Being a cashless society is what most countries are heading to. There are several powerful forces that are actually supporting this transition to the cash-free world. Some of these forces include governments as well as known companies that offer financial services, even Critics of the financial system as well as the government-issued currencies are supporting the transit to a cash-free society. On the other hand, Singapore has yet to reach that stage yet. Despite the logistical challenges, we should address a few social issues before we give up on cash completely.
Advantages of moving to a cashless society
1.) Low crime – Using cash, stealing money is very easy regardless of the amount of money. In a similar manner, the illegal transactions such as drug trade will typically take place using cash in order to avoid any transaction record. This similarly ensures that the seller actually receive their share.
2.) Paper trails – If there is another crime which should come to an end is financial crime. It becomes much difficult to conceal income & evade the taxes if at all a record of each payment you receive is present. In a similar manner, money laundering becomes a hard task when the funds source is available whenever needed.
3.) There is no management of cash – You will obviously spend cash in the printing of bills as well as coins. Businesses will require to store their money and seek more whenever they run out. In a similar manner, the businesses must deposit cash in case the cash becomes excess. Moving the money around as well as the protection of huge amounts of cash will definitely be forgotten. Moreover, it will prevent you from spending your all pay check away!
4.) International payments – Whenever one visits a foreign country, they might be needed to purchase local currency. However, payments become easy when the two nations are able to handle the cashless transactions. Rather than thinking about another currency, the mobile device is going to handle everything for you.
Disadvantages of moving to a cashless society
Depending on how you look at it, transiting to a cashless world might be complicated.
1.) Privacy – Making your payments in the electronic form translates to low privacy. You could trust the organizations responsible for handling your data and opt to unhide everything. However, your payment information might turn up in some ways which are not possible to foretell. Cash permits someone to spend cash & receive their money in an anonymous manner.
2.) Hacking – Hackers are known to rob banks for the payments that are made electronically. In the cashless world, the effects become even high in case someone drains your account since you have no other ways of spending. Despite being under federal law protection, you still encounter significant inconveniences and some other effects after a breach.
3.) Technological issues – Glitches, outages or some other mistakes that you make innocently can similarly lead to problems which leave you without any ability to purchase things whenever you need them. In a similar way, merchants do not have any way of accepting payments from clients when the systems fail to operate. Even a simple thing like a phone battery which is dead might leave you without money.
4.) Lack of equality – The poor are going to have a harder time when the cashless society starts functioning. They don’t own the costly devices that are needed to make the payments. On top of that, those who work in the informal economy won’t have any way to receive payment or aid. The United Kingdom is giving it a try with the contactless means when donating to charities as well as the homeless individuals. However, there is a long way still to go.
5.) Fees – In case we are forced to select from a few methods of payment, can we really expect the financial institutions to offer us a good deal? The payment processors might just exploit the high volumes which in turn eliminate the savings which should actually come from the handling of less cash.
6.) Overspending – Once you spend using cash, you are cautious of each dollar that you spend. However, with the electronic method of payment, it becomes simple to swipe or even click without knowing the exact amount that you spent. Clients will have to revitalize their efforts of managing the money they spend. In the end, you will feel stressed because of money. Thus, the chances of engaging licensed money lenders will tend to be higher.
7.) Interest rates that are negative – Once we turn to the cashless society, governments will have a chance to promote the negative interest rates. This is typically a move which is meant to stimulate national economies. The result however is that money is going to lose its purchasing power.
What does the cashless world appear like?
Without having cash, payments are made in an electronic form. Rather than using paper & coins in order to exchange value, one authorizes a funds transfer to other people or businesses. The logistics are developing yet, but we have a few hints on the manner in which the cashless society might develop.
• Credit cards & debit cards are some of the known cash options that are currently in use. However, cards by themselves are not adequate. The mobile devices are most likely going to be a key tool when making payments.
• Apps and services for electronic mobile payment as well as mobile wallets such as Apple Pay, Alipay, PayPal offer secure and cash-free payments. For the developing as well as developed countries which use cash in a sparing manner, you will notice that mobile devices are the tools that are commonly used to make payments.
• Cryptocurrencies too cannot be left out of this discussion: Cryptocurrencies are already being used in transferring money which may bring competition & innovation. This in turn helps in keeping the costs low. However, they have risks as of now as well as regulatory hurdles which bring impracticality for most clients making them unfit for widespread use.
Cashless societies examples
Several nations have already made moves to do away with cash. This push originates from the consumers & the government bodies too. Sweden and China are the most notable countries that are enforcing a cashless society. In Sweden, it is not an uncommon sight to see “No Cash Allowed” in shops and certain banks stopped accept cash. In the case of China, Alipay has dominated and became the sole mode of payment that most China Citizens opt for.
Having said that
These examples suggest that the idea of being cashless is much possible so long as the infrastructure is sufficient and the progress is gradual. The remaining questions focus on the manner in which the marginalized are going to fare once cash becomes history.