With the ever-increasing use of paperless transactions. We may be heading toward a cashless economy. Our blog looks at the economic implications of a cashless society. Have you ever thought of what a completely cashless society would look like? Although we have experienced it to some level all around the world. But we have not observed what a completely cashless society would look like.
IDEA BEHIND PAPERLESS TRANSACTIONS BASED SOCIETY
A cashless society means financial transactions are no longer conducted using physical currency, such as paper money and coins. Instead, purchases are made through the transfer of digital currency. One prime example of this is using credit cards. It is an efficient and generally safe payment method and allows for an immediate exchange of currency between two parties. However, on one hand it eliminates the risks of theft, snatching, and robbery, But has created new risks with its increasing usership.
Paperless transactions are vulnerable to cyber thefts. One of the reasons why digital currencies are still not used as a mode of transactions in daily life generally. Although it has become popular among millennials and young consumers because of its simplicity and less responsibility. Paperless banking or the economy are vulnerable in different aspects. Most prominents ones are the privacy of your data or falling prey to hackers. Privacy in a sense where or on which products or services you’ve spent your money.
A cashless economy has been a topic of conversation among economists, business owners, and financial analysts during COVID. Businesses have decided to go cashless to avoid unnecessary physical contact with customers and promote a faster form of payment, which limits exposure to the highly contagious virus.
Our relationship with money is constantly evolving. This is not limited to just credit cards. There are numerous payment methods are being used such as Venmo, PayPal, Zello, and Apple Pay and many other forms of wallets can transfer money quickly, without hassle or wait even without bank account. Numerous countries have implemented the cashless system – China, India, and Sweden, for example. The result is unique for every country, but the overall impression is that a cashless society is a very real possibility for the near future.
ADVERSE SIDE OF PAPERLESS TRANSACTIONS
A cashless economy could increase the rate of fraud and identity theft. Merchants do not always know if the person behind the register is the real owner of the credit card. “The existing processes in place for verifying and protecting identity are tied to outdated financial systems and aren’t designed to support a cashless, digitized society,” according to Forbes writer Glenn Larson.
People don’t just shop online or in-store with their credit cards; major purchases such as buying a home or a car are often conducted through a cashless system. People open checking accounts and file taxes online, as well. However, governments and revenue collection establishments have their own objectives to achieve from paperless transactions.
authorities can track payments through an online trail. Easier to monitor in case of any terror financing activities. Time and effort both can be saved by using integrated softwares by banks or applications by consumers. Financial crime will also become less common, as there is a record of every payment you receive. It will be much easier to catch those who are money laundering. Also It costs money to print bills and coins, and businesses need to store the money and deposit cash when they have too much in their register. While travelling you can exchange currencies through an online platforms.
SHOULD WE OPT FOR? OR NOT?
There are numerous pros and cons to a cashless economy. We will not know the full repercussions until we choose to move forward with one option. We will have to prepare for the good and bad that come with it.
While we are not entirely sure what it will mean to move into a cashless economy, we can predict some possible negative implications. A cashless economy could expose your personal information and potentially cause a data breach. If someone hacks your account, you could lose all your money and be unable to enter your account. Low income class observes plastic currency as luxury and costly because of hefty charges by credit card companies. The world of currency is constantly in flux, and we are adapting to its changes at a rapid rate.
A cashless economy is quickly becoming a reality, from the way we shop online to the way we exchange money with friends and family. Taking steps toward a fully cashless society might be a big feat, but we are surely getting there. Many countries are moving in this direction, but it’s difficult to tell which ones will eliminate cash altogether.
The downsides of going for paperless transactions include less privacy, greater exposure to hacking, technological dependency, magnifying economic inequality, and more which need to be addressed. Credit and debit cards, electronic payment apps, mobile payment services, and virtual currencies in use today could pave the way to a full cashless society. Which would be a huge success for mankind.