Understanding The Proposed Safe Harbor Threshold And How It Will Likely Affect The Remittance Rule Enforced By The Bureau Of Consumer Financial Protection

The Bureau of Consumer Financial Protection recently proposed some changes to the remittance rule as part of Regulation E. The changes will likely affect anyone that regularly makes international money transfers and companies that provide international remittance services. If you find yourself in that bracket, then you need to familiarize yourself with the proposed changes. Let's dive in and see how the proposed changes will affect remittance services and future activities.

What is Regulation E?

It is also known as The Electronic Fund Transfer Act (EFTA), and it is the legal framework that highlights the responsibilities and rights of parties involved in electronic fund transfer systems. The Bureau of Consumer Financial Protection implemented regulation E. It also establishes various protections for cross-border remittance.

The latest proposal pertains to a statutory exception through which insured institutions will be allowed to disclose estimates instead of exact amounts to clients. This exception will expire on July 21, but the Bureau of Consumer Financial Protection has proposed a change that will create a soft landing one the remittance rule expires. The proposal that has been tabled suggests increasing the safe harbor threshold.

How does the safe harbor threshold affect Regulation E?

In this case, the safe harbor threshold refers to the number of remittance transfers that a person can make in a year within the determined legal confines. Going beyond that limit raises some flags, which may lead to things like money laundering probes. Going beyond that limit legally requires remittance services is subject to higher compliance costs, especially for insured remittance providers.

The Bureau suggests increasing the safe harbor threshold, and this will be a huge advantage, especially to entities or businesses that conduct few remittance transfers every year. There are numerous amendments to the remittance rule that the Bureau has suggested. It suggested raising the current remittance transfer threshold from 100 transactions to 500 transactions a year.

The Bureau also proposed remittance rule changes that will ease the effect or impact of the expiration of statutory exception expiry. This particularly focuses on the expiry of the exception that lets insured institutions to reveal third-party fees exchange rate estimates to their customers rather than disclosing the actual amounts as noted earlier. The new proposal aims to introduce a permanent exception rather than one that expires.

Why the Bureau is focusing on the changes

Cross-border money transfer is vital for many reasons. It allows people working abroad send money to their families in their native countries. It also allows people working remotely to receive their pay. For example, a person may work for an organization in another country without having to travel. Another reason why cross-border transfers are important is that they enable the exchange of value and facilitate e-commerce.

The Bureau recognizes the value of such services and thus the focus on making such services available more conveniently. These are also the reasons why money service businesses (MSBs) exist. Banks, credit unions, and MSBs usually provide money transfer services to customers, but MSBs handle a majority of the remittance services, 95.5 percent in 2017, to be more specific.

Interestingly, the Bureau discovered that although banks and credit unions handle far fewer remittance transactions than MSBs, they handled larger amounts. Meanwhile, MSBs handed significantly more transactions, although each transaction is on average is of a small amount. This kind of information is playing a key role in guiding the Bureau's decision on how to structure the guidelines for cross-border transactions and remittance services.

Here’s why the proposed changes are important

There have been previous attempts to get the Bureau to waive the cost of compliance on smaller businesses in the remittance industry. However, those requests were turned down. The Bureau has instead entertained the idea of adjusting the exemptions so that it can provide some benefits, especially to smaller firms. For example, one of the proposed changes will increase the safe harbor threshold, thus allowing smaller firms to enjoy some exceptions.

This also means that smaller companies in the remittance space will get to enjoy some cost savings with the threshold lifted to 500 transactions. This means that they can make, on average 10 transactions per week. The Bureau also expects the increased safe harbor threshold will help avoid any issues resulting from the expiry of the temporary exemption.

The Bureau has also encouraged industry players to provide comments on the changes. These requests aim to help the Bureau come up with the best possible regulations that will help the industry move forward. The Bureau also believes that raising the threshold will also make EFTA's purpose clearer especially making it clear what being a remittance transfer provider means. Doing this will also help credit unions, and banks avoid facing additional or disproportionate cost by providing remittance services to their customers. Many banks handle between 100 and 500 transactions annually.

