The Pros and Cons of Moving to a Cashless Society

The Pros and Cons of Moving to a Cashless Society

Many people talk about a cashless society or use a cashless payment app today. The latest trends in the finance industry appear to take the world in that direction. The pandemic has pushed people and businesses to adopt a cashless system. Banks have gone digital and are trying to automate their services. We also see the rise of cryptocurrencies like Bitcoin and Ethereum that signals public support for a cashless society. But what could it mean to the world and various governments? To help you judge whether a cashless society is a bane or a boon, we list down both its positives and negatives. 

Pros of a Cashless Society

Less Tax Evasion 

The government depends on people’s goodwill and their taxes for effective administration. Without sufficient tax revenue, the government will struggle to maintain law and order. Many businesses don’t file their tax returns and know how to hide their money from the government. Also, contractors, freelancers, and self-employed workers want to be paid in cash to hide their income from the government. A cashless system eliminates cash-in-hand payments and boosts transparency. The government can monitor the revenue of individuals and companies. It allows them to generate more revenue for developing infrastructure and other worthwhile projects. Also, the government can simplify the process of returns through a cash back apps.

Eliminates the need for cash management 

Managing cash is also expensive, as banks need to print bills and mint coins. The central banks involved in minting money need to invest more in manpower, electricity, equipment, and technology. Banks need to hire security firms to protect their cash reserves from robbers. They also need to invest in professional vehicles to move money from one place to another. Likewise, running ATMs have the equipment and operational costs. Businesses also need to buy expensive lockers and spaces to store their money. A cashless society eliminates or at least minimizes the need for cash management. Businesses can do online transactions through a cashless payment app.

Makes International Payments Easier 

People had to exchange their currencies before they travel to other countries. But with the rise of payment gateways PayPal and Stripe, there is no need to exchange currencies. You can make transactions from your phone through a cashless payment app. It helps save time and make travel memorable. 

Cashless payments reduce transmission of infectious diseases 

The pandemic has highlighted the importance of hygiene and safety. Public health experts advise people to limit direct human contact and maintain social distancing. Physical interactions increase the risk for the transmission of deadly viruses. If people make purchases through bills or coins, they could spread viruses. Many viruses can live on the surface of bills and coins for some days. Through a cashless payment app that minimizes physical interactions, people can benefit from superior health and wellbeing.

Reduces corruption and forgery

A cashless society boosts transparency and makes the leaders accountable. They are little loopholes for public servants to loot people’s money. Likewise, a cashless society eliminates the problem of forged money. No one can accumulate wealth in forged money. The government will require tax declarations from people and avoid tax evasion.

Cons of a Cashless Society 

 Privacy Concerns 

A cashless society is a nightmare for people who want privacy. Even when they don’t engage in tax fraud, cashless systems expose their financial information to banks, law enforcement, and private intelligence agencies. People can use financial information to judge their friends, and it would put a strain on relationships. Your financial information will be accessible to spammers and hackers. 

Gives more power to totalitarian regimes

Cashless systems foster the growth of big government. People distrust the government and want them to stay away from their personal lives. But a cashless system gives limitless power to the government. The government will use such a system to oppress minorities and deny them welfare and benefits. Ethnic cleansing is a real threat, as governments can manipulate cashless systems in their favour. They can shut down payment gateways and the internet to oppress dissidents. The concept of separation of powers fades away into oblivion as the government takes complete control over anything.

Discourages savings while pushing spending

Cashless systems exploit people’s weaknesses and make them spend beyond their means. There is no tangible money, and people have a disconnect with their money. Since it is easier to send money through phones, people tend to overspend. People get into debt and struggle to get out of it. It gives little incentive for people to save and promotes consumerism. The virtue of “deferred gratification” disappears, and people want instant results.

Removes the Emotional Value of Money

People work hard to earn wealth and get attached to tangible forms of wealth. Whenever they look at currencies, they will remember the amount of hard work they had put into earning them. They know the value of their money and protect it from all threats. But when money becomes digital, there is no emotional attachment. Money becomes too abstract and exists only as a concept in your bank.

Favours big businesses over small businesses 

Small businesses cannot invest in digital infrastructure as they struggle with cash flow problems QR scanner. They also have to pay service charges and third-party fees to banks and financial organizations. So, cashless systems turn a blind eye to the plight of small businesses. Big companies don’t have a problem buying the infrastructure necessary to make cashless systems possible.

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