A cashless society is like a dream for our ancestors. A decade ago, the way we use to transfer money without touching paper cash was alien to us. The cashless society took momentum because of some powerful forces, including some governments and large financial services companies. At the outset of the Covid-19 pandemic, central banks started to disinfect banknotes in the most virus-affected regions. The Federal Reserve initiated a process of quarantining money. Many banks advised people to use electronic payment methods. Covid-19 and the cashless society have changed the way we live earlier. It is making us think differently. The convenience of not carrying cash around and staying safe from the robbers are some of the advantages. But when a crisis arrives, people prefer to keep paper money at hand as they can’t rely solely on online transactions. Governments are promoting the cashless society because online transactions are registered in banks and they can get data which they can use to increase revenue, decrease crime rate, and other suspicious activities. The transaction done with the paper money is very difficult to track. The pandemic adversely affected the economy but digital platforms get acceleration and so the electronic payments. However, it will take a lot of years for societies to go cash-free, also many major issues need to be resolved to make society independent of cash. The pros and cons mentioned below can give you an idea of the effects of a cashless society on us and on the banking system.
#1 Faster & Simpler currency exchange:
Carrying a lot of cash with us is a huge responsibility and makes us vulnerable in many situations. Cashless transactions are faster and much more convenient as one can transfer money whenever and wherever they like through their mobiles. You don’t have to carry cash and count it out every time a transaction occurs. Nowadays, many digital banks allow paying internationally by card at a great exchange rate.
#2 Lower Crime Rates
When you carry cash, you can’t stay relaxed because it makes you an easy target. Once the money is gone, you can’t take it back from robbers as you don’t have any proof. Also, you can’t even track that money. Several studies showed that with the improvement in cashless transactions in the UK, crime rates are declining drastically. Also, illegal activities like money laundering, illegal gambling, and drug operations are now traceable. Every payment is recorded and tracked.
#3 Better Cash Management
When you carry cash with you, you need to be extra cautious but going cashless is convenient. Printing bills & coins cost money. Also, storage and deposit cash is another daunting task. But in a cashless society, managing cash will not be difficult, and protecting large sums of cash is also not required.
#4 Less Responsibility
Who doesn’t want to travel without any fear? When you carry cash with you, you have to be very protective; you have to carry your bag wherever you go. You would lose freedom. Going cashless is easy and convenient for all. Nobody can steal your money without your consent. You can pay your bills without going anywhere.
#1 Internet Issues and Payment Failure
Due to internet issues, several times, we are unable to make payments at the right time. Going cashless can be a cause of worry if any technical problems occur while you make necessary payments. You have to rely on technology. To stay on the safer side, one has to carry cash.
#2 No Privacy
Your personal information is your treasure. But online payments make payment information accessible to all and vulnerable. Once your account gets hacked, within a minute your cash will be gone. You have to stay beware of the hackers.
#3 Difficult to learn for an older generation
Older generation people who don’t know how to operate smart phones or not comfortable with digital modes of payment can face difficulty in a cashless society.
#4 Spend More Money
When you spend banknotes while making a purchase, psychologically, you may not able to spend more. But while making online payments, you only see the numbers deducting from our account. You have to use different ways to save money to prevent yourself from impulsive purchases.
We are going through a difficult phase where we are dealing with so many issues altogether. Moving towards a cashless society during COVID-19 will surely change the future of paper money and make people technologically advanced. Still, we are unaware of what would happen next. With the advancement of technology, the world is changing in every aspect. Going digital is a wise step that should be appreciated, but there are also some disadvantages. Society is a blend of cash and cashless transaction & nobody knows the future of cash.