The Digitalization of Money
- On the Money Magazine
- Jul 30
- 2 min read
Hailan Yu, Williams College, Freshman, Summer 2024
The increase in the number of card payments accounted for more than 84 percent of the growth in the number of noncash payments from 2018 to 2021 (Federal Reserve, 2022). In recent years, the digitalization of money has changed the global financial landscape. Although electronic banking systems and credit cards have been in use for decades, the emergence of mobile technology and Covid-19 has helped the rise of digital money.
With money becoming virtual, concepts such as cryptocurrencies and blockchain technology have introduced methods of secure payments throughout the internet. Companies like Paypal, Zelle, and Venmo have taken advantage of the increase in the use of digital money to allow for more convenient transactions. Mobile payment solutions, such as Apple Pay, have further integrated digital money into our daily lives, allowing consumers to pay for a transaction with a simple tap of their smartphones. Incoming college student, Mackenzie Cote, said, “It’s so much easier to pay for things now, especially when I am away from home”.
Globally, 1.7 billion adults remain unbanked, yet two-thirds of them own a mobile phone that could help them access financial services (World Bank, 2018). Digital banking can empower minorities by providing them with direct access to financial services, enabling them to save money securely, invest in their businesses, and manage their finances independently. This can lead to greater economic participation and increased equality.
While digitized money offers numerous benefits, its adoption is not uniform, often leaving marginalized groups behind. Incoming PhD candidate William Benet shares, “Factors such as limited internet connectivity, lack of access to smartphones, and insufficient digital literacy prevent many from the benefits of digitalization of money”. In rural and remote areas, inadequate infrastructure can hinder access to digital financial services, excluding those who are struggling to afford the necessary technology or data plans required for digital transactions. This digital divide can worsen existing inequalities, as those already disadvantaged may find themselves further marginalized in an increasingly digital economy.
Addressing the digital divide requires action steps, such as investments in infrastructure, affordable access to technology, and comprehensive digital literacy programs. By bridging this gap, we can ensure that the benefits of digitized money are equitably distributed, fostering inclusive economic growth and financial empowerment for all.
Sources:
Interviews:
Mackenzie Cote, College Student
William Benet, PhD Candidate
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