Any banks and credit unions are expected to benefit from the proposed safe harbor threshold increment. There have been some claims that some banks are no longer providing limited remittance due to the previously limited safe harbor threshold. The Bureau thus expects that raising the threshold will pave the way for the affected banks and other institutions affected to resume offering their services.

Will customers be exposed to risk?

The Bureau expects that raising the safe harbor threshold will lead to new firms qualifying for the exemption. New firms may not strictly adhere to the regulations or have the necessary security systems in place, thus leaving the consumer exposed. The Bureau is expected to help ensure that firms take the necessary measures to ensure that firms in the industry are compliant and that customers are adequately protected.

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Good Karma and the Butterfly Effect

We all know how the proverb goes, “Do unto others as you would have them do unto you.” This is an outstanding principle to observe by people of all ages. Unfortunately, there is a gradual decline in values orientation in the 21st century. In this dog-eat-dog world, people are preoccupied with work. Everyone needs to get ahead. Everyone aims for success regardless of what they sacrifice and leave behind.

In the modern generation, selfishness has become a trend. The current belief is to look out for yourself or else you’ll end up at the bottom. It's high time to break the dogma and realize that people need to bring back their belief in good karma. But what is it and what does it comprise?

What is Karma?

Karma is the result of one's actions towards others or himself. This is related to the concept of cause and effect: what you reap is what you sow. Experts believe that karma is the law of the spiritual world. It states that people are held accountable for their actions and intentions. Whatever an individual does, there is a counterpart, a result, or a consequence. This outcome is called karma.

Bad karma happens when a person has done bad things in his life. It's true what the movies portray – villains never win. The law of the spiritual realm will consort against those who break the laws of mankind. If you steal from somebody, the universe conspires to take back what you took, sometimes more.

For example, you stole $100 from your office fund. The universe will conspire and find a way for you to pay it. You or your family might get sick and this will force you to pay thousands of hospital bills. Or, other people could rob you. The tricky thing is, the outcome doesn’t have to be a direct counterpart of what you did. The result doesn't have to be an eye-for-an-eye phenomenon. It could take a toll on your career, your relationship with your loved ones, or your overall well-being.

Good karma, on the other hand, occurs when a person focuses on doing righteous deeds like giving to people, offering a compliment, teaching new skills, and offering thanks. These behaviors, no matter small, result in positive outcomes. Sometimes, what you get is more than what you have given. You might not receive what is due immediately, but that's the beauty of it. Karma works mysteriously. It might not be what you wish for now, but it could be an opportunity that could change your life in the future.

The Butterfly Effect

Karma is not limited to what you gain or lose due to your actions. It also commences a butterfly effect, a phenomenon where a small action causes various outcomes. The butterfly effect is also known as the ripple effect. When you throw a pebble in the water, it can cause a wave.

According to experts, your actions, no matter how small, have the potential to change someone else's life. For example, you smiled at a stranger today and made him happy. The positivity you shared could affect his work life and family life. Because he's in a good mood, he is motivated and determined to accomplish his goals for the day. Little does he know that his outputs were the key to his promotion to boost his career.

Say he is a grumpy man, and he directs his anger towards his children. Because of this promotion, he feels more satisfied with life. He displays joy and liveliness to his family as opposed to his angry and aggressive tendency towards them. Instead of making his children hate him for what he is, he found a way to instill positivity to his loved ones. This change could lead his children to a better tomorrow. And the ripple effect goes on to future generations because of one quick smile.

To some of you who don't believe this phenomenon, try to look back in your lives and remember the most righteous deed that anyone displayed towards you. Now, assess how it affected your behavior and perception. Believe it or not, your life is not just defined by your talents, genes, and predispositions. The actions that people displayed towards you contributed to who you are now. At this point, you are emancipating the same deeds and positivity to others in hopes to help them achieve their full potential as you reached yours.

