Should We Transit into A Cashless Society?

In a cashless society, all monetary transactions are conducted via the exchange of digital information, as opposed to the exchange of physical currency, such as banknotes or coins. In fact, historical research reveals that cashless civilizations have existed since the early days of organized human social life. The well-known barter system was just one of several popular means of exchanging goods and services.

Debit cards, mobile wallet apps, credit cards, POS systems, mobile banking, and digital coins like Bitcoin have made cashless payments possible today.

Pros

1. An intermediary is not needed in a cashless society.

The cashless society appears to have a monetary system similar to the traditional one, where money is transferred during a transaction. Unlike conventional financial institutions like banks, this service requires a governing body to act as the payment processor. The savings from lowered production costs will be redistributed to initiatives that help those in need, such as a drive to improve economically depressed areas.

A cashless society, encompassing the final leg of fund transfers, payments, and payment networks, will further reduce the economic inclusion gap.

2. A tool to combat corruption

When it comes to combating graft and gang activity, cashless systems may prove invaluable. Those in most need are, once again, the ones who stand to gain the most.

An estimated 1.4 billion people worldwide live on less than $1.25 daily. At the same time, corruption, bribery, theft, and tax evasion amount to almost $1.26 trillion in lost revenue for developing nations. That kind of money, if returned to those countries, would be enough to permanently raise 1.4 billion people out of poverty for a minimum of six years.

In a cashless society, where all transactions are conducted digitally, all financial transactions would be open to the public. If all parties in the chain were digitally linked, it would be possible to track the flow of any financial transaction, including international aid and private investment.

Any numbers that didn’t fit could be identified immediately and looked into. This would help forensic accountants and law enforcement zero in on concealed funds and recover them more quickly.

3. Crime prevention

You’re less of an easy mark for thieves if you don’t flash hundreds of dollars in cash. Even if your credit cards or phone are stolen, most firms offer theft insurance to cover any charges made by an unauthorized user.

The use of cashless purchases also aids the police. When a transaction is made with a cashless payment method, a digital record of the time, location, and item(s) purchased is left, which can be used by law enforcement to identify illegal activity or to monitor the whereabouts of a wanted criminal.

4. Easier to make international payments

You’ll need to convert some of your dollars to the local currency when you go. Nevertheless, if you’re visiting a country that supports electronic payments, you can forget about getting any local money out of the ATM. Instead, everything is taken care of automatically by your mobile device.

Cons

1. Criminal sophistication

As a result of government enforcement‘s ability to monitor digital transactions and block bank accounts, many criminal organizations, including terrorist groups and drug cartels, prefer to deal only with cash. In that manner, they can quickly secure their financial assets.

Nonetheless, this does provide a distinct benefit to law enforcement. They can seize or destroy currency vaults, which can cripple criminal groups. With the advent of a cashless society, the edge law enforcement once held is no longer available.

While a cashless system might simplify monitoring criminal activity and freeze accounts, it would force many larger criminal organizations to resort to offshore banking, Bitcoin-style currencies, and other complex digital techniques.

These would make identifying and confiscating/eliminating unlawfully obtained money much more difficult.

2. Negative interest rates might be passed on to customers

Negative interest rates may have a more direct impact on consumers in a cashless society. Negative interest rates are nothing new; they have been tried in countries like Japan, Denmark, and Switzerland.

When the interest rate is lowered, the aim is to promote the economy. However, it causes the money to lose purchasing power. The International Monetary Fund (IMF) has warned that negative interest rates might cause financial institutions to lose money and lead them to consider raising costs for their clients as a means of making up the difference.

Banks can only pass on fees so much since clients can always take their money out of the bank if they prefer to avoid the fees. Future consumers may have to accept additional fees if they cannot withdraw cash from the bank.

3. Technical difficulties could hamper the ability to get your hands on some cash.

Problems with making purchases at inopportune times can also arise due to technical difficulties, power failures, or simply human error. As a result, businesses can’t take payments either. A flat phone battery can leave you “penniless” in more ways than one.

Conclusion

A cashless society is expanding, whether or not you like it. Whether or not a cashless global society is possible remains at the center of the debate.

Transfers in a cashless society in a developing country can be instantaneous, hassle-free, and inexpensive. Furthermore, it may provide numerous economic and social benefits in developed nations. A more just and connected world could be built through this form of readily available interest sharing that transcends social rank.