While to many, a cashless society may seem a bit science-fiction like, we are already making big steps to achieving it.
Governments as well as main-stream financial service companies are very much in favor of a cashless society.
However, besides the challenges in terms of logistics, there are social issues to be considered too, before we reach the goal of “cashlessness.”
Nevertheless, cashless societies are, in fact, nothing new.
Well before we even thought of using cash, we used to barter as a form of payment.
In this article, we highlight the advantages and the disadvantages of going cashless in today’s society.
What are the Advantages of a Cashless Society?
1 Cashless means less criminal activity?
Cash is easy to steal. It can be a large amount of money, or it can be a small amount – it’s still relatively easy to pilfer.
There are many illegal transactions, drugs being a good example, that occur using cash. Why so? Because it’s very difficult, if not impossible, to trace these types of transactions.
2 Cash makes financial crime easier
Cash payments are relatively easy to hide.
It’s much more difficult to evade taxes and hide income when every payment received is recorded.
When the source of funding is easily located (due to electronic financial records), money laundering is far more difficult to achieve.
3 Cash makes international payments more difficult
You may travel to foreign countries for holidays; you may go to foreign countries for business; you might reside in a foreign country while the money you use is in U.S. dollars or some other currency that is different to the currency used where you live.
In any event, you may regularly have to buy local currency.
Fact is, for you, cashless transactions are much easier to make, and, likely quite a bit cheaper, too.
4 Cash management
To print bills and to make coins there’s a cost.
To store money, to get more whenever funds are low, and to deposit in cash if there’s too much, businesses have to move cash around and protect it.
With “cashlessness,” there’s no need to do any of that.
Disadvantages of a Cash-Free World
1 Cashless hacking
In a world that is cashless, if a hacker manages to raid your bank account, you could find yourself broke.
Even if the laws of the land provide you with a level of protection, if there’s a breach to your account/s, it’s an inconvenience to say the least.
2 Matters of privacy
When you make transactions electronically, there’s less privacy than there is with cash transactions.
Your data may be handled by trustworthy organizations, but your transaction records could appear anywhere.
When you use cash, you can spend and receive money with complete anonymity.
3 Glitches with technology
Technology regularly has glitches. Technology means power outages.
When there are glitches or power outages, it means you can’t pay or can’t be paid in a cashless society.
Even if the battery in your phone goes dead, you could be left “penniless.”
4 Overspending
For those that prefer to pay by cash, it can be a “painful” experience to part with your money. There can be a tendency to count every single dollar/ pound/ euro that’s spent when it’s cash, particularly if money is hard to come by.
Cashless involves swiping, tapping, or clicking, all of which are easy to do without actually realizing how much is being spent.