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Love, and it’s Magical Properties

It is a universal fact that humans are emotion-driven. No matter how good of grasp you have on your feelings, certain ones are bound to overpower what your brain signals to your body. We all have been there at least once in our lifetime. Some feelings might not be clear enough for one to recognize, and despite that, we perform certain actions based on the feelings we are going through unknowingly.

Isn’t it strangely amazing?

Helping your mother in household errands, assisting your father with some computer-related work, trying to make your friends happy, or making a girl/boy you have a crush on are examples of love. It need not necessarily be a big enough effort to come into notice by everyone around, but small and subtle gestures that you and the person on the receiving end somehow knows of. We humans have the capability of deciphering what is love and react to it almost instantly. Human psychology is a very interesting subject, isn’t it?

Everyone has his/her unique way of expressing love, which is not going to match the receiver’s always, but that doesn’t affect the feelings of either of the person. It can also be said that added uniqueness might also multiply the love transferred.

Love multiplies

To understand this, we must first take into account how does love affects one’s personality. Take a common example; when a couple is in love, they will both transfer positive energy amongst themselves and those they are in contact with. Love induces a sense of comfort and excitement in an individual. Moreover, it makes us take certain actions which we wouldn’t have done otherwise.

Now, these feelings are transferred from us to another person through gestures or even vibes. The person, say your friend whom you will meet for a casual lunch, will automatically feel uplifted when he is around you as you will be enthusiastic. Connect the dots.

Love can be subtle yet effective

Isn’t it magical that the simplest of the actions can deliver a powerful act on the other person’s thought process? Ever gave a pay raise to one of your workers? If you would’ve noticed, they would do extra work for you just because of the pay raise. Maybe even try to help your mom, she will cook the dish you love the most. That’s the power of love. The more you express, the bigger will be the effect if the receiver has the same level of feelings for you.

It just happens

Of course, you can ignore your feelings for some time or might be unaware of, but you cannot stop them from happening. Love is such a feeling which tends to happen over time, and when you are usually aware of it, you are already in a deep state. You can ask any of your friends who are in a relationship, and they will certainly answer the same.

You don’t need to know the person

Love, at first sight, sounds too filmy, but it happens in real life as well. Ever saw someone walking by, and you can’t stop thinking about him/her and possibly want to get in touch with that person? Our hormonal changes fuel out feelings and hence love.

But there are chances this might not be true for all; some people love to get to know the traits of his/her potential partner.

Love is bounded

Love doesn’t “depend” on someone’s age, religion, gender, or any such aspect. It is what you feel for the person, and nothing else matters. Such things cannot bind it, and neither should it be because all of us are humans, after all.

When an individual is deeply in love, they will be the most positive person he/she has ever been in his entire life. This has been backed by scientific researches as well. The force of love is so strong that it can even uplift a person from depression! Depression is a critical mental state that many people fail to come out of even when seeking psychological help.

Love is a motivational force

There have been several medical cases where the loved ones motivated the patient(s) and helped boost their will power. This is even regarded by best doctors around the world.

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The U.S Stock Market Has Been Rallying While The Economy Struggles And This Is Troublesome

The U.S stock market has continued to raise questions among traders, particularly because the market has been rallying at a time when the economy was severely affected by the coronavirus. Technically, in crisis, such as the ongoing global pandemic, investors tend to exercise caution because they know the markets could go against them. In most cases, investors start shorting their stocks, and this inadvertently causes a market crash.

Curiously, a stock market crash has not happened despite the COVID-19 induced economic decline. So why have stocks been rallying while the economy becomes weaker? And does that mean that stock prices have been ignoring company fundamentals?

How company fundamentals influence the price of a stock

Company fundamentals should mainly drive stock prices. Fundamental analysis is important for traders because it allows them to understand how data such as market data should influence a company’s performance. They thus need to observe important stock fundamentals such as debt to equity ratio, return on assets, cash flow, and many others. However, the most used basic fundamental factors are the price/earnings ratio and the earnings per share (EPS).

To put it to perspective, if a company has too much debt versus the revenue it is making, then most of the revenue will be used to pay off the debt. If the return on assets is too low, it does not facilitate optimal value for the investors. If the cash flow is not favorable, then the company's performance is affected, and these factors should have a significant impact on the stock price.

