Digital payments are simple, fast, and easily accessible for all. With the internet becoming an essential part of our daily lives, payments have mainly become digital. Cash is slowly becoming a thing of the past as more people shift to credit and debit cards. They offer a way out of dealing with physical money that can be unsafe and haphazard. Counting Coins and currency notes for large payments can be so tedious and difficult to imagine in the present world.
Cashless societies were only part of science fiction movies some years ago. They are becoming an imminent reality as the world shifts towards plastic money. Large corporations with centralized hiring have one bank account that disperses payments to all employees. Funds transfer, receiving and saving sound much safer and more convenient with digital payments as well. Although, the reality might be a little different. Going cashless could have potential disadvantages as well.
What Is a Cashless Society?
One might think that a cashless society is a new concept. But it has been a way of business in ancient Mesopotamia as well. They introduced a barter system that meant the exchange of goods with other items. Although, the modern definition of a cashless society is a lot different now. It means that all business is done through digital and electronic transactions. There is no physical currency which includes cash memos, currency notes, and coins.
Many countries are slowly moving towards going cashless. Because it is easier for the government to regulate taxes and keep corruption in check. More than 80% of Sweden’s population uses digital payments. Others like USA, UK, and India are also becoming cash-light societies. Soon, cash could disappear from our daily lives.
Pros of a Cashless Society
As long as you have a card or your phone, you can make a transaction. So, for the tech-savvy people, going cashless saves some hassle. Apart from being convenient, here are some other pros of a cashless world:
It can be easy for criminals to steal away cash from your home or your wallet. You can’t make cash boxes completely safe no matter how much you try. Moreover, once cash leaves your wallet and goes to the criminal, no one can trace it. So, carrying digital cards can be a lifesaver. As all your money is password and key-protected, you are a lot less likely to get robbed.
Verified Paper Trails
Cash also creates a lot of room for financial crimes. Almost all money laundering and black money cases have been associated with cash. It is easier to fake cash transactions and evade taxes. Moreover, there are usually no recorded money trails. So, in such cases, digital payments are the best. They can create automatic paper trails that are nearly impossible to replicate. It can be difficult to launder money if your source of income is documented and identifiable.
Lesser Management Costs
Governments have to spend a lot of money on cash management as well such as printing and storing. Companies have to maintain a storage space for cash. It has to be transported from one place to another in a cash car. Moreover, it can’t be an ordinary vehicle and needs a lot of security reinforcements. Banks also need to hire more people like drivers, cashiers, and tellers. Digital payments can help curb all of these costs
Easier International Payments
For businesses with international clients, cash transactions can be a major problem. Therefore, digital payments save the day again. They are as easy as pressing a few buttons and the transfers are almost instantaneous.
Cons of a Cashless Society
While there are a lot of benefits, nothing is perfect. All conveniences come at a cost and there are some cons to going cashless.
Digital payments can be a lot less private than cash transfers. You almost always need to involve a third party such as a bank or other financial organization. So, even if you trust your bank and have nothing to hide, your information might not be safe. It can easily get in the hands of someone with malicious intent. Moreover, you can’t make digital transactions anonymously.
Risks of Hack
If you are cashless, you won’t have any alternative ways to use your funds. So, if your account credentials get into the wrong hands, you might be helpless. Hackers can become bank robbers easily and drain your account. So, stricter measures should be taken to safeguard online transactions.
Your internet connection or bank app might not work all the time. Technology can sometimes be unpredictable and act up suddenly. You can become virtually penniless even if your phone battery dies. So, relying completely on tech with no plan B can be a disadvantage.
As you have to involve a third party for digital transactions, they can charge for their services. Most banks and financial organizations charge per transaction. So, if you made a $100 transaction, you will need more than the amount in your account. Otherwise, the payment might not even go through.