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A "cashless society" describes an economic state (usually a country) in which financial transactions are not conducted with money in the form of physical banknotes or coins, but through the transfer of digital information (usually an electronic representation of money) between buyers and sellers or other parties.

Cashless societies have existed from the time human societies first came into existence, based on barter (the swapping of goods or services) and other methods of exchange. Cashless transactions have also become possible in modern times using digital currencies such as bitcoin. However, the most common understanding of the term "cashless society" is one where cash is replaced by its digital equivalent - in other words, legal tender (money) exists, is recorded, and is exchanged only in electronic digital form.

The term is sometimes understood to refer to a society in which all physical currency has been removed from circulation and only electronic funds transfers are able to occur. Another understanding of the term is that it refers to a society in which, though virtually all financial transactions are conducted electronically, physical cash is still available.

The concept of a cashless society has been discussed widely in recent times, particularly because the world is experiencing a rapid and increasing use of digital methods of recording, managing, and exchanging money in commerce, investment and daily life in many parts of the world, and transactions which would historically have been undertaken with cash are often now undertaken electronically.

Some countries now set limits on transactions and transaction values for which non-electronic payment may be legally used. For example, in Australia, an attempt was recently made to limit transactions for which cash could be used to those under the value of $10,000.

Types of cashless payments
There are many ways in which a user can make payments without cash.

Banking cards
Banking cards like debit and credit cards are one of the most used cashless payment methods across the world. A debit card is a payment card that deducts money directly from a consumer's checking or savings account. A credit card allows cardholders to borrow funds with which to pay for goods and services with merchants that accept cards for payment. Credit cards impose the condition that cardholders pay back the borrowed money, plus any applicable interest, as well as any additional agreed-upon charges.

These cards can also be integrated with other digital platforms. For example, users can store their card information in mobile wallets or digital payment apps to make cashless payment. Moreover, banking cards can be also used in online purchases, PoS (point of sale) machines, online transactions, etc.

Digital wallets
These are mobile applications which allow the user to send, receive, and store money. Users can add or store money in their mobile wallets by linking to their bank accounts. Users can also send money to friends, relatives, or any other person by entering phone number, email ID, unique ID, or scanning a QR code. Users can also make payments to merchants and pay various utility bills like water bill, electricity bill, mobile recharge, and many more directly from the mobile wallet app.

QR Codes
QR stands for Quick Response. This is a two-dimensional code that has a pattern of black squares which are arranged on a square grid. QR codes are read by imaging devices such as smartphone cameras. QR codes are widely used for making cashless payments in which a user scans the QR code of the merchant service to complete the transaction.

Some of the countries closest to going cashless
Sweden
With a date set in 2023 to go completely cashless, Sweden is arguably the closest country to achieve this. It is currently not uncommon to see signs that say "No Cash Accepted" in various shops in Sweden. A recent study from the European Payments Council showed that cash transactions accounted for only 1% of Sweden's GDP in 2019 with cash withdrawals steadily declining by about 10% a year.

While consumers are generally happy, those struggling financially or technologically continue to rely on cash. Recent reports show that mobile payments are accelerating very sharply in Sweden. One of the main reasons for this is that Swedes are tech-savvy. For example, Swish, which is a mobile app, had over 7.8 million users in July of 2020 and performs close to 50 million transactions a month.

Finland
Finland has a smaller population of around 5.5 million. Finland is not taking as aggressive measures as Sweden in going towards a fully digital economy, however, it is reported that Finland is currently more capable of going fully cashless this moment. Finland currently ranks second to just Ireland in terms of frequency of use of cards, and fifth in e-commerce spending, and second in smartphone penetration.

China
The growth in China's electronic payments is very significant, given its massive population size. Like other countries that have been aiming towards going cashless, China has shown a rapid adoption of mobile payments. Currently, one of the most popular ways to pay by phone is through QR code scanning. China is the biggest eCommerce market in the world, with annual online sales of $672 billion and an annual growth rate of 27.3 percent.

South Korea
South Korea is currently more cashless than China, however, there are far fewer people. South Korea already has most of the infrastructure in place nationwide to go cashless. It was reported that roughly 6 percent of South Korea's GDP being eCommerce spending and more than 100 transactions on every credit card per year.