The U.S government implemented strict restrictions and lockdown measures to prevent the coronavirus from spreading. Every company in the U.S was affected in one way or the other. For example, the lockdown measures forced people to stay at home, and their spending habits were affected, especially with the loss of jobs. Demand for non-essential products declined, and as such, many companies felt the impact in the form of drastically reduced revenue streams.

Looking at things from the above perspective highlights just how the economic factors can influence a company's performance and, thus, its stock price. Therefore, it is unusual that stocks have been skyrocketing when the economic conditions should reflect in their fundamentals. Interestingly, the stocks also seem to be immune to the unrest that has been going on during the Black Lives Matter protests.

Were company fundamentals really involved?

Some analysts argue that company fundamentals were involved in the stock market rally. They believe that the traders that did not manage to jump on the rally were simply bitter about it, and thus they started crying foul about it. But is that really what happened? Perhaps the answer to that question lies in the stock market performance in the first quarter.

February, March, and April were tough months because the coronavirus pandemic went into full swing and spread across the world. Many industries were grounded as governments rushed to place restrictions that would help flatten the curve. As noted earlier, every industry was affected in one way or the other. Even the negatively affected stocks took advantage of the lifted or eased restrictions to get back on the saddle.

How did the companies bounce back so quickly?

This has to do with the timeline of the coronavirus pandemic, which happened quite fast. Most of the companies acted rapidly by restructuring their operations to focus on essential production only. Some had to shut down their operations to avoid huge losses temporarily. Such measures were critical towards ensuring that companies had a chance at recovering quickly once the government eased restrictions.

All that happened within a span of three months, but preparedness was the name of the game. Prolonged exposure would have hurt the fundamentals of many companies. Fortunately, that was not the case as the government reopening the economy meant that demand got back to normal after just three months.

The companies are businesses that still need to make profit

Despite the debate on whether or not the stock market rally respects company fundamentals, one thing is clear. At the core of each stock is a business whose main goal is to make profits perpetually so that it can generate value for shareholders. This means they have to think about the best course of action to ensure their survival. This is why even the top companies usually respond to crises by slashing jobs and downsizing their operations.

Trimming the fat is an essential process of ensuring the survival of the business in the future. Government intervention has also been critical in helping the stock market to get back on its feet. The stock market needed to survive because a huge crash would have far-reaching consequences, such as expediting an economic recession.

What to expect moving forward

Although the stock market has been enjoying a speedy recovery, the coronavirus threat remains active. Analysts remain worried about another wave of COVID-19 infections and the potential implications on different industries. There is still no cure, which means that the threat is still active, and things have not completely resumed normalcy. Until then, the demand for services and commodities remains affected, which also means that companies are not operating at 100 percent efficiency.

Investors should proceed with caution, but there is a glimpse of hope, especially with pharmaceutical giants such as Moderna fast-tracking clinical studies for their developmental vaccines. Fundamentals remain an important aspect when determining whether stocks are reasonably valued and thus the need to continue using such criteria when stock picking.

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Positivity begets Positivity & the Butterfly Effect

We, humans, tend to ignore routine things we know are good for us. For example, working out to stay fit and eating healthy sounds all good, and some of us might even layout plans to be on a strict routine throughout the year, but we all know how that usually ends. The paper on which the diet chart was laid out being tossed into the trash can, or we skipping them until it become a habit. Isn’t it true?

Similarly, we all know that staying positive is one of the salient factors in a happy life. But do we all preach it? Well, we try to, but certain situations and emotions overpower it. It can oscillate from individual to individual, but even the smallest of the things can cast a shadow, inducing negative thoughts.

What I’m trying to establish is that such little things may happen in our day to day life, which would pile up, and despite no amount of effort we make, we might end in a loop of negative thought process.

So, what could you do to disrupt this process cycle? The answer is simple. Indulge yourself in any such activity which is not a part of your daily routine that is capable of diverting your attention span for some time. Tasks involving applying your creativity, such as painting, dancing, or even playing a sport, can be helpful.

