For centuries, people have used cash as a means of payment. But over the past two decades, this has started to rapidly change. The internet connected people and information like never before — and now, it’s transforming financial services in the same way.
For centuries, people have used cash as a means of payment. But over the past two decades, this has started to rapidly change. The internet connected people and information like never before — and now, it’s transforming financial services in the same way.
Especially for younger generations like Gen Z, digital finance is the norm. Most younger consumers open bank accounts online, send money through peer-to-peer apps, and rarely handle physical cash. This generational shift, driven largely by new fintech innovation, is redefining the once-foundational institutions for how people keep and spend money.
“Just as people manage emails, meetings, and even shopping from a single mobile device, their financial activities have become part of that same ecosystem — creating a one-stop digital hub for daily needs,” said Anna Sheard, Director of Communications at Interledger Foundation.
According to a recent Interledger Foundation (ILF) report, A Cashless Country and the Future of Banks – Consumer Perspectives, consumers are split on eliminating paper cash, with half (51%) of all respondents willing to abandon it entirely.
But before society goes fully cashless — several critical challenges need to be addressed. We sat down with Anna at ILF to discuss the report’s findings and what they mean for fintechs and banks.
The challenge for fintechs and banks is to out-convenience cash.
Even though over half of consumers are willing to abandon cash, 56% of consumers use it at least weekly, revealing deep-rooted habits that digital alternatives must match in cost and convenience.
“In a cashless society, the goods and services people want would remain the same, but access to them could shift significantly,” said Sheard. ILF argues that companies eager to accelerate this shift must first understand and overcome infrastructure challenges and deeply embedded habits in people’s daily lives.
Unlike digital forms of payment, cash is still accepted nearly everywhere. For digital payment options to achieve even greater ubiquity than they already have — they must match cash’s universal acceptance and be so convenient that using cash begins to feel like a hassle.
But convenience alone isn’t enough. Sheard emphasizes that equality must be central: “A society without cash could function effectively, but only if it is built on principles of fairness and accessibility. It should not impose higher costs or barriers based on geography, income, or financial history.”
That means designing systems that don’t just replicate existing siloed payments infrastructure, but improve upon it — ensuring that merchants, consumers, and businesses all have affordable, accessible options.
The reasons people still reach for cash.
The ILF report shows that while digital payments are on the rise, consumers’ hesitation is driven by tangible concerns. The top two reasons people continue to rely on cash are:
While there’s no payment method that’s universally accepted, cash is the closest thing society has. By contrast, because businesses have to pay fees per transaction on most digital payments, some businesses choose to pass on those fees to consumers. Others set minimum purchases for card payments. Consumers who have had either or both of these experiences can become turned off and opt for cash.
For fintech innovators, this highlights a critical opportunity: design business models that reduce or eliminate transaction costs for end users. Open, interoperable standards can help lower these costs, making digital payments as affordable and accessible as cash.
For banks, to remain competitive with fintech counterparts, they must prioritize efficient, low-cost payment methods for both businesses and consumers. Additionally, since banks power a lot of fintech offerings, extending these payment methods to fintechs can also present a viable business model.
As Sheard explains, achieving a cashless society depends on building “robust and inclusive infrastructure, such as the universal application of digital public infrastructure (DPI) principles.” Much like public roads that connect people and places, DPI can connect data and financial systems for low-cost, accessible payments.
Regulatory safety alone won’t win with the younger generation.
Traditional financial institutions are regulated entities that offer government-backed protection like FDIC insurance, which insures up to $250,000 if the institution fails — yet many consumers no longer prioritize this.
The report highlights that only 56% of Gen Z know only banks can offer FDIC insurance, compared to 80% of Boomers. Further, only 56% of Gen Z consumers classify JPMorgan Chase as a bank, while 50% consider digital payments providers like Cash App a bank, despite its lack of direct FDIC insurance. When compared to the average across all generations, 64% of consumers categorize JPMorgan Chase as a bank, and 31% categorize Cash App and Chime as banks.
ILF states that it wasn’t too long ago that fintechs and challenger banks had to fight hard to prove their value against traditional banks, in light of not being FDIC insured. According to this data, however, many consumers aren’t even aware that the businesses responsible for storing and moving their money don’t offer this safeguard — and aren’t too concerned.
For banks, this means they need to innovate and communicate their value beyond safety. Placing an increased focus on delivering products like seamless peer-to-peer payments, which 36% of Gen Z ranked as one of their top 3 priorities when choosing where to store their funds.
Because fintechs can provide every other service banks offer — either directly or via partners — fintechs are doubling down on convenience, ease of use, and speed over the safety of regulated banks. And for many consumers, these characteristics are appealing.
Interoperability: the infrastructure powering a cashless future.
ILF is advocating for a payments future built on open, interoperable standards — where transactions aren’t tied to a single bank, mobile money provider, or geographic location.
As stewards of the Interledger Protocol, an open-source payments network that allows money to move like data on the internet, ILF envisions a system that enables low- or no-cost transactions while promoting inclusion and innovation.
Sheard explains: “A model based on the same principles that made the internet successful offers a clear path forward. The advantage of this approach is that it is open source, freely available, and ready to use today.”
For fintechs and banks, that represents both a challenge and an opportunity. Competing in the next era of payments will require building on shared infrastructure that lowers barriers, promotes fairness, and enables universal access.
Digital banking refers to the digitization of all traditional banking activities, allowing customers to conduct financial transactions online, including account management, money transfers, and bill payments.
Cash management involves the collection, handling, and usage of cash, ensuring that a business has enough liquidity to meet its obligations while maximizing its cash resources.
Fintechs are financial technology companies that use technology to offer financial services, such as mobile payments, online banking, and investment platforms, often aiming to improve user experience and efficiency.
Consumer perception refers to the way consumers view and interpret a brand or service based on their experiences, beliefs, and feelings, which can significantly influence their purchasing decisions.
A cashless society is an economic state where financial transactions are conducted electronically rather than using physical cash, relying on digital payment methods like credit cards and mobile apps.
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