash in 2022 (Source: Pew Research)

13.4% of American consumers have stopped using cash completely in 2024, compared to 11% in 2022 (Source: Capital One Shopping)

The average number of cash payments fell from 26% in 2019 to 20% in 2021 (Source: Federal Reserve)

Between 2012 and 2022, cheque transactions declined by almost half (Source: Federal Reserve)

The annual growth rate of digital payment is estimated at 9.25%, which could result in digital payments reaching $16.69 trillion by 2028 (Source: Statista)

70% of Americans believe that the US is becoming a cashless society (Source: Card Rates)

More than 23 million people in the UK used virtually no cash in 2021 (Source: The Guardian)

Cash only represents 1.3% of Sweden's GDP (Source: International Monetary Fund)

The number of cashless payments in the Asia-Pacific is forecasted to be higher than Europe and North America combined in 2026 (Source: Statista)

What Are the Benefits of a Cashless Society?

Not convinced of the advantages of going cashless? Here are some reasons dropping cash could benefit businesses and society at large.

Improves convenience

Digital systems can streamline practices by eliminating the need for bank runs and extra POS accessories like cash drawers. Therefore, one of the biggest reasons that businesses decide to go digital is convenience.

Saves costs

While the costs of digital payments can add up - with credit card processing fees averaging between 1.5% to 3.5% per card-based transaction - moving away from manual methods means that businesses will no longer need to cover banking costs associated with depositing and processing cash.

Helps to prevent fraud

Physical cash is much harder to track and trace, hence why it appeals to criminals and fraudsters. Switching to digital payment methods has been shown to reduce money laundering incidents and improve financial transparency in countries like Sweden and China, while also reducing cases of burglary.

Boosts consumer spending

Research shows consumers spend 160% more on credit card transactions than they would on cash transactions, likely because using tap payments and Venmo feels much more abstract. While this isn't ideal for the bank balance of consumers, it can provide valuable opportunities for businesses looking to maintain healthy profits.

What Are the Disadvantages of a Cashless Society?

So, going cashless sounds great, right? Well, while phasing out physical tender can deliver clear benefits to businesses, it's important to be aware of the potential drawbacks of a cashless society, too.

Increases financial exclusion

Around 5.6 million US households are currently unbanked, meaning that the occupants rely on cash to make daily purchases. By making digital methods mandatory, the most marginalized members of society will be affected, including members of the homeless population, who often rely on cash donations from the public in order to get back on their feet again.

Increased risk of cybercrime

While cashless businesses aren't likely to encounter traditional burglaries, digital systems are much more vulnerable to cyber attacks, and these types of crimes tend to cost businesses a lot more.

Lack of privacy

Since digital payments leave a digital trail, the experts that we spoke to raised concerns around data privacy. Cyrus Vanover, founder of personal finance site FrugalBudgeter, told Tech.co: "A cashless society could make it easier for governments and financial institutions to track individuals' financial transactions, raising concerns about privacy and surveillance."

Mandatory negative interest charges

If we ditched cash for good, normal citizens wouldn't be able to avoid paying negative interest rates imposed by central banks to curb the impact of inflation. Examples of this have already been seen in Japan, when the national bank introduced a policy that charged its users a negative interest rate of 0.1% back in 2016.

"Cashless payments can be a barrier for people who do not have access to technology or who are not familiar with digital payment systems." - Doug Carey, a chartered financial analyst and CEO of WealthTrace

In the table below, you'll find a quick at-a-glance overview of the pros and cons of a cashless society.

Cashless society

More convenient

Saves costs

Helps to prevent fraud

Boosts consumer spending

Increases financial exclusion

Increased risk of cybercrime

Lack of privacy

Mandatory negative interest charges

When Will Society Become Cashless?

While it's impossible to accurately predict when the US will move to a fully cashless society, a 2024 survey by Card Rates reveals that 70% of Americans believe that the nation is becoming a cashless society, with two in five respondents never usually carrying cash.

"Today you can actually conduct all aspects of your life without ever spending a single dollar bill."- Mario Almonte, Managing Partner at Almonte PR

The popularity of cash payments has been dwindling for some time, but the method took a massive hit during the first year of the pandemic. In this period, cash comprised just 19% of all transactions, representing a fall of 7%. The trend toward digital currency has accelerated ever since, with the number of card and phone payments climbing higher each year.

Due to the accessibility of digital payment options, Mario Almonte, managing partner of the financial PR company Herman & Almonte, explains that for many US citizens, a cashless society is already here. "Every vendor offers cashless payment options," Almonte tells Tech.co, adding: "Today you can actually conduct all aspects of your life without ever spending a single dollar bill."

But the phasing out of paper and coins isn't just taking place on home soil. While no such countries currently exist, experts predict that Sweden could become fully cashless by the end of 2025.

Recent technological developments like the growing sophistication of digital wallets and the rise of blockchain-based systems like Bitcoin and central bank digital currencies (CBDCs) are accelerating the move away from physical tender, too.

But despite this global shift away from physical currency, the US isn't likely to officially transition anytime soon. The government has no plans to make paper money worthless, and the majority of Americans are not ready to make cash a thing of the past - 56% of Gallup respondents revealed that they like to have cash with them at all times when they leave the house.

Which political party wants a cashless society?

While the debate around going cashless isn't neatly split down partisan lines, Republicans have traditionally proven more favorable towards the idea of a cashless society.

On the other side of the coin, Democrats tend to be more supportive of protecting cash. With around 7% of the US population unbanked, they argue that the acceleration of cashless payments could leave certain segments of the population behind.

On occasion, both sides see eye to eye. Several US states, including Arizona, Illinois, New York, and Kentucky, have banned retail establishments from going fully cashless after the bills received cross-party support from legislators.

Steps Businesses Should Take Today

Going cashless won't be right for every business. Here are some important considerations to make if you're curious about ditching dollar bills for good.

Know your customer base

If you make a large portion of your income through cash payments or primarily serve demographics who still consider cash to be king - such as elderly consumers and those from lower socio-economic backgrounds - removing cash may cut off vital streams of revenue.

Check if your state is eligible

While most states don't have any policies against going fully digital, certain states and cities prohibit cashless businesses. These states include Connecticut, New Jersey, Massachusetts, and Pennsylvania, making ditching cash in these locations impossible.

Invest in a good POS system

However, if you're looking to streamline your checkout experience and tap into the ever-growing digital payments economy, embracing tech for cashless payments could prove to be a wise decision for your business.

For those serious about taking the next steps, POS systems offer streamlined ways for businesses to accept and manage digital transactions. Most POS systems let you accept a wide range of digital payment options, such as e-wallet, bank transfer, and contactless (including Apple Pay and Google Pay). Our top-rated provider, Square , even offers Buy Now Pay Later (BNPL) and split-payment options.

Summary: Are We Close to a Cashless Society?

In summary, while a cashless society offers a raft of great benefits, including a reduction in fraud, better convenience, and more, it doesn't look like the US will go fully cashless in the near-future. This is because it still has its drawbacks, from potentially increasing financial exclusion to raising the possibility of cybercrime.

What we can say conclusively is that US society is slowly moving towards a future in which cash plays a very minor role, even if it is never totally cashless. And in this climate, it's critical that your business is ready to cope with the demands of a largely digital economy.

Use our free comparison tool to get tailored quotes for your next POS system.

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Written by:

Isobel O'Sullivan (BSc) is a senior writer at Tech.co with over four years of experience covering business and technology news. Since studying Digital Anthropology at University College London (UCL), she's been a regular contributor to Market Finance's blog and has also worked as a freelance tech researcher. Isobel's always up to date with the topics in employment and data security and has a specialist focus on POS and VoIP systems.

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How Close Are We to a Cashless Society? 2025 Guide

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US society is on course for a cashless society, but how far into the future will it happen? Check out our full guide, with pros, cons, stats, and more.

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Cash will soon be obsolete. Will America be ready? | Brookings

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Eswar Prasad examines the economic, financial, and societal effects of the end of cash.

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JSTOR is a digital library of academic journals, books, and primary sources.

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JSTOR is a digital library of academic journals, books, and primary sources.

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THE FUTURE: INNOVATION AND JOBS on JSTOR

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Yvonne A. Stevens, THE FUTURE: INNOVATION AND JOBS, Jurimetrics, Vol. 56, No. 4, SPECIAL ISSUE: DOOMSDAY PREDICTIONS, TECHNOLOGY, AND THE FUTURE (SUMMER 2016), pp. 367-385

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A Survey of Online Card Payment Fraud Detection using Data Mining-based Methods

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Card payment fraud is a serious problem, and a roadblock for an optimally functioning digital economy, with cards (Debits and Credit) being the most popular digital payment method across the globe. Despite the occurrence of fraud could be relatively rare, the impact of fraud could be significant, especially on the cardholder. In the research, there have been many attempts to develop methods of detecting potentially fraudulent transactions based on data mining techniques, predominantly exploiting the developments in the space of machine learning over the last decade. This survey proposes a taxonomy based on a review of existing research attempts and experiments, which mainly elaborates the approaches taken by researchers to incorporate the (i) business impact of fraud (and fraud detection) into their work , (ii) the feature engineering techniques that focus on cardholder behavioural profiling to separate fraudulent activities happening with the same card, and (iii) the adaptive efforts taken to address the changing nature of fraud. Further, there will be a comparative performance evaluation of classification algorithms used and efforts of addressing class imbalance problem. Forty-five peer-reviewed papers published in the domain of card fraud detection between 2009 and 2020 were intensively reviewed to develop this paper.

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More Americans are joining the ‘cashless’ economy

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In less than a decade, the share of Americans who go “cashless” in a typical week has increased by double digits.

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JSTOR is a digital library of academic journals, books, and primary sources.

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Tech Giants in Banking: The Implications of a New Market Power The Implications of a New Market Power on JSTOR

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JSTOR is a digital library of academic journals, books, and primary sources.

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Lorenzo Kamel (Series edited by); Nicola Bilotta (Editor); Fabrizio Botti (Editor)

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Research Guides: Fintech: Financial Technology Research Guide: Cryptocurrency & Blockchain Technology

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Financial technology otherwise known as fintech or FinTech, is the technology and innovation that aims to compete with the traditional delivery of financial and banking services with new innovations like cryptocurrencies and crowdfunding.

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Fact Sheet: President Donald J. Trump Modernizes Payments to and from America’s Bank Account

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PHASING OUT PAPER CHECKS: Today, President Donald J. Trump signed an Executive Order to modernize how the government handles money, switching from

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JSTOR is a digital library of academic journals, books, and primary sources.