If you would’ve noticed, when it rains, it creates a chain reaction. It helps to replenish the groundwater levels, act as a source of water for plants, ease the ambient temps in the area, and so on. Like so, if you stay positive, you will appeal to more individuals on an intellectual level. Humans are creatures with emotions, who tend to relate to one another based on the common experiences we share. If one tends to stay positive in heavy workload environments, then that person’s colleagues and subordinates will inherit it and try to stay positive. This will trigger a chain reaction in the workplace and then might even reach the masses.

By staying positive, you will get into something as known as the “butterfly effect.” You must know it a larva evolves into a caterpillar and then finally into a beautiful butterfly. Consider that as stages of your psychological thought process. It takes time to get into the right mindset but shall evolve you into a beautiful human being.

According to social psychology, positivity is considered to be a key attracting factor. Remember the last seminar by an engaging person? You must’ve walked out of the hall with an uplifted mood and a big smile on your face. That’s the power of positivity. You can see the guest speaker as a butterfly and you as a human watching him/her evolve and be a person filled with positivity.

“What goes around comes around.”

If you spread positivity, knowingly, or unknowingly, it will always return to you in some form of action. The mass chain effect and the butterfly effect we talked about earlier will always have someone from your work or home or social environment covered. What happened to you when you were implementing this phenomenon in your life will now happen to them, and you will be on the receiver end. In response to the same, you will also perform such actions that deliver positivity to the giver in the previous statement, and the cycle will continue to go on.

Now consider this on the macro level. The scale will be humongous! While it might not be able to reach the entire human population, even if it happens to half of it, it will be a better place. Friction amongst communities will reduce people of different cultures and beliefs might come together; the next generation will potentially see lesser suicide cases. Isn’t that great? We all want such a society, don’t we?

It would be best if you gave motivational lectures to your employees or be super serious about it. You will be in a state of true positivity when the positive thoughts generate in your brain automatically, and your heart adheres to them. You can, for sure, force your mind in the first practice, but the former is what you should be like when you think you’re a genuinely optimistic man. A piece of advice would be to incorporate unique activities in your routine, workout, or go for a walk with your loved one(s); it will bring a small but significant improvement!

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Logotherapy as an All-around Healing Regimen for People with Mental Disorders

Depression, Schizophrenia, Anxiety Disorder, Posttraumatic Stress Disorder, Personality Disorder, Substance Abuse Disorder, and Mood Disorder – Most of you might have heard about these illnesses before. These are some of the most common psychological disorders that people develop in the 21st Century. Knowing that the cases of these disorders could reach millions, have you ever thought about how these people are treated and cured? One of the most effective methods is Logotherapy. What is it? And how does it work?

Logotherapy is based on the premise that humans need to find the “meaning of life.” According to Viktor Frankl, the creator of Logotherapy, lack of meaning is a primary source of stress and anxiety. Without intervention, it could lead to the psychological disorders mentioned above.

This technique is one of the oldest concepts in psychology which started in the 1940s. Its primary objective is to help individuals find the significance of their lives – to find their purpose of living. Logotherapy helps them achieve these using time-tested strategies. But before we discuss these, here's why Logotherapy was created.

Logotherapy vs. Psychoanalysis vs. Psychodynamic Therapy

Experts regard Logotherapy as the third school of Viennese psychotherapy next to Sigmund Freud's Psychoanalysis and Alfred Adler's Individual Psychology. Many make the mistake of interchanging one's concept for the other. To differentiate the ideas presented by these theories, let's have a rundown of their fundamental approaches.

Freud believed that childhood experiences pose significant effects on human behaviors during adulthood. He concentrated his efforts to find countless ways to penetrate the barrier that will lead him to the secrets of a person's cognitive processes. This is how he developed the types of defense mechanisms such as repression, projection, and many more. To this date, his theories remain an important tool to assess human behavior.

Alfred Adler, on the other hand, believed that everyone has one basic desire – it is to attain a sense of belongingness. According to his studies, if people are encouraged, they will be more inclined to work cooperatively. However, if they feel discouraged and unappreciated, people tend to react in unhealthy ways by competing, withdrawing, or giving up.

