A cashless society would have been unheard of several decades ago, but we are now gradually becoming one. There are many powerful forces supporting this move, including governments, large financial service companies, and even popular brands.
Before we can complete this move, we must understand several aspects of going cashless, such as its following advantages and disadvantages.
The advantages of going cashless
Transaction records. Whether you sending or receiving the payment, there would be a paper trail for almost every cashless transaction. This way, consumers can easily track their purchases in the same way businesses easily manage and store the data. It may also prevent money laundering and other financial crimes, since the paper trail makes it difficult to hide income and evade taxes.
Lower risk of theft. Cash is tangible and is harder to hide, so it can be easier to steal in any amount. Illegal transactions, like drug trades, also tend to use cash because there can be no record of the transaction.
Less handling costs. For governments, printing bills and coins costs money. Meanwhile, businesses need to spend to secure cash in their premises and deposit it in banks. Even for individuals, moving money around and protecting them may also be troublesome and costly. All of these expenses can be minimized (if not eliminated) as our society becomes entirely cashless.
International transactions. You need to buy local currency when you transact with cash in foreign countries. But if the locations involved can both handle cashless transactions, it would be a lot easier, and you can do it from your mobile device.
Data exposure. The paper trail from electronic payments would mean less privacy. Even if you have nothing to hide and you trust those who handle your data, your payment information may be used in unpredictable ways. It also makes you vulnerable to hackers who could easily drain your account once they have access to your data.
Technical glitches. The global payment system depends heavily on servers and devices that can still experience glitches and outages. During a system malfunction, consumers would not be able to buy and businesses could not accept payment. Someone who lives totally cashless may be left penniless by something as simple as a dead phone battery.
Exclusivity. Cashless payments remain a luxury for many and some consumers may prefer to pay with cash, especially older people. If a business decides to go totally cashless, they may be excluding a lot of potential customers.
Accessibility. Accessing cashless payment systems is more difficult than accessing cash. Most cashless payment methods require people to go through several processes to pay through them, such as money sharing apps and digital wallets. Companies who want to have alternative payment options may also go through procedures that are specific to the nature of their business. Enabling credit card processing for loan companies, for example, might be different from the process to enable virtual wallet payments for e-commerce merchants.
Before we can totally become a cashless society, there are still a lot of issues we must address regarding cash alternatives. For the meantime, it might be best to use both cash and digital payment methods alongside each other to have a backup in case one of them becomes unavailable.