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Cashless Society – 5 Advantages and Disadvantages

Cash is becoming obsolete. Instead of carrying a wallet full of dollars, you may now make purchases using cashless transactions, credit cards, mobile wallet applications, and money transfer services like Google and Paytm. These cashless payment solutions make life easier in many ways. Although a cashless society may appear to be something out of a science fiction novel, it is now a reality. The move to a cashless future is being driven by several powerful forces, including particular governments and large financial services companies.

Cashless transactions, it’s fair to say, have altered India’s economic environment. The usage of mobile phones to make payments rather than traditional payment methods has increased considerably after demonetization. Those who have moved to cashless transactions could reduce their losses when most SMEs’ activity came to a standstill due to demonetization. But going cashless is also not very fruitful for us. It carries some downside with it. So we will discuss the advantages and disadvantages of a cashless society.

Vietnam and Thailand lead drive to make Southeast Asia cashless - Vietnam  InsiderAdvantages of going cashless 

1. Convenience

It’s as simple as swiping a credit card or scanning your phone to make a purchase. It eliminates the need to count money or make a change, allowing you to buy anything you want, whenever you want, without going to the bank to get cash. It is also advantageous for traders. Because electronic-transfer-based sales can be recorded into computer systems swiftly and efficiently, they don’t have to deposit as much cash every day and can rapidly balance their accounts.

2. Prevent crimes 

Many violent crimes have happened at cash registers. It puts bankers and merchants in danger of being robbed. When cash is withdrawn from the business premises, the risk of theft is significantly decreased. It also indicates that a tiny business does not require the services of a security guard. A business may be necessary to engage professional security to carry cash safely. The company and the client stand to save money if money is substituted.

3. Automatic paper trails 

Financial crime should also vanish in a cashless world. Because there is no transaction record and the money is easier to launder, cash is widely utilized in criminal operations such as illegal gambling and drug trafficking. Money laundering becomes much more difficult when the source of funds is always known. It’s more difficult to hide income and avoid taxes when every payment is documented.

4. Payments across Borders Have Been Made Much Easier 

When travelling, you may need to convert your dollars to local currencies. You won’t have to worry about how much local money you’ll need if you travel in a country that allows cashless transactions. Instead, everything is handled by your mobile device.

Benefits of Digital Transactions for Seniors | Reasons to go Cashless5. Discounts

The exemption of service tax on card purchases up to Rs 2,000 is one of the government’s new incentives to increase digital transactions. After then, there was a wave of price reductions and gifts. Now is a perfect moment to boost your savings if you take advantage of these changes. For example, a 0.75 per cent discount on digital gasoline purchases means you may save a little money on each filling.

Similarly, saving money on train tickets, highway tolls, or insurance, for example, can help you save money. You can see a minor boost in your cash flow if you combine cashback and discounts from mobile wallets like Paytm with reward points and loyalty benefits from current credit and retail cards.

Disadvantages of the cashless society 

1. Privacy is sacrificed in digital transactions.

Electronic payments do not offer the same level of security as cash transactions. You may have nothing to hide and put your faith in the companies that handle your data. However, the more information you have circulating online, the more likely it will fall into the wrong hands. Cash may be used to send and receive money discreetly.

The danger of identity theft is the most severe issue. Because we are culturally unused to digital transactions, even well-educated people are vulnerable to phishing traps.” The risk of getting hacked will only increase as more people use the internet, thanks to the surge in online fraud.

UP cops carry out digital literacy drive for cybercrimes | India News,The  Indian Express2. Criminality Has Become More Advanced

Many criminals, including drug cartels and terrorist organizations, operate in cash since government enforcement can follow digital transactions and prohibit bank accounts. It’s a straightforward solution for customers to safeguard their funds. However, it gives law enforcement a significant edge. They have the authority to confiscate or shut down cash shops, wreaking havoc on criminal enterprises. Law enforcement loses this advantage in a cashless world. While a cashless system would make it easier to track illegal transactions and freeze accounts, the lack of a simple cash alternative would likely encourage many larger criminal organizations to use offshore banking, Bitcoin-style currencies, and other sophisticated digital tricks to make it more difficult to seize illegally obtained funds.

3. Electronic payments are not available to everyone.

According to The New York Times, low-income earners, pensioners, certain immigrants, and those with disabilities “have little or no access to electronic payments and are being blocked out as banks cut back on ATMs and customer support.” This might exacerbate the problem of economic inequality.

Should We Move to a Mostly Cashless Society? - WSJ4. You could be charged transaction fees in future 

It’s not only the establishments you visit that charge fees for cashless purchases; living in a cashless world may also cost you money. Peer-to-peer payment services like PhonePe, for example, charge transaction fees. Credit cards charge annual fees, late fees, and foreign transaction fees, among other things.

5. Overspending

While the convenience of card or mobile wallet transactions cannot be denied, they may expose an unwary public to a spending trap. The misery of parting with money is felt more acutely if you use actual cash rather than a card, according to behavioural finance specialists. As a result, for people who have problems regulating their spending, utilizing cash rather than cards or a mobile wallet acts as a natural barrier. “This is why folks may end up overpaying and causing havoc with their budgets.”

Furthermore, widespread use of digital payment systems mandates that the same amount of money not be re-circulated. If this occurs, individuals will be more likely to return to the former convenience of using cash, which is a tough habit to break.

Edited by Prakriti Arora

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