Cashless Economy Empowering Women Entrepreneurs  

The nature of payments and transactions has undergone a dramatic transformation in recent years, with cashless payments increasingly taking precedence over the use of cash due to their convenience, efficiency and reliability. 

The Covid pandemic was a tipping point that created an unprecedented appetite for digital transactions, when the handling of physical currency became even less common. And with digital transactions offering tangible benefits over cash, a cashless world appears inevitable. 

One reason to favour a cashless society is because transactions can be tracked and recorded, which protects consumer rights, increases the efficiency of tax revenue collection for the government and creates conditions for faster economic development. 

 A survey conducted in 33 countries showed that reducing the value of cash transactions by just 10% can cut the volume of the grey economy related to cash by up to 2.1 per cent of GDP. 

The share of cashless payments is projected to grow as evidenced by estimates that in 2025, the number of transactions will increase by almost 135 per cent, to 1.842 billion. Average annual growth will reach 18.6 per cent, driven by increased use of e-commerce, mobile payments and digital wallets.  

Sweden is the closest to becoming a completely digitized economy. According to the Swedish central bank, the percentage of Swedes who use cash dropped from 39 per cent to nine per cent between 2010 and 2020, and more than 80% of transactions are only cashless.  Various international studies show that world largest economies like China and the US are closest to becoming cashless.  

At the same time, governments are required to establish safeguards and provisions to protect the vulnerable and help them participate in a way that meets their needs. The priority should not be to eliminate cash entirely, but to introduce payment sovereignty, offer cashless transactions to everyone, and develop a robust and scalable infrastructure to support it.   

Another challenge facing the cashless movement is to ensure digital financial inclusion so that micro businesses and unbanked segments of society are not left behind by such innovation, particularly as they tend to be more reliant on physical cash and often do not have the means to set up digital payments.  

On the other hand, digitalisation can be used by developing economies to boost financial inclusion and unlock development gains for micro businesses and women, in particular. Digital access therefore proves to be key to unlocking a range of services to boost gender equality and support growth and inclusion of micro and female entrepreneurs, which in return narrows the gender gap and brings them into the financial ecosystem. 

This is key as women constitute a large percentage of the informal economy globally. In developing countries, many informal sector jobs such as domestic workers and caregivers, are mostly done by women.  

Women who are reliant on cash as a vulnerable commodity and still need access to essential financial services like a bank account, are frequently not be able to buy anything without their partner knowing. Single mothers and elderly women who are long-term unemployed are highly unlikely to get a job that meets their needs. They are looking for part-time and self-employment opportunities to express their potential and offer value-added, marketable products and services, thus creating a sense of accomplishment and self-reliance, along with a source of income to add to their independence and equality.  

In Serbia, one in two citizens uses some form of cashless payment. The profile of an average user of card payments is a woman between 30 and 44, with higher education, from urban areas, most often the capital, and with higher income.  

One of the mechanisms to boost financial inclusion in Serbia is the POS Programme implemented by NALED with the support of GIZ, Visa and Mastercard within the Better Way Initiative.  

The aim is to help micro and female entrepreneurs introduce cashless payments without fixed costs, with a subsidized merchant fee. The subsidy includes free installation and usage of POS terminals with a reduced fee of 0.99 per cent for card payments for a year, with no additional charges or obligations. After the expiration of the subsidy, businesses can opt out or continue using POS terminal as agreed with the bank.  

So far, the programme is assisting 6,000 micro businesses in Serbia like small shops, cafes, hairdressers and nail salons, flower shops, bakeries and artisan studios, many that are owned and run by capable women. There is interest to disseminate the program to the Western Balkan region to meet the demand for cashless payments in growing economies like Albania and Bosnia and Herzegovina.   

With proper government support and technological infrastructure for cashless transactions, there is an immediate opportunity to generate economic perspectives for micro businesses and underserved populations including women all over the globe.  

Digital inclusion would foster their economic independence and reinstate their dignity, placing the power of choice back into their own hands. 

 Author: Violeta Jovanovic, Executive Director at NALED, Serbia