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Navigating the Transition: Impacts, Challenges and Future Prospects of a Cashless Society | OxJournal

# data[].attributes.attachment_link.description
The global shift towards a cashless society represents a significant transformation in the way economies operate, driven by advancements in digital technology and the increasing preference for electronic transactions. This paper explores the implications, challenges, and future prospects of transitioning to a cashless society, by drawing on case studies from various countries at different stages of this transition. The study examines the potential benefits of a cashless society, including increased financial inclusion, reduced transaction costs, and enhanced transparency. However, we also address critical challenges, such as digital security risks, the advancements of the technological industry, and the persistence of cash in certain cultures and economies. Through a comprehensive analysis of these factors, the paper provides insights into the socioeconomic impacts of a cashless transition and offers a clear understanding of what lies ahead for the many countries embarking on this evolutionary change. While doing this, we will also highlight that although the move towards a digital economy holds significant promise, it requires careful planning, robust infrastructure, and adaptive strategies to eliminate risks and ensure that this journey is smooth and successful.

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Helen Castell, DIGITAL PAYMENTS: Broadening the appeal of mobile money, Spore, No. 185 (June - August 2017), pp. 22-26

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Going Cashless: What Can We Learn from Sweden’s Experience?

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Sweden is expected to become the world’s first cashless society by 2023. What can other countries learn from its journey?…Read More

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Going Cashless: Central Banks and Digital Currencies – IMF F&D Magazine - Point of View - IMF F&D Magazine

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How Central Banks should think about digital currencies, digital payments and the future of money. Stefan Ingves, governor of the world’s oldest central bank in Sweden, explains their move to a cashless society.

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'Bridges to cash': channelling agency in mobile money on JSTOR

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Bill Maurer, Taylor C. Nelms, Stephen C. Rea, 'Bridges to cash': channelling agency in mobile money, The Journal of the Royal Anthropological Institute, Vol. 19, No. 1 (March 2013), pp. 52-74

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The IMF at a Glance

The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near-global membership.

The IMF's primary purpose is to ensure the stability of the international monetary system-the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund's mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.

What We Do

The IMF's fundamental mission is to ensure the stability of the international monetary system. It does so in three ways: keeping track of the global economy and the economies of member countries; lending to countries with balance of payments difficulties; and giving practical help to members.

The IMF oversees the international monetary system and monitors the economic and financial policies of its 189 member countries. As part of this process, which takes place both at the global level and in individual countries, the IMF highlights possible risks to stability and advises on needed policy adjustments.

Learn how the IMF helped Vietnam.

The IMF provides loans to member countries experiencing actual or potential balance of payments problems to help them rebuild their international reserves, stabilize their currencies, continue paying for imports, and restore conditions for strong economic growth, while correcting underlying problems.

Learn how the IMF helped Ireland.

The IMF works with governments around the world to modernize their economic policies and institutions, and train their people. This helps countries strengthen their economy, improve growth and create jobs.

Organization & Finances

The IMF has a management team and 17 departments that carry out its country, policy, analytical, and technical work. One department is charged with managing the IMF's resources. This section also explains where the IMF gets its resources and how they are used.

The IMF has a Managing Director, who is head of the staff and Chairperson of the Executive Board. The Managing Director is appointed by the Executive Board for a renewable term of five years and is assisted by a First Deputy Managing Director and three Deputy Managing Directors.

The IMF's employees come from all over the world; they are responsible to the IMF and not to the authorities of the countries of which they are citizens. The IMF staff is organized mainly into area; functional; and information, liaison, and support responsibilities.

Most resources for IMF loans are provided by member countries, primarily through their payment of quotas.

Quota subscriptions are a central component of the IMF's financial resources. Each member country of the IMF is assigned a quota, based broadly on its relative position in the world economy.

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves.

Gold remains an important asset in the reserve holdings of several countries, and the IMF is still one of the world's largest official holders of gold.

While quota subscriptions of member countries are the IMF's main source of financing, the Fund can supplement its quota resources through borrowing if it believes that they might fall short of members' needs.

Governance

The IMF has evolved along with the global economy throughout its 70-year history, allowing the organization to retain a central role within the international financial architecture.

Unlike the General Assembly of the United Nations, where each country has one vote, decision making at the IMF was designed to reflect the relative positions of its member countries in the global economy. The IMF continues to undertake reforms to ensure that its governance structure adequately reflects fundamental changes taking place in the world economy.

Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near-global membership. Decision making at the IMF was designed to reflect the relative positions of its member countries in the global economy.

The IMF has policies in place to ensure that meaningful and accurate information-both about its own role in the global economy and the economies of its member countries-is provided in real time to its global audiences.

The IMF Giving Together campaign guides the IMF's humanitarian and community outreach efforts.

History

Why the IMF was created and how it works

The IMF, also known as the Fund, was conceived at a UN conference in Bretton Woods, New Hampshire, United States, in July 1944. The 44 countries at that conference sought to build a framework for economic cooperation to avoid a repetition of the competitive devaluations that had contributed to the Great Depression of the 1930s.

The IMF has played a part in shaping the global economy since the end of World War II.

As the Second World War ends, the job of rebuilding national economies begins. The IMF is charged with overseeing the international monetary system to ensure exchange rate stability and encouraging members to eliminate exchange restrictions that hinder trade.
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After the system of fixed exchange rates collapses in 1971, countries are free to choose their exchange arrangement. Oil shocks occur in 1973-74 and 1979, and the IMF steps in to help countries deal with the consequences.

The oil shocks lead to an international debt crisis, and the IMF assists in coordinating the global response.

The IMF plays a central role in helping the countries of the former Soviet bloc transition from central planning to market-driven economies.

The implications of the continued rise of capital flows for economic policy and the stability of the international financial system are still not entirely clear. The current credit crisis and the food and oil price shock are clear signs that new challenges for the IMF are waiting just around the corner.

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The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near-global membership.

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Helen Castell, DIGITAL PAYMENTS: Broadening the appeal of mobile money, Spore, No. 185 (June - August 2017), pp. 22-26

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The Rise of FinTech and the Journey Toward a Cashless Society: Investigating the Use of Mobile Payments by SMEs in Oman in the Context of Vision 2040

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This study investigates the factors that affect the adoption of mobile payment systems in Oman, focusing specifically on small and medium-sized enterprises (SMEs) within the expanding FinTech landscape. By utilizing secondary sources of data from the Central Bank of Oman and global FinTech reports, this research identifies essential enablers, such as security features and ease of use, which are propelled by developments in FinTech solutions. It also addresses the obstacles, such as high transaction fees and issues with authentication, that impede SMEs from embracing these technologies. Through an examination of worldwide FinTech adoption patterns, this research offers perspectives on Oman’s progress toward becoming a cashless society. This study employs sophisticated statistical techniques, including histograms and correlation analysis, to reveal significant trends in the rates of mobile payment adoption. The results emphasize the necessity for cooperative efforts among regulators, financial entities, and FinTech developers to minimize costs, strengthen digital infrastructure, and enhance user experiences. These findings are consistent with Oman’s Vision 2040, which aims to foster financial inclusion and propel the country’s shift toward a robust, digitally oriented economy powered by FinTech innovation.

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Would a Cashless Society Be a Better Society? | J.P. Morgan

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As physical cash use rapidly declines, what would the implications of a cashless society be? We asked two experts to weigh in on either side of the debate.

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Navigating the Transition: Impacts, Challenges and Future Prospects of a Cashless Society | OxJournal

# data[].attributes.attachment_link.description
The global shift towards a cashless society represents a significant transformation in the way economies operate, driven by advancements in digital technology and the increasing preference for electronic transactions. This paper explores the implications, challenges, and future prospects of transitioning to a cashless society, by drawing on case studies from various countries at different stages of this transition. The study examines the potential benefits of a cashless society, including increased financial inclusion, reduced transaction costs, and enhanced transparency. However, we also address critical challenges, such as digital security risks, the advancements of the technological industry, and the persistence of cash in certain cultures and economies. Through a comprehensive analysis of these factors, the paper provides insights into the socioeconomic impacts of a cashless transition and offers a clear understanding of what lies ahead for the many countries embarking on this evolutionary change. While doing this, we will also highlight that although the move towards a digital economy holds significant promise, it requires careful planning, robust infrastructure, and adaptive strategies to eliminate risks and ensure that this journey is smooth and successful.

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In 2016, the European Central Bank (ECB) announced that it would stop minting €500 notes, in a move that they say is meant to curb fraud and money laundering. The 500 euro note is the second-largest denomination currently across the common euro currency zone, and the ECB says that it is the banknote of choice among criminals.

While the stated purpose was to stop financial crime, others have speculated that this move was part of a recent "war" on cash, essentially with the government trying to get rid of cash and eliminate money from the economy. In a "race to the bottom" to weaken currencies in order to stimulate flagging economies around the globe, we may ultimately see a complete elimination of paper cash in favor of electronic money - not to be confused with digital currency, such as bitcoin, but rather fiat currencies stored as entries in bank accounts.

The "War" on Cash

At the time of ECB's announcement, the number of 500 euro bills in circulation represented over €300 billion, or nearly one-third of all the euro-denominated cash outstanding. Holding on to physical cash is exactly what negative interest rates, as implemented by the ECB and elsewhere, is meant to dis-incentivize. Because it is relatively easy to hoard cash using €500 notes, eliminating them would benefit the central bank by making it increasingly difficult to avoid the negative interest rate policy (NIRP) mandate. Alternatives to hoarding paper money such as physical assets such as gold are much more cumbersome and costly to store and transfer.

Analysts at Bank of America Corp. ( BAC) have also suggested that eliminating high-denomination banknotes can effectively weaken a currency in global foreign exchange markets. Without a high-value euro bill, people who want to hold cash (rather than spend it) will trade in their euros for higher denominations in other currencies, like the 1,000 note Swiss Francs or U.S. $100 bills. If this analysis is correct, scrapping high-denomination notes would also serve the ECB's motives of indirectly weakening the currency so as to boost exports and spur economic growth.

Paper money also makes it easy for people to withdraw large sums of money from their banks, which can be a cause of bank runs in a fractional reserve banking system, and was a big problem during the 2008 financial crisis. If banks have to pay negative interest rates persistently to central banks, they will ultimately have to pass this cost on to their customers. If a bank charges you a negative 1% interest on your deposits, you are much more likely to withdraw your money in the form of cash. Making it harder to effect those large withdrawals will help stabilize the financial sector in such a case.

The European Central Bank is not alone in this recent "war" on cash to eliminate money from circulation. An ex-banking chief in the U.K. has called for a ban on £50 notes in order to "tackle terrorism," and a former CEO of Standard Chartered Bank Peter Sands has gone on the record calling for the $100 bill to be scrapped in America.