Both of these theories have valid points to define the personality of individuals. However, they have shortcomings according to Viktor Frankl. He believed that the psychoanalysis of Freud abandoned the genuineness and spontaneity of humans. Plus, this theory leans towards a negative note, claiming that people's behaviors are based solely on their experiences as children. It discounts the fact that humans can be resilient.

Frankl also frowned upon Adler's Psychodynamic Therapy. Frankl believed that by seeking belongingness, people forget to search the meanings of their own lives. This, to Frankl, is just as important. Because of these shortcomings, Frankl developed a new type of therapy. He built it based on the idea that humans are motivated by their need to find the meaning of life as opposed to finding pleasure or power. So, how can it be used to shape the behavior individuals?

Techniques of Logotherapy

Like other theories, Logotherapy offers a variety of techniques to help individuals heal from psychological disorders or maintain a healthy mental well being. Here are the most prominent techniques of Logotherapy.

Paradoxical Intention

Paradoxical intention is a famous technique similar to exposure therapy. This allows clients to use humor to deal with and get past their biggest fears. It works by gradually persuading the patient to engage and confront all of his or her negative thoughts.

This technique, also known as the paradoxical directive, is equated to reverse psychology. It is a process wherein a patient is directed by a therapist to keep on displaying undesired behaviors. Better yet, the therapist will ask the client to enhance and exaggerate their negative behavior to show that he or she has voluntary control over it. This method is effective for people with phobia and mood disorders.

Dereflection

Dereflection, on the other hand, is a strategy based on transcendence. This attempts to redirect unhealthy attention to more important concepts such as life, love, and freedom. It is a technique often used for people with maladaptive concerns such as narcissism and histrionism. Dereflection helps foster a more goal-oriented lifestyle to allow the clients to look beyond and focus on reasonable expectations about themselves and their environment.

Attitude Modification

The last but not the least technique of Logotherapy is Attitude Modification. It focuses on the changes in a person's attitude as opposed to modifying only their behaviors.

In psychology, behavior refers to the external reactions of humans to their physical environment. It is the combination of emotions, mental processes, and temperament that leads to a physiological embodiment. Many believe that these are the only factors that affect behavior. In fact, there is one that people discount all the time – attitude.

Psychologist define attitude as a person's tendency to evaluate the environment based on a specific criterion. It could be based on the people, objects, and events around them. It could also be based on their issues, mistakes, and experiences. Depending on these factors, one's evaluation can either be positive or negative which will greatly affect how one reacts to specific stimuli.

This is why Frankl believed that attitude is an important factor to shape behavior. This sparked his need to develop the Attitude Modification technique to improve one's perspective and actions. Thankfully, it is effective to help individuals with depression, anxiety, PTSD, and eating disorders.

All of these three techniques help individuals search for the meaning of their lives. But will it still be effective during modern times?

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Is The U.S Going Through A Money Shortage?

You may have heard that the U.S is facing a money shortage, but that is not entirely accurate. There is enough money circulating in the U.S economy. However, there is a shortage of physical coins, and it has something to do with the coronavirus.

The coin shortage and how it happened

Jerome Powell, the current Federal Reserve Chairman, recently confirmed that the U.S is going through a coin shortage. Even banks confirmed that they have been receiving fewer coins than usual. There are perfectly good explanations for the phenomenon, and the coronavirus is right in the middle of it.

The coinage shortfall results from Federal Reserve's mints deciding to reduce production, and some even shut down. Like many companies, the mint had to reduce its workforce, requiring some of its workers to stay at home while others remained at work. This was part of measures aimed at preventing the spread of COVID-19. Consequently, fewer workers meant that the mint could not produce as many coins as it did before.

The other reason for the coin shortage is that the stay-at-home directive meant that very few people have been shopping at physical outlets and kept their coins at home. This means stores have not been receiving coins, and thus coin circulation has been affected. Most of the shopping has been taking place online during the COVID-19 pandemic.

