Cashless societies are increasingly cropping up, thanks to the digitization of the global financial sector. While paper money has helped shape the world for decades, a transition to a cashless world is slowly gaining traction thanks to the proliferation of the internet and mobile devices.
Governments are increasingly pushing for cashless payments as a way of combating illicit activities as well as black markets. The biggest downside of cash is that it provides an untraceable means of fuelling and facilitating illegal activities. Without paper money, it will be easy to detect illicit transactions given the paper trail left by electronic payments.
With the phasing out of cash, people are increasingly turning to electronic cash to complete transactions. Credit and debit cards popularity is on the rise given their ability to relieve people the burden of walking around with hoards of cash.
However, cards may not be the future of a cashless society. The proliferation of mobile devices capable of connecting to the internet has given rise to other forms of payments.
Electronic payment apps like PayPal and Venmo are slowly taking over as reliable means of making payment. Apple Pay and Google Pay are also gaining traction, given the convenience of having to make payments directly from a mobile device.
Cryptocurrencies use in payments is also on the rise given the low costs of transactions associated with them. The fact that it is challenging to trace crypto transactions has also seen their popularity skyrocket, especially among people who cherish their privacy.
The top Cashless Societies in the world
Several countries have made impressive strides in nurturing electronic payments. Sweden is one of the countries whereby electronic payments are slowly becoming the order of the day. It is common to see signs such as ‘no cash accepted.” Some shops, as well as banks, no longer handle cash. Cash payment account for a mere 15% of retail sales.
Australia is another country making strides on cashless payments.
Citibank is no longer accepting cash in its branches, having also phased out cash machines. In Belgium, it is illegal to buy real estate with cash. It is also unlawful to make payments above 3,000 euros in cash.
India boasts of one of the fastest growing economies in the world, something that the government wants to accelerate by encouraging cashless transactions. Prime Minister Narendra Modi has already outlined ambitions for a cashless society as a way of curbing underground economy.
Benefits of Cashless Society
Reduced Crime Levels
Cases of people being mugged and robbed are familiar with cash. Electronic cash is seen as one of the best ways of curbing such incidences. Electronic payments are also seen as one of the best alternatives for reducing illegal transactions as well as black market activities. Such operations usually take place with cash.
Paper Trail Creation
The creation of a paper trail with electronic cash should result in a reduction in financial crime. With electronic payments, it is impossible to hide income in the effort of evading taxes. In countries with high levels of corruption, a cashless society would offer some reprieve.
No Cash Management
A cashless society would do away with the cost involved in the printing and storage of money. Business does incur some charges in storing and moving around huge sums of money.
Improved Cross-border Payments
Traveling from one country to another many at times requires people to buy local currency to make payments. In future cross-border Payments should be much easier on countries accepting electronic payments.
Disadvantages of Cashless Society
Electronic payments translate to reduced privacy given the paper trail created. Cash allows people to send and receive money anonymously.
The biggest threat to dealing in electronic cash has to be the risk of being hacked, and everything siphoned away. Hackers are increasingly upping their game as they continue to come up with new ways of draining ‘people’s accounts electronically.
Electronic payments rely on technologies for seamless operations. In the case of glitches or outages, people would be left without the ability to make transactions. Whenever systems malfunction, merchants may not be able to accept electronic payments.