Unfortunately, eliminating cash will likely do little to reduce crime as there are multiple ways to circumvent the need for cash, and even worse, cutting off cash may just lead criminal organizations to innovate and use pre-paid gift cards, digital currency, or bank checks to elude law enforcement.

The Bottom Line

The "war" on cash begun with the European Central Bank's proposal to get rid of the 500 euro note and calls for the elimination of the $100 bill in America. While the argument for the move is that these large bills aid in financial crime and terrorism, the ulterior motive may be to make it harder for banks and consumers to avoid negative interest rates by holding on to actual money.

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In 2016, the European Central Bank (ECB) announced that it would stop minting €500 notes, in a move that they say is meant to curb fraud and money laundering. The 500 euro note is the second-largest denomination currently across the common euro currency zone, and the ECB says that it is the banknote of choice among criminals.

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JSTOR is a digital library of academic journals, books, and primary sources.

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© Saravutvanset-RooM/Getty Images

A cashless society is one in which cash, in the form of physical banknotes and coins, is not accepted in any financial transaction. Instead, people and businesses transfer money to one another digitally-via credit or debit cards, electronic money transfers, cryptocurrency, or online and mobile payment services, such as PayPal and Apple Pay. Although no existing society is cashless, many economists believe that consumer preferences, competitive pressures on businesses, profit seeking by banks, and government policies designed to facilitate cashless transactions will soon lead to at least a few cashless societies.

There are various measures of cashlessness, yielding different rankings of countries along a "cashless continuum," but most experts agree that Sweden is now closest to the cashless ideal. Cash is now used in less than 15 percent of transactions in that country, and the value of cash in circulation has declined significantly in the 21st century, now representing about 1 percent of GDP. Swedish retailers and restaurants are now permitted to refuse cash payments merely by posting a sign, and more than half of all Swedish bank branches no longer handle cash. To facilitate the transition to cashlessness, central banks in some countries have introduced government-backed digital currencies to replace or complement banknotes and coins.

Proponents of a cashless society argue that digital transactions are more convenient for both customers and businesses and that cashlessness would cut down on many criminal activities. They also maintain that the trend toward cashlessness is unstoppable, given the increasing digitization of economies and consumers' growing preference for conducting daily business with mobile devices. The trend has been propelled, however, by banks that have intentionally made cash transactions less convenient for their customers (e.g., by closing branches and removing ATMs) to encourage the use of digital services that are more profitable. The global coronavirus pandemic that began in 2020 also contributed heavily to an increase in touchless and cashless transactions.

But there are potential drawbacks to a cashless society. First, it would largely exclude "unbanked" (mostly poor) persons, who do not use or cannot obtain a bank account. Second, it could invite serious breaches of privacy, because few purchases and sales would be anonymous. Third, even minor technological glitches could block access to funds, and systemic failures due to natural disasters or massive hacking could make all purchases and payments impossible. Fourth, during a severe economic crisis threatening the solvency of major banks, depositors would be unable to rescue their money by withdrawing it in cash. Nor could depositors prevent troubled banks from taking a portion of their deposits in "bail-in" scenarios, under which the institution's shareholders and creditors, including depositors, are held responsible for its debts (in the U.S., up to $250,000 of each deposit would be protected from such seizures). Finally, ordinary depositors would not be able to protect themselves from negative interest rates, which central banks in some countries (e.g., Japan) have imposed to combat recession or deflation after cuts in positive interest rates to near zero have failed. Negative interest rates permit private banks to charge depositors what amounts to a fee for holding their money, thus encouraging them to spend and invest. Indeed, some economists consider that to be an argument in favor of a cashless society, as it would make painfully deep negative interest rates workable because they could not be avoided through cash withdrawals.

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What Is a Cashless Society and How Does It Work?

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How people pay for things in a world with no physical money.

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Ian F. G. Baxter, The Simple Payment of Money, The University of Toronto Law Journal, Vol. 24, No. 1 (Winter, 1974), pp. 63-95

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Abstract

The rapid advancement of cashless technologies has transformed financial transactions worldwide. In Bangladesh, entrepreneurs affiliated with Small and Medium Enterprises (SMEs) are increasingly adopting these innovations to enhance business efficiency and sustainability. This study delves into the factors influencing the continued use of cashless technologies among SME entrepreneurs by developing an integrated and extended model. It combines the Unified Theory of Acceptance and Use of Technology (UTAUT2) with the Information Systems (IS) Continuance Model, incorporating attitude toward sustainability as a mediator and gender and education as moderating variables. Following an empirical investigation of 219 SME entrepreneurs in Bangladesh, this study employs a Structural Equation Modeling (SEM) approach. The findings indicate that performance expectancy, facilitating conditions, and hedonic motivation directly impact entrepreneurs' satisfaction, which, in turn, influences their intention to continue using cashless technologies. Additionally, attitude toward sustainability partially mediates the relationship between satisfaction and continuance intention. Furthermore, gender negatively moderates the relationship between social influence and satisfaction, whereas education also inversely moderates the link between effort expectancy and satisfaction. By integrating UTAUT2 with the IS Continuance Model and incorporating sustainability and demographic moderators, this research provides a comprehensive theoretical framework for examining both cashless technology usage's pre-adoption and post-adoption phases in entrepreneurial contexts. The findings suggest that policymakers and fintech developers refine their strategies, ensuring sustained user engagement and long-term adoption.

Introduction

The widespread adoption of smartphones and mobile applications has significantly increased the preference for cashless banking and payment systems (Al-Okaily et al., 2022; Choi, 2020). A cashless society is built on various digital payment methods, including SMS payments, debit and credit cards, ATM cards, electronic transfers, internet banking, digital wallets, QR code transactions, and other mobile payment services (Akinola, 2012). Their ease of use, accessibility, and cost-effectiveness make electronic services beneficial for consumers and financial institutions (Albastaki, 2022; Rosli et al., 2023; Yang et al., 2021). As a result, cashless technologies represent a pivotal advancement in contemporary banking practices. Bangladesh, a rapidly growing emerging market, has made significant progress in financial inclusion (Sultana et al., 2023). The country has strong reasons to be optimistic about leveraging cashless technologies as technological advancements have positively influenced GDP growth (Huda et al., 2024). As the ninth-largest country globally and the fifth-largest smartphone market in the Asia Pacific region (GSMA, 2022), Bangladesh has witnessed a steady rise in cashless transactions over the last three years. Between December 2022 and December 2024 (Fig. 1), Bangladesh saw a significant shift toward cashless payments, led by a surge in mobile financial services. Internet banking, POS transactions, and plastic card use grew while ATM use declined. QR-based mobile payments are rising, with Bangla QR launched in January 2023 (Islam et al., 2024), aiming to boost digital transactions and potentially contribute 1.7% to GDP (Talukder, 2023).

Number of transactions conducted through cashless technologies between December 2022 and 2024 (Bangladesh Bank, 2025)

Huda et al. ( 2024) examined the concept of a cashless society and highlighted how innovations in financial services contribute to broader sustainability goals, such as reducing carbon emissions. Cashless technologies also lessen reliance on paper receipts and physical currency, thereby reducing paper consumption and its associated environmental consequences (Abushamleh et al., 2021). By showcasing the eco-friendly advantages of digital payment systems, individuals with a strong sense of ecological responsibility are more inclined to adopt them as a sustainable alternative to cash transactions (Zaidan et al., 2025). Those who prioritize sustainability or maintain a positive outlook on environmental responsibility prefer electronic payment methods, recognizing their role in minimizing paper consumption (Ramli & Hamzah, 2021). Sustainability attitudes and the adoption of cashless technologies are closely intertwined in the business sector. Businesses benefit significantly from the cashless economy, as it enhances sales by removing cash limitations-customers are no longer restricted by the physical cash in their wallets but rather by the available funds in their accounts (Nwankwo et al., 2022). Furthermore, Nwankwo et al. ( 2022) found that internet banking, automated teller machine (ATM) services, and crowdfunding positively impact entrepreneurship development. Small and Medium Enterprises (SMEs) are vital to the economic structure of most nations, especially in developing countries. According to the World Bank ( 2025), SMEs comprise around 90% of businesses and over half of global employment, with formal SMEs contributing up to 40% of GDP in emerging economies. In Bangladesh, about 10 million SMEs drive 23% of GDP, 80% of industrial jobs, and 25% of the workforce. The first comprehensive SME Policy in the country was introduced in December 2019, emphasizing regulation, expert guidance, and better support for women entrepreneurs (World Bank, 2025). These statistics highlight that sustainability cannot be achieved without acknowledging the significant contribution of SMEs (Meramveliotakis & Manioudis, 2021a, 2021b).

In an emerging country, the structural capital of SMEs is found to have a positive and significant impact on innovation capacity (Beltramino et al., 2020). With the growing prominence of Asian countries in the global economy (de Sousa Jabbour et al., 2020), small- and medium-sized enterprises (SMEs) have emerged as key contributors to enhancing the economic performance of these nations (Budhwar et al., 2016; Harvie & Lee, 2002). Ahad et al. ( 2012) analyzed the factors influencing SME's intention to adopt mobile banking in rural Bangladesh. A study by Islam et al. ( 2011) found that while entrepreneur characteristics notably affect business success, firm characteristics, such as capital structure and sector, also shape outcomes for SMEs in Bangladesh. Additionally, women-owned SMEs in Bangladesh actively engage in open innovation practices driven by market-related intentions and customer demand (Meng et al., 2021). These findings underscore the importance of considering the unique attributes of SMEs when developing policies and support mechanisms to enhance technology adoption and entrepreneurial satisfaction. Furthermore, segmenting the SME population by sector or digital maturity could provide deeper insights into how structural characteristics influence technology adoption behaviors. For example, women SME entrepreneurs in Bangladesh encounter barriers, such as low financial and digital literacy, social norms affecting mobile phone ownership, and limited family support, all of which impact their digital transformation journey (UNCDF, 2023). A study by Anwar et al. ( 2023) highlighted challenges small businesses face in the service industry, including low-use frequency, lack of skilled employees for managing mobile transactions, fear of large transactions, attempts to evade taxes through avoiding MFS payments and slow internet connectivity. Another study by Rahman and Islam ( 2021) identified that factors, such as effort expectancy, performance expectancy, social influence, cost, and voluntariness, significantly influence the adoption of mobile payment systems among SMEs in Bangladesh. Previous studies have explored various factors influencing consumer adoption of e-wallets (Akter et al., 2023), plastic money (Al-Amin et al., 2019), internet banking (Akhter et al., 2022), QR code payments (Islam et al., 2024), and mobile banking (Al Amin et al., 2021; Haque et al., 2024; Kwateng et al., 2018) in Bangladesh. However, research remains limited in identifying the factors that drive SME entrepreneurs to adopt cashless technologies holistically, including digital wallets, POS terminals, plastic money, internet banking, and mobile banking, particularly concerning their sustainability attitudes. This study aims to bridge this gap by investigating the continuance intention of SME entrepreneurs in adopting cashless technologies through the lens of their sustainability attitude and demographic variables (gender and education). Hence, it seeks to address the following research questions:

RQ1: What key antecedents influence SME entrepreneurs' satisfaction and continuance intention to use cashless technologies?