Some banks have started calling on people to exchange the coins they are holding for notes to help enable the coin circulation to get back to normal levels. Some such as the Amarillo National Bank have promised to give percentage cash backs to those who will submit their coins.

Will the shortage also affect notes?

A shortage of notes would be a major problem for any economy, including the U.S. This is because it would mess up liquidity, thus reducing the efficiency of operating business. This would not go well for the economy, but the good news is that governments through central banks are keen to prevent such things from happening.

Even coins that hold little value individually are of huge importance, especially when purchasing products that are valued below one dollar in the U.S. The lack of coins would force such products to be priced higher, thus contributing to inflation. This is why it is such a big deal when there is a shortage of coins in the market.

Fears of the coronavirus spreading through physical cash have fueled contactless payments

Most of the people shopping at physical outlets have also resulted in using contactless payments to pay for products and services. This is due to the fear that the coronavirus could easily spread through physical cash. The World Health Organization released a statement earlier this year, urging people to avoid using cash to curb the spread of the coronavirus.

Some governments have been taking measures to ensure that the virus does not spread through the physical exchange of money. For example, South Korea and China have made sure that their money is sterilized through heat or UV light before it is allowed back into the economy. However, there is still the risk of money facilitating the spread of the virus, and so most governments still recommend cashless transactions.

Although some studies suggest that the likelihood of a spread of the virus through money surfaces is low, it is still very possible. This is why health organizations like Center for Disease Control and WHO stressed the need to wash hands. People have also been warned to avoid touching their faces with their hands before sanitizing, especially after touching public surfaces. This is especially important when handling money.

It is unknown how long the virus can survive on the surface of a fiat currency note or the surface of a coin. However, it is believed that contact with a contaminated note significantly raises the risk of contracting the virus.

Are countries ready to go cashless?

The coronavirus has exposed many inefficiencies that are in our global systems. One of those inefficiencies is the use of money. For example, if you think about it, money exchanges hand quite frequently, and that also means it can get quite dirty and collect germs. This makes a solid case for cashless systems and digital money. However, even those options have their inefficiencies.

The good thing about physical cash is that it is easily available, and anyone can hold it. Contactless or cashless payments are not accessible to everyone. Not everyone owns a credit or debit card, which means that going cashless would be an inconvenience. Similarly, the distribution and accessibility of digital currencies would not be equitable because not everyone owns a smartphone or device to store or hold the digital currency.

Digital currencies rely on other technologies like blockchain, which are internet-based, which presents another challenge because the internet is not available everywhere. So, it looks like physical cash remains king, albeit a potentially filthy one.

Cashless alternatives are currently more appealing

The Federal Reserve expects the coin shortage in the U.S to end, especially with the reopening of the economy. Many businesses have regained their operations, which should contribute to an improved flow of money across the country. However, this does not take away from the fact that people are still worried about the potential of contracting the virus by handling physical cash.

It is still advisable to use digital or contactless payment alternatives, especially when making payments at restaurants. This will go a long way in curbing the coronavirus spread if there is no physical money involved. In other words, paying through contactless payment methods is currently appealing and also the safer option.

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Are We Turning To A Cashless Society?

A few years back, a cashless society felt like a farfetched dream, but not anymore. Digital payments are the new norm, spread from rural to urban establishments worldwide. Business owners, consumers, lawmakers, government departments are all resorting to digital or electronic payments thanks to the convenience on offer.

In a cashless society, payments happen electronically. Instead of using paper or coins to exchange value, a simple click of a smartphone or other mobile devices has made it possible for people to complete transactions. Credit, debit cards, and electronic payment systems are some of the alternatives enabling cashless societies worldwide.

Some of the dominant forces fueling the cashless society include large financial services and startups offering digital payment platforms. Governments worldwide have also enabled friendly environments to make it easy and encourage consumers to resort to digital payments.

COVID-19, a pandemic that has brought the world to a standstill, is another catalyst accelerating the ongoing transition to a cashless society. Shopping patterns have changed drastically as people resort to doing shopping from the comfort of their homes and have goods delivered at the doorstep. Similarly, digital payments have become the norm as people opt for option offering minimal interaction with physical cash.

