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People have experienced a rising phenomenon in cashless transactions in recent decades, as well as explicitly sold commodities and services in this fashion. Also, it has emerged after the advent of the global economic crisis that proprietary cryptocurrencies have posed some dubiousness. All these developments present the dilemma of whether or not the modern world is progressing towards a cashless society. This also creates a host of other apprehensions, such as if cashless societies have negative impacts on the financial market and whether they include what the economic regulatory bodies’ answer would be and who will be the potential winners and ultimate losers, and so on.
A rational individual always analyzes theories for and against cashless society, the prospect of cryptocurrencies, as well as possible economic policymakers’ approaches to the advent of a cashless society. People also observe that it is impossible to foresee a remarkable transition to a cashless society soon, but the obvious step in money progression may be the introduction of digital currencies in pioneer banks, at least in some major countries that seem to dominate the international economy.
A cashless society is an economic phenomenon that conducts monetary transactions in an electronic format, rather than using banknotes. Through these activities, individual will have an electronic card or software in a cashless society which will be used to carry out the transaction. The cashless transaction can consist of a Debit Card, Credit Card, Mobile Banking, internet banking, Google Wallet, Mobile Wallet, Point of Sales (POS), PayPal, Amazon Go, Payoneer, MoneyBookers, and so on. These are some of the real-world manifestations.
A cashless society might seem like something out of dystopian fiction, but people are already on their way to embrace the concept. There are many strong forces behind the transition to a cash-free nation, including government agencies and major financial service providers. Also, opponents of the conventional banking industry and currencies provided by the government tend to do away with currency with swift execution. But somehow, individuals are not following it wholeheartedly. Besides, logistical challenges, one must tackle many social concerns before having to give up altogether on cash. The following benefits and drawbacks will render an individual an impression of the multitude of cashless impacts that can have on both money and banking.
Benefits
The crime rate would be negligible. It is easy to misappropriate money with the handling of cash, whether the sum is big or minimal. Besides, illegal transactions like drug trafficking, smuggling, etc. usually happen with big cash so that there is no documentary evidence of the transaction such that the seller can be confident of being paid. A cashless society is paperless. Financial fraud will also run dry. Hiding income and evading taxes becomes difficult because there is a database of any payment that one receives. Money laundering is much complicated if there is still a fund source available in the market.
There is no need for cash management. A large amount of money is involved while printing bills and coins. Business institutions do have the requirement of money; get far more when they are fallen short, and reinvest cash when they’ve got greater volume in hand. A distant memory might be in the offing to move money around and preserve large amounts of cash in the process. Foreign payments have become more effective. One may need to own local currency while he is visiting a foreign land. However, if both governments can manage cashless transactions, payments are quite seamless. A person’s mobile app does it for him, instead of finding out another currency alternative.
Drawbacks
In reality, going entirely cashless may be troublesome depending on one’s outlook. There is no privacy in a cashless environment. A payment through electronic medium means too little privacy. People may trust the agencies that manage their data, and they may not have anything to cover, but the payment details can come up in ways that cannot be expected. Currency and cash transactions enable consumers to have anonymous identities while receiving money from other different sources. Also, there is always a possible element of hacking. The hackers are construed as cybercriminals and muggers and spread across the world. They are sufficiently tech-savvy.
The implications of a cashless society are greater if anyone drains a users’ wallet, and he doesn’t have any alternate ways to spend it. Even though people are covered by federal law, post a violation, one encounters considerable discomfort and other implications.
Besides, technological advancements are not always smooth sailing. Bugs, accidental glitches, and outages can also create problems, leaving people without the opportunity to buy items when they desperately need them. Similarly, when devices fail, vendors have no other way out but to accept customers’ payments in cash. Just something as basic as a dead motherboard could leave the computer operator in a standstill! Inequality may be the hardcore truth in a cashless society.
The vulnerable and unbanked segment of the community would have an even tougher time. They don’t have the readiness to accept sophisticated payment systems, so those who live in the priority economy will have no means of getting paid or receiving assistance. The United Kingdom has been trying out with contactless ways of donating to charities and homeless people but it’s a long way to go and any positivity is yet to materialize. When people are forced to select from only a few payment options, can they expect a lucrative offer from the banking sector?
Service providers will only cash in on the large amounts for processing of payments, reducing the customers’ savings on the plea of less cash handling. Besides, an overpayment is also a great bone of contention. If consumers spend cash, they feel the obvious pressure of every penny that they spend. But it’s simple to tap, swipe, or press with the help of electronic payments, without realizing how much has been spent. Customers need to intensify efforts to control their expenses. Negative interest rates are a curse. If all liquidity is in electronic mode and the government levies a negative interest rate on financial institutions, it may be passed on to consumers by way of fees who no longer have been assigned any cash to take out and put in a safer place to escape the adversity of interest rates. Usually, lowering the interest rate is a bid to boost an economy and human purchasing power, but the effect is simply the opposite that money itself becomes the cause of losing the purchasing power.
Payments do occur electronically without the existence of cash. One may allow a money transfer to another person or a firm with the help of electronic mode exchange money. Logistics are still in a primary stage, but still, people have some indications as to how a cashless society would develop in the long run.

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