RQ2: Does the attitude toward sustainability mediate the relationship between entrepreneurs' satisfaction and their continuance intention to use cashless technologies?

RQ3: Do gender and education intervene between the antecedents (performance expectancy, effort expectancy, social influence, and facilitating conditions) and entrepreneurs' satisfaction?

This study offers both theoretical and practical contributions. Theoretically, it integrates the Unified Theory of Acceptance and Use of Technology 2 (UTAUT2) with the IS Continuance Model. It extends the framework by incorporating attitude toward sustainability as a mediator and gender and education as moderators. In terms of practice, it provides insights for policymakers and businesses to enhance entrepreneurs'adoption of cashless technologies in Bangladesh. The findings support sustainability-driven financial inclusion, promoting a cashless economy.

The rest of the paper is structured as follows: Sect. " Literature Review" reviews prior research, outlines the theoretical framework and develops the hypotheses. Sect. " Methodology" details the data and methodology, while Sect. " Analyses and findings" presents the results and discussion. Sect. " Discussion" discusses the findings, and Sect. " Conclusion and implications of the study " presents the concluding remarks.

Literature review

Electronic money, mobile money, and plastic money as cashless technologies

The rise of digitalization via the internet has significantly boosted globalization and transformed payment systems from manual methods to online transactions. This shift has fostered a growing reliance on electronic money (e-money) or digital money for transactions. Today, digital wallets, plastic cards, and online payment systems have effectively resolved challenges associated with cash handling and remote transactions (Yang et al., 2021). Cashless transactions are now enabled with innovative payment alternatives, such as mobile money, e-wallets, plastic cards, and online payment systems. The widespread adoption of mobile phones and internet use has driven the growth of various mobile applications, including e-money platforms. Currently, e-commerce payments are predominantly cashless, with the three most common methods being bank transfers, electronic money or wallets, and credit cards (Sasongko et al., 2022).

Mobile payments, often called mobile money or wallets, have evolved to be connected to credit cards, debit cards, or other funding sources (Leng et al., 2018). On the other hand, a mobile wallet is an application that enables users to organize, access, and utilize different payment instruments provided by different payment system providers (Sasongko et al., 2022). Adopting electronic money, such as mobile money, helps close the financial infrastructure gap, allowing service providers to onboard new clients previously excluded from the economic system (Diniz et al., 2012). The National Financial Inclusion Strategy ( 2021) states that using mobile money, Bangladesh aims to achieve full financial inclusion by 2026. However, despite ongoing efforts, the financial inclusion rate remained at 53% by the end of 2021, showing only a slight increase from 50% in 2017. Considering the benefits of cashless transactions, payment cards such as plastic money are now preferable worldwide (Arora & Dhanda, 2017). According to a Forbes report published in 2023, the use of credit or debit cards in the USA in shopping has become a common phenomenon. Only 9% of people use cash for shopping, while 85% of people in America have a credit card in 2021 (Pokora, 2021). The number of plastic money users is also swelling progressively in Bangladesh. The total monetary value of various card transactions was BDT 27,072.5 crore in 2022 (Liaquat, 2022). The surge in the use of plastic money in various nations drew the attention of scholars who sought to assess the satisfaction of plastic money. Khandelwal and Gulati ( 2021) studied the customers'satisfaction with plastic money. Consumers are pleased to use plastic money with an increased prospect of its use shortly (Dave & Patel, 2021; DS, 2022; Khandelwal & Gulati, 2021).

Small and Medium Enterprise (SME) entrepreneurs in Bangladesh

Thus, this research investigates the factors influencing SME entrepreneurs'satisfaction with cashless technologies, their intention to continue using them, and their attitudes toward sustainability. Additionally, it explores the moderating effects of gender and educational background on these relationships.

Theoretical framework

The unified theory of acceptance and use of technology (UTAUT) model is a comprehensive framework that integrates eight theoretical models for adopting information systems and information technology (Venkatesh et al., 2003). It consolidates the key constructs from these earlier models. Furthermore, the UTAUT model facilitates an in-depth examination of the intricate process of user adoption, explaining up to 70% of the variance in adoption rates (Venkatesh et al., 2003). Finally, UTAUT2 model emerged in 2012 by Venkatesh and included new variables with the original ones (Venkatesh et al., 2012) and the new variables are hedonic motivation and perceived cost (Chang, 2012; Venkatesh et al., 2003). UTAUT2 model is widely applied to investigate e-money or plastic money adoption in various nations (Fithriya et al., 2019; Gupta & Arora, 2020; Makanyeza & Mutambayashata, 2018). Compared to other models, UTAUT2 is the most recent and more applicable to assessing users'intention to use any technology or new concept (Oechslein et al., 2014; Venkatesh; Slade et al., 2013). However, this study of continuance use behavior differs significantly from an adoption study (Hartzler et al., 2018).

Numerous studies have examined post-adoption behavior or the intention to continue using various information systems as the success of such systems relies more on their sustained use rather than just initial adoption (Bhattacherjee, 2001; Limayem et al., 2007). Initially, researchers viewed continuance use as an extension of initial adoption behavior, applying the same theories and models to study pre- and post-adoption behaviors (Karahanna et al., 1999; Venkatesh & Davis, 2000). However, these theories and models overlooked the factors influencing post-adoption or continuance use. They failed to explain why users continue or discontinue using information systems after initial acceptance (Bhattacherjee, 2001). To address this gap, Bhattacherjee ( 2001) introduced the post-acceptance model of IS continuance, commonly referred to as the IS continuance model, which is grounded in the expectation-confirmation theory (ECT) from marketing (Oliver, 1980). This distinctive model surpasses earlier IS adoption models by incorporating psychological factors relevant to post-adoption, such as satisfaction (SAT) and confirmation. Technology continuance theory is applied to established technology to determine the users'satisfaction and intention to use the new technology (Bhattacherjee et al., 2008). This theory is grounded on but usually applicable to old technology that is in use (Foroughi et al., 2019). The IS continuance model has often been integrated with other frameworks, such as UTAUT, to comprehensively understand post-adoption behavior (Faaeq et al., 2017; Marinkovic et al., 2020; Tam et al., 2020). In line with the recent recommendations from IS researchers, this study adopted a combined model that merges the IS continuance model with UTAUT2.

Previous research has highlighted the significance of integrating various theoretical frameworks to examine post-adoption behavior (Veeramootoo et al., 2018). Notably, many researchers have combined the Unified Theory of Acceptance and Use of Technology (UTAUT) with other models to investigate continuance use behavior (Alghamdi et al., 2018; Lu et al., 2017; Marinkovic et al., 2020; Sun et al., 2011, 2014; Tam et al., 2020). Perceived usefulness (performance expectancy) integrates the IS continuance model with UTAUT2 (Ozecan & Arikan, 2022; Tam et al., 2020). Rahman and Islam ( 2021) examined factors influencing SME adoption of mobile banking using the extended UTAUT model, while Anwar et al. ( 2023) focused on the challenges small businesses face in the service sector face. Other relevant studies in Bangladesh include Thakur ( 2023), who analyzed digital tool adoption in SME supply chain management; Hai et al. ( 2024), who provided an in-depth overview of digital technology adoption among SMEs; and Shahadat et al. ( 2023), who investigated technological, environmental, and organizational factors shaping adoption in the SME sector. However, no studies have explored the pre- and post-adoption factors influencing SME entrepreneurs'engagement with digital technologies. Given the increasing volume of digital transactions in recent years (as depicted in Fig. 1), digital or cashless technologies are now considered well-established in Bangladesh. Therefore, combining the UTAUT and IS Continuance models is appropriate for examining such technologies'adoption and ongoing use (pre- and post-adoption). This integrated approach uniquely contributes to a deeper understanding of the factors that affect SME entrepreneurs'satisfaction and continuance behavior using digital technologies. The present study aims to investigate these factors within the SME context in Bangladesh.

Hypotheses development

This study introduces an integrated model to investigate the continuance use behavior of cashless technology. The proposed model incorporates UTAUT2 constructs, such as Performance Expectancy (PE, aligned with perceived usefulness in the IS continuance model), Effort Expectancy (EE), Social Influence (SI), Facilitating Conditions (FC), and Hedonic Motivation (HM), which are anticipated to significantly influence users'satisfaction (SAT) with cashless technologies (electronic money, mobile money, and plastic money). Furthermore, we hypothesize that the SAT construct is a key determinant directly influencing continuance intention (CON) to use cashless technologies. Additionally, this model proposes that a mediator variable, attitude toward sustainability (ATS), mediates the relationship between SAT and CON. Additionally, the moderating effects of gender and education between the identified constructs are hypothesized. Hypotheses for each construct are presented and elaborated in the subsequent sub-sections. Figure 2 demonstrates the conceptual framework of the study.

Performance expectancy (PE)

H1

PE posits a positive influence on SAT toward continuance use of cashless technologies among SME entrepreneurs.

Effort expectancy (EE)

H2

EE posits a positive influence on SAT toward continuance use of cashless technologies among SME entrepreneurs

Social influence (SI)

H3

SI posits a positive influence on SAT toward continuance use of cashless technologies among SME entrepreneurs.

Facilitating conditions (FC)

H4

FC posits a positive influence on SAT toward continuance use of cashless technologies among SME entrepreneurs

Hedonic motivation (HM)

Hedonic motivation (HM) was introduced as an independent variable in the UTAUT2 model, representing users'pleasure or enjoyment from using a particular system (Venkatesh et al., 2012). Previous research has often identified HM as a significant factor influencing technology acceptance (Brown & Venkatesh, 2005; Childers et al., 2001; Thong et al., 2006; van der Heijden, 2004). In the post-adoption phase, while Chai and Xu ( 2006) have questioned the influence of HM on satisfaction, others provide compelling evidence to the contrary, showing that positive emotional experiences can significantly enhance satisfaction with technology systems (Anand et al., 2019; Saprikis et al., 2010; Wu et al., 2011). For SME entrepreneurs, enjoyable user interfaces and emotional gratification should not be overlooked besides rational and utility-driven business decisions. Experiencing enjoyment while using cashless technologies can cultivate a more favorable attitude, ultimately leading to higher satisfaction. Therefore, this study presents a compelling case to test the following hypothesis:

H5

HM posits a positive influence on SAT toward continuance use of cashless technologies among SME entrepreneurs.