Cashless Society in Numbers

Digital payments at the heart of cashless society are growing at an annual growth rate of 17% and projected to reach $4.4 trillion in 2020. The market's largest segment is digital commerce, as people resort to doing shopping on e-commerce platforms.

China has made the biggest strides to becoming a cashless society. The country accounts for about $1.9 trillion of digital and electronic payments. The U.S comes a close second with digital payments poised to surpass the $800 billion milestones in 2020. In the U.K, digital payments could rise to highs of $160 billion in 2020

Top Countries Moving Into Cashless Society

As technological disruption continues to fuel cashless societies, a number of countries have emerged at the top. Some of the countries projected to be cashless leaders include.

***Finland
***

Finland is, by far, one of the most developed countries when it comes to electronic payments. The country ranks second when it comes to cards used and fifth in the world when it comes to e-commerce spending.

In a country of 5.5 million people, the use of cash is slowly becoming obsolete in Finland as people in rural and urban settings resort to digital payments. The country already seems more cashless than any economy in the world.

*****Sweden
*****

Sweden is on track to become the first truly cashless society by 2023. The country is moving towards a fully digital economy as digital payments takeover thanks to widespread internet banking. People are also increasingly turning to mobile payments systems shunning cash.

***China
***

China stays ahead of the pack, thanks to its robust mobile payment ecosystem. The country has made extreme developments in the adoption of mobile payments made possible by QR code scanning in smartphones.

Being the undisputed king of e-commerce, electronic payments have taken over poised to account for about 11% of the country’s GDP by 2022. The country does not rank higher because of its massive population, which means penetration is not that massive.

***South Korea
***

South Korea's transition to a cashless society continues to gather steam thanks to a robust infrastructure enabling the same. More than 1600 of the country’s bank branches no longer accept cash deposits affirming the cashless drive. Likewise, government institutions have gone cashless, affirming the transition.

Drivers behind Cashless Society

***Reduced Crime Levels
***

A transition to a cashless society has gained prominences as people no longer want to be easy targets for criminals. With money embedded in digital platforms, one can walk freely without arousing any suspicion from criminal targets. A study by American and German researchers has already shown that crime levels tend to reduce by up to 9% as authorities replace cash with electronic payments.

***Automatic Paper Trials
***

A cashless society results in accurate paper trails that people can use to track their spending patterns. Similarly, people are opting for digital payments to keep track of how they spend their money. Governments are also pushing for digital payments to keep track of illegal transactions such as gambling and drug operations.

The paper trails created by digital payments also make it easy to keep track of money laundering activities. Likewise, it is impossible to hide income and evade taxes when there is a paper trail created for every payment.

***Cost Savings
***

It costs money to store and protect money. Likewise, large businesses and government departments are pushing for a cashless society to save on such costs. Protecting and moving large sums leaves most businesses vulnerable to theft. Therefore, going cashless is convenient and saves time and money used to move and protect hard cash.

***Need for International Payments
***

A transition to a cashless society has, to a great extent, enhanced international payments and transactions. People no longer need to exchange money for local currency when traveling. Electronic payments have made it easy for people to participate in international payments without contending with the burdens of changing currency.

Disadvantages of a Cashless Society

Just like any new technology or development, a cashless society has also come with its fair share of challenges and problems.

For starters, electronic payments call for people to sacrifice their privacy. With electronic payments, people must share their data with institutions handling electronic payments. Given that the information is always floating online, the risk of being hacked is always high.

Technology is at the heart of fuelling cashless payments systems. Similarly, such technologies are always at great risk of failing or stalling when needed the most. When such technologies are not working, it can be extremely difficult to make payments. Likewise, merchants might lose on big business when such systems are not functioning properly.

Digital payments also do come with additional costs that impact people’s finances, depending on the size of the transaction. In societies where there is only one platform set as a standard for cashless payments, such services tend to come with extraneous costs, given the lack of competition.

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