As the world transitions inevitably toward cashless societies, it’s important for people in Jamaica, especially those of a certain age, to understand how this will eventually affect the way they live.

A digital transaction is basically a system in which a business transaction is effected between participants without the physical need for cash and completed within the span of a few seconds. This is made possible by financial technology, or fintech, companies collaborating with various sectors in the economy (not just banking) for meeting the increasingly sophisticated needs of users who are becoming more and more tech-savvy and have less time to conduct business in the way they once did. Hence, the societal need to increase the number of digitised services and offerings as consumers move from a cash-powered economy to a digital one. A digital transaction, therefore, involves using a credit card to pay for an online purchase, the swiping of a debit card in-person at a brick-and-mortar store, and the transferring of funds from an app to your bank account or even making investment trades.

Like it or not, the world is headed towards becoming cashless societies. You may not live to see the complete evolution of this, but the fact is we’ve already set out on the journey. Not only have more and more branches of banks in Jamaica begun to close but certain branches have begun to transition towards becoming teller-less. We see the strenuous opposition to this in letters to the editors in the newspapers, protesting the inherent unfairness as it regards senior citizens who may not be able to confidently navigate digital devices, or those people who are simply emotionally tied to the idea of using cash. And we’ve now officially recently launched our own digital currency, called JAM-DEX, which will affect how we transact business and commerce in the long term.

You already understand the basics: Rather than suffer the inconvenience of dropping by the bank every time you need money, a debit or credit card is secured and you’re now instantly part of the digital finance world and able to conduct business anywhere, day or night. The debit card is linked to your chequing account, while the credit card is linked to the line of credit your bank thinks you have the ability to repay.

So you go to the supermarket and purchase some items, paying by, let’s say a debit card issued by Mastercard. The cashier swipes the magnetic strip at the edge of card. What you don’t see is the behind-the-scenes digital intricacies as you stand there anxiously crossing your fingers waiting for the card to be processed and praying the transaction won’t be declined.

That magnetic strip stores information digitally and when the card is swiped against a point-of-sale machine or payment processor for approval, Mastercard makes note of the information amount on that particular transaction then forwards it to your bank, which will then confirm that you have the requisite funds to complete the transaction. Depending on the results of that check into whether you have the necessary funds, then your card will either be authorised for the transaction, or not.

The exact amount of the transaction is then debited from your account and a percentage of this amount, say 98%, is credited to your supermarket’s account. The remaining balance is shared between your bank and Mastercard as their fee. It may seem like a complicated process, but remember, all this takes place in just a few seconds!

Buying goods online from e-commerce websites, signing business contracts online, buying movie tickets through a smartphone app, or even paying for a nice meal using your mobile wallet — all these fall under the umbrella of digital transactions, which are quicker, convenient, and certainly make life easier. Not to mention that they will see a reduction in physical thefts and robberies along with a reduction in cash circulation and the printing cost for currency, among other things. Fact is, digital transactions benefit everybody: the end-user, the businesses and the financial institutions. Technology adaptation tens to outweigh the costs.

But even more digital initiatives are coming along every day, and much in the same way that credit and debit cards have subverted the use of cash, developments in online transactions and cryptocurrencies are subverting the outmoded system whereby physical presence and, yes, even credit cards, will be needed for transactions. There are mobile wallets for use in tandem with digital currencies; cloud service portals for providing digital processes for storing data; crowdfunding gateways for providing, among other things, ways in which start-ups can access funds; and so on, just waiting to become mainstream. And then these digital transactions will eventually in turn become subverted by other, newer, initiatives over the years.