Satisfaction (SAT) to continuance intention (CON)

H6

SAT posits a positive influence on continuance use intention (CON) of cashless technologies among SME entrepreneurs.

Sustainability attitude (ATS) as a mediator

Sustainability, a key concern in the twenty-first century, has been defined in various ways (Zhang et al., 2021). Sustainability encompasses the three fundamental dimensions of economics, society, and the environment, commonly called the'Triple Bottom Line'(Hacking & Guthrie, 2008). Today, sustainability represents actions that can persist indefinitely without harming the environment, respecting oneself and others, and addressing the needs of the present generation without compromising those of the future (Fletcher, 2008; Partridge, 2011). While attitudes toward sustainability (ATS) provide valuable insights into behavioral intentions, a comprehensive understanding of sustainability in the SME context requires examining how digital innovations like cashless technologies intersect with structural development challenges. In the Global South, issues, such as digital inequality, limited access to financial infrastructure, energy inefficiency, and waste management, are inseparable from the broader sustainability agenda (Ozturk et al., 2024; Smith et al., 2022). Hence, this study not only considers ATS as a psychological mediator but situates it within the broader sustainable development discourse, recognizing that technological adoption by SMEs must be evaluated through its contributions to environmental stewardship, economic resilience, and social equity (Meramveliotakis & Manioudis, 2021a, 2021b, 2022).

Recent studies have increasingly emphasized the critical role of SMEs and digital transformation in advancing sustainable development. Ozturk et al. ( 2024) argue that digitization is essential for SMEs to achieve sustainability goals. Supporting this view, de Sousa Jabbour et al. ( 2020) highlight the significant contribution of Asian SMEs to both economic growth and the realization of the region's sustainable development goals (SDGs). Similarly, Smith et al. ( 2022) demonstrate that SMEs are well-positioned to promote localized approaches to the SDGs through community partnerships. However, power imbalances often hinder their ability to comprehend and implement sustainability guidelines fully. In parallel, innovation and interplay between the technology and the economy have been recognized as a driver of sustainable economic progress. Meramveliotakis and Manioudis ( 2024) emphasize that a balanced integration of financial and technological forces is key to achieving growth and sustainability. Building on this, Manioudis and Meramveliotakis ( 2022) advocate revisiting classical political economy to contextualize sustainable development better, while their earlier work (2021) proposes a grand theory that places the dialectical relationship between knowledge, nature, and culture at the heart of sustainable economic transformation.

H7

Attitude toward sustainability (ATS) mediates the relationship between SAT and continuance use intention (CON) of cashless technologies among SME entrepreneurs.

Gender and education as moderator:

Research in the field of Information Systems (IS) has explored gender-related issues from multiple perspectives, as highlighted by Ahuja and Thatcher ( 2005) and Trauth et al. ( 2009). More recent studies, such as Yang et al. ( 2021), have specifically examined gender as a moderating factor in the intention to use digital wallets, influencing both perceived ease of use (PE) and effort expectancy (EE) among Indonesian consumers. Other studies emphasize the role of gender perceptions in technology adoption, with prior research indicating gender-based differences in the effective use of mobile technologies (Faqih & Jaradat, 2015; Glavee-Geo et al., 2017). However, to our knowledge, no study has investigated gender's moderating effect within an integrated framework combining UTAUT2 and the IS continuance model. Based on these insights, this study proposes examining gender's moderation effect on the direct relationships between PE, EE, SI, FC, and SAT, leading to the formulation of specific hypotheses.

H8a

Gender moderates the relationship between PE and SAT

H8b

Gender moderates the relationship between EE and SAT

H8c

Gender moderates the relationship between SI and SAT

H8d

Gender moderates the relationship between FC and SAT

Several previous studies have examined how education level affects the relationships within the UTAUT and UTAUT2 models. Idrees and Ullah ( 2024) explored the moderating role of education on the impact of Performance Expectancy (PE), Effort Expectancy (EE), Social Influence (SI), and Facilitating Conditions (FC) on Behavioral Intention (BI) in the context of Fintech adoption. Similarly, Abu-Shanab ( 2011) found that education level moderates the relationship between PE and BI in technology adoption. However, no prior studies have investigated its moderating effect on integrated models, such as the UTAUT2 and the IS continuance models. Building on these findings, this study proposes the moderation effect of education on the direct relationship between PE, EE, SI, FC, and SAT, hence testing the following hypotheses.

H9a

Education moderates the relationship between PE and SAT

H9b

Education moderates the relationship between EE and SAT

H9c

Education moderates the relationship between SI and SAT

H9 d

Education moderates the relationship between FC and SAT

Methodology

Population and sampling

This study examines the continuance intention of SME entrepreneurs in Bangladesh concerning the use of cashless technologies. The target population for this research comprises entrepreneurs listed under the SME foundation, which serves as a significant business organization in the country. The entrepreneurs were selected from the list of entrepreneurs who participated in the SME Product Fair, 2024, organized by the SME foundation. A simple random sampling technique was employed to make the sample representative of the target population. By selecting participants from this list, this study aims to gather insights from a pool of entrepreneurs involved in active SME businesses. They will likely have a deeper understanding of the practical implications and challenges of adopting cashless technologies in their business operations.

Instrument development and data collection

After thoroughly reviewing relevant literature, a series of questions was developed to collect primary data from the entrepreneurs. The research items were derived from previous studies, considering the context of technology adoption intentions and the definitions of key constructs. Fifteen items from the UTAUT 2 constructs (performance expectancy, effort expectancy, social influence, facilitating conditions, and hedonic motivation) were sourced from, Venkatesh et al. ( 2012) and Venkatesh et al. ( 2003). Three items assessing satisfaction were adapted from Bhattacherjee ( 2001), while three items evaluating continuance intention were taken from Venkatesh et al. ( 2011) and Talukder et al. ( 2021). Additionally, three items related to attitude toward sustainability were derived from Quoquab et al. ( 2019) and Dickinger et al. ( 2008). All measurement instruments utilized a five-point Likert scale, ranging from"strongly agree"(5) to"strongly disagree"(1). A structured questionnaire was created, incorporating these instruments, consisting of 24 items representing each construct, demographic questions, and some general questions about the research context.

The questionnaire was circulated in person to 332 entrepreneurs. Among them, 260 agreed to participate in the study, resulting in a 78.3% response rate. After cleaning the data to remove invalid and incomplete responses, 219 valid responses were retained for further analysis. Data collection occurred over three months, from November 2024 to January 2025.

Analysis method and sample size

Several guidelines exist for determining the appropriate sample size for conducting PLS-SEM analysis. According to Hair et al. ( 2021), the minimum required sample size for any PLS path model should be at least ten times the highest number of indicators directed toward any latent construct. While this"10-times rule"provides a general benchmark, researchers must also account for the model's complexity and data characteristics (Hair et al., 2021). In this study, the construct 'satisfaction' has the highest number of incoming paths, with five arrowheads pointing toward it. Based on the 10-times rule, the minimum required sample size is 5 × 10 = 50. Another approach considers the expected minimum significant path coefficient, which, if assumed to be between 0.11 and 0.20, would require approximately 155 observations to achieve statistical significance at a 5% level (Hair et al., 2022).

Additionally, based on the sample-to-variable ratio method, a minimum observation-to-variable ratio of 5:1 is recommended, while higher ratios of 15:1 or 20:1 are preferable (Hair et al., 2018). Given that this study includes five independent variables, applying the preferred 20:1 ratio results in a minimum sample size of 20 × 5 = 100. Considering all available insights, the sample size 219 used in this study is sufficient to proceed with PLS-SEM analysis.

Analyses and findings

Descriptive analysis

The dataset in Fig. 3 provides demographic insights into a group of respondents categorized by gender, age, and education. Most respondents are male (65.3%), while females constitute a smaller proportion (34.7%). In terms of age distribution, the largest group falls within the 26-30 age range (29.7%), followed by those aged 20-25 (28.3%), 36-40 (26.5%), and 31-35 (15.5%). Regarding educational qualifications, most respondents hold a bachelor's degree (45.7%), followed by those with a master's degree (34.3%). A smaller number have completed higher secondary education (HSC-11%) or secondary school certification (SSC-5.9%), while only a few (3.2%) possess professional degrees. This demographic breakdown suggests that the sample consists mainly of young to middle-aged individuals with a strong academic background, particularly at the undergraduate and postgraduate levels.

Table 1 provides an overview of the adoption of cashless technologies among respondents. The data regarding the types of digital tools used reveal that mobile commerce (M-Commerce), including platforms like Bkash and Nagad, is the most widely used, with 49% of respondents engaging in it. Debit cards are the second most used digital tool, adopted by 30% of the respondents. Credit card use is relatively lower, with 15% of individuals utilizing this service. Meanwhile, both ATM cards and internet banking services are used by 13% of respondents. These figures suggest that mobile-based services or apps and debit cards as digital payment tools dominate the adoption of cashless technology. In contrast, traditional banking tools like credit and ATM cards have relatively lower penetration.

The dataset about the frequency of cashless technology use among respondents shows that a significant portion (44%) use the technologies daily or multiple times daily, indicating a high reliance on digital financial transactions. Additionally, 39% of respondents use such financial tools weekly or multiple times per week, suggesting regular but less frequent engagement. Meanwhile, only 2% of individuals use it yearly or occasionally, highlighting a minimal dependency on digital financial tools. These insights suggest that most users actively engage in digital transactions, with daily and weekly use being the most common patterns.

Figure 4 illustrates the duration of business engagement and the use of cashless technologies among entrepreneurs. The most significant proportion of respondents (37%) have been in business for 3-5 years, followed by 29% with 6-10 years of experience. Additionally, 20% have been operating for over a decade, 8% have 1-2 years of experience, and 7% have been in business for less than a year. This indicates a diverse mix of both emerging and well-established businesses. Regarding cashless technology adoption, the majority (55%) have used these technologies for 3-5 years, while 19% have adopted them within the last 1-2 years. Furthermore, 14% have been utilizing cashless methods for 6-10 years, 9% for more than a decade, 2% for just over a year, and only 1% for less than a year. These findings highlight a progressively evolving business landscape where cashless technologies are increasingly becoming a fundamental part of daily operations.

