Thanks to the smooth development of contactless payments, debit cards and mobile apps, cash will probably soon be history. It has been the primary form of settlement for as long as we can remember, however, given both technological developments and the slow shift away from what is already becoming inconvenient, digital payments are a much more attractive alternative. Later in this article, you’ll learn about the history of cash and the top 5 reasons why card and phone payments are better than cash transactions. Enjoy your reading!
The history of cash
Whether represented by a metal coin or a piece of paper, money is not always valuable. Their value depends on the importance people attach to them – as a means of exchange. Money allows people to indirectly trade in goods and services and is a representation of the value of certain things, as well as allowing for the accumulation of wealth. Below are some interesting facts about money:
- Before money, people acquired and exchanged goods through the barter system, which involves direct trade in goods and services;
- The Chinese were the first to develop a paper money system around 770 BC;
- Money expresses value, according to the value people assign to it;
- The first region where the first coinage plant was established was Lydia (today’s area of western Turkey), around 600 BC.
- Although in most cases the terms ‘money’ and ‘currency’ are used interchangeably, there are several theories that suggest that the terms are not the same. According to some claims, money is inherently an intangible concept, while currency is a physical and tangible manifestation of intangible money.
Therefore, according to this theory, money cannot be touched or smelled. Currency is a coin, note, object, etc. The basic form of money is numbers in turn the form of currency is paper notes, coins or debit cards. Although this distinction can be crucial in some discussions, taken as a whole, people use these terms interchangeably.
The transition from barter to currency
Money, which has had many forms over the years, has been part of humanity for more than 3,000 years. Before this period, historians agree that a barter system was probably used. Barter is the direct exchange of goods and services, for example, a farmer might exchange his wheat for tools to cultivate a field. However, such agreements take time to become effective. The second issue remains the ability to fulfil the terms of this contract.
Slowly, over the centuries, a type of currency has developed, involving easily exchangeable items such as:
- animal skin;
All of the things mentioned had a value, which was nevertheless still negotiable. This method of trading is used all over the world even in the present day, as it is often difficult to establish the value of a contract. Nevertheless, with the introduction of money as it is today, business can be conducted much more efficiently.
The creation of the first official currency
King Alyattes of Lydia introduced the world’s first official currency in 600 BC. The coins were made of electrum, a blend of silver and gold, and had stamped images that represented denominations. In Sardes, during the same period, you could buy a clay jar for two owls and one snake, with these symbols representing specific coin images.
Lydia’s introduction of currency had far-reaching effects, contributing to the nation’s development both internally and externally.As a result, Lydia quickly became one of the wealthiest empires in Asia Minor. It is worth noting that the famous saying ‘rich as Croesus’ stems from the last king of Lydia, Croesus, who was renowned for his extraordinary wealth and credited with creating the world’s first official currency.Lydia’s currency had a significant impact on its own fortunes and the historical and economic landscape. Its legacy is still visible today.
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Reasons why card and phone payments are better
Advocates of both cash and alternative payments have been engaged in heated debates for years, which so far have not produced any concrete resolutions. However, it is not insignificant that some countries are trying to move away from cash, while cards and phone payments are gaining more fans. The following are the best reasons that should put an end to these discussions.
Cash creates chaos
Cash is unidentifiable as are all the purchases paid for with it. So it is almost impossible to manage and improve your finances effectively. With digital forms of payment such as debit cards or contactless payments, you can receive push notifications as soon as a payment is made. In addition, by using debit cards or your phone, you have a full transaction history at your fingertips, so you can monitor your spending and make informed financial decisions.
Did you know that there are countries that are very close to eliminating cash from the domestic market, in order to use cashless payments completely? Norway and Denmark are leading the way in becoming a cashless society, but the real leader is Sweden, where only 3% of all transactions are cash transactions. This figure is expected to be even lower in the coming years.
In general, Scandinavian countries are not fans of banknotes and cash transactions, which is why digital payments are most popular. Many shops, restaurants and banks refuse to accept cash because consumers rarely use it. Some retailers place a sign on the door before entering the premises, indicating that only contactless payments are accepted.
If you are heading north, consider that it would be a good idea to have a credit card and a mobile app. Otherwise, you will not be able to use all the services that will be offered there.
Cash is awkward
Plenty of people use cash to give money to friends or donate to charity, but what if you don’t have the exact amount in your profile? You can save yourself these inconveniences and awkward moments with apps such as, for example, Revolut.
This mobile app allows you to send money instantly to other users with just a few taps. In this way, you can quickly send information to friends and put money aside for your dream holiday. In addition, you can use the card issued with your account to deposit at any shop and withdraw money from most ATMs around the world, while it is worth bearing in mind the commission rates, as they often vary for certain brands.
Using card and phone payments online
The internet is a space where the use of cash is impossible. Of course, we can use cash for intermediate purchases, as we will only pay when the courier delivers the order, however, if we want to order a service online, payment can only be made by credit card. Another place where debit card or phone payments can be used is online casinos. All operators allow payments to be made using a number of different payment methods.
Cash makes it easier to commit crime
Cash is untraceable and provides anonymity that digital payments do not. Of course, we are not referring to the serial numbers with which banknotes are marked. Did you know that even now there could be a note in your wallet that was stolen from the bank a dozen years ago? Cash is passed from hand to hand, so this makes it an effective tool for criminal activity. Almost all criminal groups that engage in illegal activities use cash to facilitate money laundering, tax evasion and other illegal activities. If only digital payments existed, criminal behaviour would be much more difficult to conceal.
From a consumer perspective, carrying cash is quite risky. Every day, thousands of banknotes are stolen or lost. With debit cards, the risk is much lower – even if someone steals your card, you can quickly block it on the app and allow payments to be made at the same time.
Greater control over your money
While you might think that cash is more controllable, this is just a myth. When you use cash to make everyday purchases, you can easily lose control of your spending. You start the day with a wallet full of cash and before you know it, the money is just gone. Sometimes you can’t even remember when you spent your last $100.
Unlike cash, debit cards are usually linked to an online account that can be accessed via the respective operator’s mobile app. In this way, you are able to see exactly what you have spent your money on, at what time and where. Mobile payments open up completely new solutions for people that are not possible when using cash.
While cash continues to be used by all societies, digital payments represent an increasing percentage of all transactions, and this is bound to change in the future in favour of cashless payments. Many industries already prefer only debit card or phone payments. It is worth noting that all payments for online services ie: Spotify or Netflix, can be paid digitally, hence cash will not be applicable here.
The above reasons further support this form of settlement not only online, but also in everyday life. Of course, there is still a long way to go before cash is no longer used, but it is worth equipping oneself with the necessary knowledge in order to familiarise oneself with other accounting methods, which have many more advantages over cash.