Measurement model analysis

The objective of assessing the reflective measurement model is to confirm the reliability and validity of the construct measures, thereby justifying their inclusion in the path model (Hair et al., 2021). This section in Table 2 outlines the essential criteria for evaluating the reflective measurement model, including indicator reliability, internal consistency reliability (measured by Cronbach's alpha and composite reliability), convergent validity (measured by AVE), and discriminant validity (Measured by HTMT).

Indicator reliability and internal consistency

To assess reliability, outer loadings (indicator reliability), Cronbach's alpha (CA), and composite reliability (CR) must surpass the threshold of 0.70 (Chin et al., 1998; Hair et al., 2006). One item under Hedonic Motivation (HM) did not meet this criterion (the item had a loading of 0.62 below the 0.70 threshold) and was removed from the dataset. After this adjustment, all 24 remaining items, as shown in Table 2, exceed the 0.70 threshold, confirming their reliability and allowing for further analysis.

Convergent validity

Convergent validity was evaluated using the Average Variance Extracted (AVE), with a benchmark of 0.50 (Fornell & Larcker, 1981). AVE refers to the extent to which a latent construct accounts for the variance in its indicators, also known as communality (Hair et al., 2021). The data in Table 2 indicate that all constructs meet this criterion, establishing their convergent validity.

Discriminant validity

Additionally, to assess discriminant validity, this study uses the Heterotrait-Monotrait (HTMT) ratio of correlations, a contemporary and reliable SEM method. While some SEM scholars (Gold et al., 2001; Hair et al., 2019a, 2019b) advocate for a more flexible threshold of 0.90, others adopt stricter criteria, setting the limit at 0.85 (Hair et al., 2019a, 2019b; Kline, 2015). The values presented in Table 3 fall within these acceptable thresholds, confirming the discriminant validity of the constructs.

Structural model analysis

In PLS-SEM, structural model assessment involves analyzing the significance and relevance of path coefficients and evaluating the model's explanatory and predictive capabilities (Hair et al., 2021). The section presents the path model diagram, direct and indirect relationships assessment, and simple slop analysis for moderating factors.

Path model

A path model visualizes variable relationships and hypotheses examined using structural equation modeling (SEM) (Hair et al., 2021). Figure 5 illustrates these relationships, including path coefficients, p-values, outer loadings, and R2 values. The R2 value, or the coefficient of determination, measures the proportion of variance in an endogenous construct explained by its predictor constructs, reflecting the model's explanatory power (Hair et al., 2021).

In this model, the R2 value for the Satisfaction (SAT) construct is 0.450, indicating that Performance Expectancy (PE), Effort Expectancy (EE), Social Influence (SI), Facilitating Conditions (FC), and Hedonic Motivation (HM), and moderators (gender and education level) collectively explain 48.3% of the variance in SAT. Similarly, the R2 value for the Continuance Intention (CON) construct is 0.400, suggesting that SAT and Attitude Toward System (ATS) together account for 40% of the variance in CON. Hair et al. ( 2017) recommended that an R2 value of 0.20 is considered to demonstrate strong predictive power in consumer behavior research. Therefore, this model is a robust framework for predicting entrepreneurs'continuance intention to adopt cashless technologies.

Assessment of direct relationships

The structural model assessment for direct relationships is summarized in Table 4, which presents the path coefficients, standard errors, t values, p values, ƒ2 effect sizes, variance inflation factor (VIF) values, and the outcomes for each hypothesized relationship. The results indicate that performance expectancy (PE) ( β = 0.350, t = 4.696, p < 0.05), facilitating conditions (FC) ( β = 0.177, t = 2.333, p < 0.05), and hedonic motivation (HM) ( β = 0.282, t = 4.169, p < 0.05) significantly influence SME entrepreneurs'satisfaction (SAT) with the use of cashless technologies. Among these factors, PE strongly influences entrepreneurs'satisfaction, followed by HM and FC. Additionally, SAT has a significant positive impact on entrepreneurs'continuance intention (CON) to adopt cashless technologies ( β = 0.537, t = 9.063, p < 0.05). As a result, hypotheses H1, H4, H5, and H6 are supported. However, effort expectancy (EE) and social influence (SI) do not exhibit a significant effect on satisfaction ( β = 0.097, t = 1.403, p > 0.05 and β = − 0.021, t = 0.317, p  > 0.05, respectively). Therefore, hypotheses H2 and H3 are not supported.

The ƒ ² effect size is a metric used to evaluate the relative influence of an exogenous construct on an endogenous construct by assessing its explanatory power (Hair et al., 2021). According to Cohen ( 1988), an ƒ ² value greater than 0.35 indicates a significant effect, a value above 0.15 signifies a medium effect, and a value exceeding 0.02 suggests a small effect. In this study, SAT demonstrates a large effect size of 0.374 on CON, while PE and HM exhibit medium effect sizes of 0.155 and 0.124, respectively, on SAT. Additionally, FC has a small effect size of 0.035 on SAT.

The standard metric known as the variance inflation factor (VIF) is calculated to assess common method bias and evaluate potential collinearity issues. VIF measures the degree of collinearity among predictor constructs within the structural model (Hair et al., 2021). As per Hair et al. ( 2021), collinearity concerns are likely when VIF ≥ 5, moderate but usually uncritical when VIF ranges between 3 and 5, and negligible when VIF is below 3. The VIF values in Table 4 are below 3, confirming that the structural model does not suffer from collinearity issues and common method bias is not a significant concern.

Mediation and moderation analyses

As shown in Table 5, the direct and specific indirect effects were analyzed to evaluate the mediation relationship. The findings indicate that the direct impact of satisfaction (SAT) on continuance intention (CON) is significant ( β = 0.537, p < 0.005). Additionally, the indirect effect of SAT on CON, mediated by attitude toward sustainability (ATS), is also significant ( β = 0.078, p  < 0.005). This confirms that ATS is a partial mediator in the relationship between SAT and CON, as both the direct and indirect effects are statistically significant. Consequently, hypothesis H7 is supported.

Moreover, this study examined the moderating role of gender and education in the relationships among UTAUT constructs. The findings reveal that gender significantly moderates only the relationship between social influence (SI) and satisfaction (SAT) ( β = − 0.162, t = 2.137, p < 0.005). Similarly, education significantly moderates only the relationship between effort expectancy (EE) and satisfaction (SAT) ( β = − 0.171, t = 1.999, p  < 0.005). Consequently, hypotheses H8c and H9b are supported.

Simple slope analysis for moderator role

In Fig. 6, the simple slope analysis for the moderators, gender and education, indicates an inverse relationship between the examined constructs. The slope analysis demonstrates that when gender is considered a moderator, the relationship between social influence (SI) and satisfaction (SAT) is reversed. For females (represented by the red line, Gender at −1 SD), an increase in social influence (SI) leads to higher satisfaction (SAT), indicating a positive impact of social influence on satisfaction. For males (represented by the green line, Gender at + 1 SD), an increase in social influence (SI) results in lower satisfaction (SAT), suggesting that more significant social influence negatively affects men's satisfaction. However, the blue line (mean level) reveals a nearly flat relationship between social influence and satisfaction, signifying no significant direct effect exists when gender is not considered.

Findings reveal an inverse relationship between effort expectancy (EE) and satisfaction (SAT) when education is considered a moderating factor. This is evident from the green line being less steep than the red line, indicating that the effect of EE on SAT becomes weaker at higher education levels. However, as outlined in Sect. " Assessment of direct relationships ", the direct relationship analysis shows no significant association between EE and SAT. Instead, EE's influence on SAT becomes apparent only when education acts as a moderator, and this effect is negative.

Discussion

This study investigates the factors influencing SME entrepreneurs'satisfaction and their continuance intention to adopt cashless technologies. It employs an integrated model combining UTAUT2 and the IS continuance model, incorporating sustainability attitude as a mediator and gender and education as moderators. The proposed theoretical framework accounts for 48.3% of the variance in satisfaction and 40% in continuance intention of using cashless technology.

With a t value of 4.696 and a β of 0.350, H1 is supported, indicating that performance expectancy significantly impacts SME entrepreneurs'satisfaction with cashless technologies. This aligns with findings by Islam et al. ( 2023), Kaium et al. ( 2020), and others, suggesting that perceived usefulness remains a core determinant of technology acceptance. In Bangladesh, where many SMEs operate under resource-constrained and highly competitive conditions, entrepreneurs increasingly recognize cashless systems as tools for operational efficiency and as enablers of long-term growth and market access. This reinforces the idea that digital transformation in the SME sector is not just a technological shift but also a strategic adaptation to evolving consumer behavior, supply chain demands, and sustainability imperatives. Similarly, H4 is supported ( t = 2.333, β = 0.177), confirming that facilitating conditions significantly influence entrepreneurs' satisfaction. This finding highlights the essential role of infrastructure, digital literacy, and institutional support in shaping the adoption experience. While prior studies (Islam et al., 2023; Kaium et al., 2020) have noted the importance of such conditions, our study emphasizes their role within a national development context. To realize its Smart Bangladesh 2041 vision, targeted interventions are needed to ensure equitable access to the digital ecosystem-especially for rural and underserved SMEs. Government programs, public-private partnerships, and localized digital training initiatives could enhance SMEs' capacity to adopt and sustain digital tools, thereby contributing to a more inclusive digital economy. Furthermore, with a t value of 4.169 and a β of 0.282, this study confirms that hedonic motivation significantly influences entrepreneurs'satisfaction with cashless technologies (H5 supported). This suggests that enjoyment, ease, and intrinsic satisfaction derived from engaging with cashless tools play a vital role in shaping user experiences beyond practical utility. Such findings support earlier work by Wu et al. ( 2011), Saprikis et al. ( 2010), and Anand et al. ( 2019) while diverging from Chai and Xu ( 2006), who found limited influence of hedonic factors. This insight is particularly relevant in the context of Bangladesh's rapidly digitalizing economy. When digital tools are perceived not just as functional but also intuitive and enjoyable, entrepreneurs are more inclined to continue using them.

Comparing the standardized coefficients across key predictors of satisfaction, performance expectancy emerges as the most decisive influence ( β = 0.350), followed by hedonic motivation ( β = 0.282), and then facilitating conditions ( β = 0.177). This hierarchy of influence suggests that the business value of digital technologies primarily drives SME entrepreneurs, but emotional engagement and ease of use are also critical for sustained satisfaction. These findings reinforce the notion that digital transformation is not solely a technical process but also a human-centered experience, where user motivation and digital literacy matter. Furthermore, this study confirms a significant relationship between satisfaction and continuance intention, with a t value of 9.063 and a β value of 0.537, leading to the support of H6. This indicates that entrepreneurs who are satisfied with cashless systems are more likely to continue using them in their businesses. These findings are consistent with the research of Islam et al. ( 2023), Qiong et al. ( 2017), Jiang ( 2011), Zhou ( 2011), Deng et al. ( 2010), and Tiwana and Bush ( 2005). This relationship is significant in Bangladesh, where cashless systems are crucial for modernizing the economy. Entrepreneurs of SMEs who experience satisfaction with digital payment tools are more likely to invest time and resources in integrating these technologies into their business operations.

Interestingly, this study finds that Effort Expectancy (EE) and Social Influence (SI) do not have a significant impact on entrepreneurs'satisfaction with using cashless technologies, as reflected in the non-significant t values (EE = 1.403; SI = 0.097) and the respective β values (EE = 0.467; SI = − 0.032). Consequently, H2 and H3 are rejected. This suggests that the perceived ease of use is not a decisive factor for satisfaction among SME entrepreneurs, possibly because many have already developed digital fluency through routine exposure to mobile banking and fintech apps. This interpretation aligns with Kaium et al. ( 2020) but contrasts with earlier findings by Islam et al. ( 2023) and Zhou ( 2011), where effort expectancy played a stronger role in influencing user satisfaction. Similarly, the lack of significance for social influence suggests that entrepreneurs'decisions to adopt or remain satisfied with cashless technologies are driven more by individual assessment of value and usability rather than external pressures from peers, customers, or societal norms. This finding supports Hossain et al. ( 2021) but contrasts with studies that highlight the role of normative influence in technology adoption (Islam et al., 2023; Kaium et al., 2020). From a broader perspective, these results may reflect a sustainable digital ecosystem in Bangladesh. SME entrepreneurs prioritize functionality, utility, and intrinsic motivation over external validation or ease of use, particularly as digital tools become more integrated into daily business operations.

The integrated model (UTAUT2-IS continuance model) examines attitude toward sustainability (ATS) as a mediator. The analysis reveals a significant mediation effect of ATS in the relationship between satisfaction (SAT) and continuance intention (CON). Since the direct relationship between SAT and CON remains substantial, this suggests partial mediation, with a t-value of 2.777 and β of 0.078, supporting hypothesis H7. This novel finding highlights that entrepreneurs who are satisfied with cashless technologies may develop a positive attitude toward sustainability, recognizing the environmental benefits of digital payments, such as reducing paper use, lowering carbon footprints, and promoting eco-friendly business practices. This enhanced sustainability mindset further strengthens their intention to continue using cashless systems. This finding reflects a significant behavioral shift: satisfaction alone is a strong motivator, but when coupled with a sense of environmental responsibility, it transforms digital adoption into a form of value-driven, future-oriented business behavior. In this way, sustainability functions as a benefit and a motivational amplifier that deepens entrepreneurial engagement with digital tools. Overall, the mediation effect of ATS demonstrates that digital satisfaction and sustainability are not isolated drivers but co-evolving forces shaping the future of entrepreneurial behavior in developing digital economies. In line with the Smart Bangladesh 2041 vision and the country's focus on inclusive digital transformation, this insight emphasizes embedding sustainability values within digital tools. Aligning the sustainability attitude of SME entrepreneurs within the digital technology context can support long-term broader national goals related to green growth, innovation, and sustainable entrepreneurship.

The moderation analyses in the study reveal some surprising insights. The moderation effect of gender indicates that while social influence (SI) does not directly impact satisfaction (SAT), gender plays a crucial role in shaping this relationship. Specifically, when gender is considered, the relationship between social influence and satisfaction reverses. This suggests that male entrepreneurs may prioritize autonomy in decision-making and experience lower satisfaction when influenced by external social pressure, whereas female entrepreneurs remain unaffected. Although women may be more socially driven, other factors likely influence their satisfaction since social influence does not directly affect the SAT. Additionally, the moderation effect of education shows that while effort expectancy (EE) does not directly impact satisfaction (SAT), education moderates this relationship in an inverse direction. As education levels increase, the relationship between EE and SAT weakens or becomes negative. For highly educated entrepreneurs, the perceived ease of use (EE) of cashless technologies may have little or even a negative impact on satisfaction. This could be because more educated individuals have higher expectations and may seek advanced features beyond ease of use to feel truly satisfied with cashless technologies.

Conclusion and implications of the study

This study delves into exploring the adoption of cashless technologies among SME entrepreneurs. The data are analyzed across several segments, including descriptive analysis, measurement model assessment, and structural model evaluation. Descriptive analysis and demographic insights reveal that entrepreneurs predominantly utilize mobile commerce tools, followed by debit and credit cards. Additionally, the frequency of cashless technology use indicates that most entrepreneurs actively engage in digital transactions, with daily and weekly use patterns being the most common. Findings on business tenure and digital tool adoption show that most entrepreneurs have been operating their businesses and utilizing cashless systems for approximately 3 to 5 years. This trend highlights a gradually evolving business environment where digital transactions are integral to daily operations. The measurement model assessment establishes the reliability and validity of the model constructs, allowing further exploration through the structural model. The structural model analysis includes an evaluation of direct relationships and mediation and moderation effects. The assessment of direct relationships demonstrates that performance expectancy, facilitating conditions, and hedonic motivation significantly influence entrepreneurs'satisfaction, affecting their intention to continue using cashless technologies. Furthermore, mediation analysis reveals that satisfaction indirectly influences continuance intention through the mediating role of attitude toward sustainability. Moderation analyses indicate that gender negatively moderates the relationship between social influence and satisfaction, suggesting that male entrepreneurs are less satisfied when influenced by social pressure. Likewise, education inversely moderates the relationship between effort expectancy and satisfaction, implying that entrepreneurs with higher educational attainment are less likely to be satisfied by cashless systems'perceived ease of use.

Theoretical implications

Additionally, this study enhances theoretical understanding by showing that gender and education significantly moderate key relationships in the UTAUT2-IS Continuance model. The negative moderation of gender on social influence challenges the assumption that social expectations universally drive satisfaction, particularly among male entrepreneurs. Similarly, the inverse effect of education on effort expectancy suggests that highly educated users value advanced features over ease of use. These findings extend existing models by highlighting the importance of demographic context, indicating a need for more flexible, user-sensitive approaches to technology adoption theory. By integrating UTAUT2 with the IS Continuance Model while incorporating sustainability and demographic moderators, this study establishes a more holistic theoretical framework for analyzing the adoption and continued use of cashless technologies in entrepreneurial settings. These insights contribute to the broader discourse on national development priorities, digital financial transformation, and sustainable financial inclusion, offering a foundation for future research in this domain.

Practical implications

The practical implications of this study offer valuable insights and recommendations for policymakers, fintech developers, and business associations like SMEs to foster cashless technology adoption among entrepreneurs.

Fostering Satisfaction for Sustainable Use: Performance expectancy, facilitating conditions, and hedonic motivation influence entrepreneurs'satisfaction significantly. This indicates that fintech providers should emphasize efficiency, seamless integration with existing business operations, and user-friendly interfaces to enhance satisfaction. Moreover, integrating enjoyable and rewarding features, such as gamification or loyalty programs, can improve the user experience. These strategies align with SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure) by promoting technology adoption that is functional but also inclusive, engaging, and sustainable for Bangladesh's SME sector.

Sustainability-Driven Adoption Strategies: Since attitude toward sustainability mediates the relationship between satisfaction and continuance intention, fintech providers and policymakers should highlight cashless transactions'environmental and economic benefits. It underscores the opportunity for SME policymakers and fintech developers to emphasize the operational advantages of digital tools and their contribution to environmental and social goals. Framing cashless technologies as enablers of green entrepreneurship can appeal to value-driven SMEs and align with national priorities like Smart Bangladesh 2041 and global commitments to SDG 12 (Responsible Consumption and Production).

Gender-Sensitive Adoption Strategies: The negative moderation effect of gender on the relationship between social influence and satisfaction suggests that female SME entrepreneurs are more likely to be influenced by social expectations than males when adopting cashless technologies. Promoting gender-sensitive digital literacy and crafting targeted value propositions can help ensure that both male and female entrepreneurs are equitably engaged in the shift toward cashless systems. Such inclusive design not only supports SDG 5 (Gender Equality) but also strengthens the resilience and competitiveness of Bangladesh's SME sector, a key pillar in the country's socioeconomic development.

Customizing Digital Tools for Different Education Levels: The inverse moderation effect of education on the relationship between effort expectancy and satisfaction indicates that more highly educated entrepreneurs are less satisfied by the perceived ease of use of cashless technologies. In the context of Bangladesh's Smart Bangladesh 2041 vision and broader national efforts toward building an inclusive digital economy, this insight guides SME policymakers and fintech developers to emphasize value-added features, such as analytics, scalability, and system integration, for more educated entrepreneurs. Such tailored approaches support SDG 4 (Quality Education) and SDG 9 (Industry, Innovation, and Infrastructure) by ensuring advanced innovative features of digital tools for highly educated SME entrepreneurs.

By addressing these practical implications, stakeholders can create an environment encouraging cashless technology adoption and ensuring a more inclusive and sustainable digital economy for SMEs considering national development priorities.

Limitations and future directions

While offering valuable insights, this study has limitations that present future research opportunities. First, the research primarily focuses on SME entrepreneurs, which may limit the generalizability of the findings to other entrepreneurial ecosystems or industries. Future studies could expand the scope by examining diverse business sectors or comparing regions. Additionally, further research could examine evolving fintech trends, such as blockchain-based payments or AI-driven financial services, to assess their impact on digital financial inclusion and sustainability.

Availability of data and materials

The data supporting this study's findings are not publicly accessible due to sensitivity concerns but can be obtained from the authors upon reasonable request.

Acknowledgements

The authors acknowledge the material support from experts during the questionnaire design, and funding support attained from the AUST Internal Research Grant (AIRG), Ahsanullah University of Science and Technology (AUST).

Funding

This research was approved by the Committee for Advanced Studies and Research (CASR) and fully funded by the AUST Internal Research Grant (AIRG) of Ahsanullah University of Science and Technology (AUST) under Project ID: ARP/2023/BBA/04/01.

Author information

Authors and Affiliations

1. Department of Management Information Systems (MIS), Faculty of Business Studies, University of Dhaka, Dhaka, Bangladesh

Nahida Sultana

2. School of Business, Ahsanullah University of Science and Technology, Dhaka, Bangladesh

S. M. Shafiul Alam & Rifat Parveen Bokhari

Authors

1. Nahida Sultana

2. S. M. Shafiul Alam

3. Rifat Parveen Bokhari

Contributions

Nahida Sultana: conceptualization, methodology, formal analysis, writing-manuscript, review and editing. S.M. Shafiul Alam: conceptualization, investigation, data curation, validation, writing-review and editing. Rifat Parveen Bokhari: investigation, data curation, resource management, writing-review.

Corresponding author

Correspondence to Nahida Sultana.

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Competing interests

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

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Exploring cashless technology continuance among SME entrepreneurs: an integrated approach with sustainability mediation and demographic moderation - Journal of Innovation and Entrepreneurship

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The rapid advancement of cashless technologies has transformed financial transactions worldwide. In Bangladesh, entrepreneurs affiliated with Small and Medium Enterprises (SMEs) are increasingly adopting these innovations to enhance business efficiency and sustainability. This study delves into the factors influencing the continued use of cashless technologies among SME entrepreneurs by developing an integrated and extended model.

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Brands increasingly seek to provide "frictionless" experiences-a sense of ease and efficiency that enables users to engage with them on their terms. However, in a small but growing number of cases, frictionless means eliminating cash as an accepted payment method.

This is a seemingly minor but significant shift in the retail landscape. As a society, it signals a shift away from inclusive commerce toward what might better be described as the age of the preferred customer.

There's been growing support from both consumers and retailers to move away from cash in favor of digital payment options. This includes credit and debit cards, as well as newer payment forms like mobile (Apple Pay, Google Pay), peer-to-peer (PayPal, Venmo), and virtual or crypto currencies (bitcoin, etherium). According to one recent survey of over 15,000 global consumers, 47 percent of respondents were "excited about the prospect of a cashless world." The question is whether this is a good thing for those on both sides of the transaction.

On the surface, the move to a cashless society may seem like a win-win situation. However, the only clear winner would be the federal government. In a cashless environment, money laundering and tax evasion would become much more difficult. For brands and consumers, the change is less clear.

When Sweetgreen, the fast-casual restaurant chain, decided to stop taking cash payments in 2016, it cited a number of valid reasons for the decision. These included the decreased risk of theft, environmental sustainability, and overall operational efficiency. Less than four years later, the chain reversed its decision. Sweetgreen had benefited from the change, but it came with an unintended consequence: The brand was unintentionally self-selecting its customers. For a chain whose mission embraces inclusion-in the form of access to healthy food-the inability to serve all potential customers created a problem that required a course correction.

Interestingly, the pushback against cashless business practices has mostly come at the state and municipal level. The Amazon Go business model is predicated on a cash-free customer experience. But the company's ambitious expansion plans have been tempered by local government intervention. New Jersey and Philadelphia passed laws requiring that all retailers accept cash payments, and San Francisco, Chicago, New York City, and Washington, DC, are considering similar legislation. Why?

Almost 1 in 4 US consumers (which equates to 32.6 million households) are unbanked or underbanked. That means these people either have no access to banking products like credit and debit cards, or must pay exorbitant fees to use instruments like prepaid debit cards. (It seems counterintuitive, but the highest fees in the banking and credit industries are charged to those who can least afford them.) Denying these individuals access to basic products and services based solely on payment method borders on discriminatory. It's one thing for luxury brands to self-select their customers on the basis of price point, but it's another for a retailer to deny access to a person trying to buy a pack of gum.

Beyond the altruistic arguments that merchants use for going cash-free, there's another, unstated reason they're drawn to this model: Consumers spend more. Scientific studies dating back to the 1970s have shown a clear correlation between cashless environments and increased consumer spending. For retailers, the payoff can be substantial. In the absence of cash payment alternatives, consumers' "willingness to pay" can be increased by up to 100 percent.

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We are moving relentlessly towards a paperless and cashless society which by its very nature is both incredibly convenient and environmentally sound; but such frictionless spending also has much larger societal and individual, socio-political ramifications, that are not immediately visible.

Transactions are quickly-moving from cash to cards to phones to pay for goods and services.

Transactions are quickly-moving from cash to cards to phones to pay for goods and services...

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Who wins and who loses in a cashless society?

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We are moving relentlessly towards a paperless and cashless society which by its very nature is both incredibly convenient and environmentally sound; but such frictionless spending also has much larger societal and individual, socio-political ramifications, that are not immediately visible. Transactions are quickly-moving from cash to cards to phones to pay for goods and services...

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...the move from check-based welfare payments to EBT payments was associated with a substantial drop in street crime ...

In Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program (NBER Working Paper No. 19996), authors Richard Wright, Erdal Tekin, Volkan Topalli, Chandler McClellan, Timothy Dickinson, and Richard Rosenfeld investigate whether the amount of cash circulating within a community affects the crime rate. The researchers take advantage of a significant shift in welfare payment schemes that took place across the United States over the last two decades: replacement of paper checks with a digital debit card-based system, the Electronic Benefit Transfer (EBT) program. Although mandated by the federal government, the transition from paper checks to EBT payments was implemented at the state level, most often on a county-by-county basis. This generated substantial variation in the starting point of EBT adoption in different places. The researchers examine monthly data on various types of crimes from all of the counties in the state of Missouri between 1990 and 2011 to measure the impact on various crimes of reduced circulation of cash resulting from the EBT program. They find that the move from check-based welfare payments to EBT payments was associated with a substantial drop in street crime as measured by either reports or arrests. They observe significant effects for burglary, larceny, and assault, and a weaker effect for robbery.

The authors suggest that the most likely explanation for this finding is that EBT payments reduced the amount of cash on the streets that could be taken or used for illegal purposes. Even though welfare recipients still can withdraw their allotted benefits in the form of cash, EBT payments do not require the complete liquidation of benefits as would be necessary with paper checks. This means that the overall circulation of cash on the streets -- especially among those who are particularly vulnerable to street crime -- must have been reduced following adoption of the EBT program. Furthermore, the old system required a significant proportion of welfare recipients with no access to conventional bank accounts to cash their benefits at independent check-cashing establishments, which are also hot spots of street crime. Because cash is critical to the pursuit of many illicit actions, a decline in cash balances can serve as a brake on the cycle that drives street crime and can affect not just predatory offenses like burglary and larceny, but assaultive disputes that are often linked to the heavy drug and alcohol use associated with participation in street life.

The authors reject the hypothesis that adoption of the EBT program simply displaced crime from one county to another, with potential criminals moving to counties that still relied on paper checks. This finding is consistent with studies indicating that offenders tend to operate within their own geographical awareness space, and it supports the contention that the removal of cash through the EBT program has an enduring negative effect on street crime.

-- Les Picker

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the move from check-based welfare payments to EBT payments was associated with a substantial drop in street crime ... In Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program (NBER Working Paper No.

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The world is rapidly moving towards a cashless future. Digital payments, mobile wallets, and contactless transactions are becoming the norm in many parts of the globe. As technology advances, the idea of a fully cashless society no longer seems far-fetched. While this transition brings several economic benefits, it also introduces

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Japan's cashless payment ratio hits 42.8% in 2024

BOJ policymakers call for action to keep settlements attractive

CBDC could become critical infrastructure in Japan, Uchida says

No guarantee central bank currency will retain key settlement status

TOKYO, June 11 (Reuters) - Bank of Japan officials are ramping up calls to keep pace with rapid developments around digital currencies that may accelerate a shift to cashless payments in a country better known for its belief that "cash is king."

Once seen as a society favouring physical currency, Japan saw the ratio of cashless payments rise to 42.8% in 2024, up from 13.2% in 2010 and hitting the government's 40% goal a year earlier than targeted, government data showed.

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While Japan is a global laggard on payment technology, the increase in cashless transactions is forcing policymakers to ensure they are ready to adapt to shifting public preference on payment and settlement means.

This includes the option of a central bank digital currency (CBDC). While no decision has been made on whether to issue a digital yen, the BOJ began a pilot programme for developing a CBDC in 2023, and has been consulting with private firms and the government on its framework and design.

"Although banknote issuance remains high in Japan, usage of notes could fall significantly in the future amid rapid digitalisation," BOJ Executive Director Kazushige Kamiyama told a meeting last week with private firms on the pilot programme.

"As such, Japan must consider what steps it can take now to ensure its retail settlement system is convenient, efficient, accessible universally, while being safe and resilient."

BOJ Deputy Governor Shinichi Uchida said a CBDC may become "a critical piece of infrastructure" shaping the future of Japan's payment and settlement systems, but stressed that he did not expect demand for cash to disappear in Japan any time soon.

In his speech on Saturday, Uchida spoke about a hypothetical world in which the yen is overtaken by another instrument - such as crypto assets - as the main form of payment in Japan.

Such a world would not occur as long as the public believes in the BOJ's ability to keep the value of the yen stable, which could come into question if the central bank fails to fulfil its mission of price stability, Uchida said.

"Looking to the future, in a society that has made significant advances in digitalization, there is no guarantee that currency issued by the central bank of a sovereign nation will continue to function as a generally acceptable payment instrument," he said.

CBDCs are back in the spotlight after U.S. President Donald Trump issued an executive order in January banning the Federal Reserve from issuing a digital dollar, seemingly as part of a drive to promote cryptocurrencies and stablecoins instead.

The growing presence of stablecoins, or cryptocurrencies backed by a hard currency, and the potential risk of an erosion in the U.S. dollar's dominance have also piled pressure on central banks to consider issuing their own digital currencies.

The European Central Bank has called for the need to issue a digital euro to respond to Trump's push to promote stablecoins, and develop an electronic means of payment that does not rely on dominant U.S. providers such as Visa.

China is racing ahead with global ambitions to internationalise the yuan with transactions of the digital yuan more than tripling between June 2023 and June 2024.

Reporting by Leika Kihara; Editing by Sam Holmes

Our Standards: The Thomson Reuters Trust Principles., opens new tab

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The global shift towards a cashless society represents a significant transformation in the way economies operate, driven by advancements in digital technology and the increasing preference for electronic transactions. This paper explores the implications, challenges, and future prospects of transitioning to a cashless society, by drawing on case studies from various countries at different stages of this transition. The study examines the potential benefits of a cashless society, including increased financial inclusion, reduced transaction costs, and enhanced transparency. However, we also address critical challenges, such as digital security risks, the advancements of the technological industry, and the persistence of cash in certain cultures and economies. Through a comprehensive analysis of these factors, the paper provides insights into the socioeconomic impacts of a cashless transition and offers a clear understanding of what lies ahead for the many countries embarking on this evolutionary change. While doing this, we will also highlight that although the move towards a digital economy holds significant promise, it requires careful planning, robust infrastructure, and adaptive strategies to eliminate risks and ensure that this journey is smooth and successful.

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Reducing transaction costs, closing the financial inclusion gap, and fighting corruption are just a few.