Since about 960 AD, when the earliest known paper money began circulating in China, the thought of eliminating cash, in favour of electronic or digital medium, had been inconceivable. Ironically, these days, China is one of the leading countries in the world with the highest volume of cashless transactions. Elsewhere in the world, the cashless revolution is being spurred by fintech firms and online payment platforms such as PayPal, Venmo, Stripe and Square. These corporate giants have never been busier these days. Merchants are now scrambling to provide digital payment options to customers who seek to avoid, or are simply unable to, pay cash. “Our products have never been more wanted and needed,” said PayPal CEO Dan Schulman in light of the report that PayPal is signing up around 250,000 customers a day with 7.4 million customers activated during April period.
Even as we grapple with the factors that are going to affect our move towards a cash-free society, the pros and cons of living in such an idyllic world must be carefully weighed.
“Our products have never been more wanted and needed,” said PayPal CEO Dan Schulman in light of the report that PayPal is signing up around 250,000 customers a day with 7.4 million customers activated during April period.
Convenient Payment Locally and Internationally
Aside from avoiding the hassle of not being able to avail of desired products of services for lack of cash in your pocket, going full cashless also allows you to leave any worries behind when you travel. You don’t need to worry about exchange rates or currency withdrawal as your mobile device could handle everything for you.
Reduced Illegal Activities
Cash is always the preferred medium in many illegal transactions as it provides no money trail and every person involved in the transaction can go completely anonymous. Those days could end in a cashless society. As automatic paper trails are created, illegal gambling, drug operations and money laundering could be a thing of the past as a clear record of transfer of ‘money’ will exist, serving as a deterrent to lawless elements.
Increased Safety and Security
Carrying cash around entails risks and makes you an easy target for criminals. Once cash has been taken away from you, it now becomes a criminal’s possession which can be spent without any trace that they were yours.
Printing Money Costs Money
Going cashless is not only convenient, it also saves money. Printing coins and bills have costs. Storing those bills and moving them around have costs. Even storing them costs money. Businesses that churn a lot of cash have to deposit them, withdraw them and keep moving in order to keep the business going. All of these problems will go away once we get rid of the physical cash.
As automatic paper trails are created, illegal gambling, drug operations and money laundering could be a thing of the past as a clear record of transfer of ‘money’ will exist, serving as a deterrent to lawless elements.
However, depending on how you look at it, going cashless can actually entail more risks than benefits. Some of these are:
Full Access to Funds Might Not Be Guaranteed
Once you become dependent on technology to get access to your funds, then problems such as glitches, virus, computer error, and even innocent mistakes could prevent you from being able to spend your money. Moreover, merchants that encounter compatibility issues or system malfunction may not be able to accept your payment even if you have enough funds to do so.
Additional Charges by Payment Processors
Moving to a cashless society might entail selecting a few payment processors to handle payment transactions. These payment processors are companies that have invested time and resources to create a product that could handle the task. As such, some form of fees must be implemented in order to recoup their investment. The resultant effect could be higher total cost of transaction instead of savings, purportedly touted due to less cash handling.
Increased Privacy and Security Concerns
Regardless of the amount of encryption, security and safeguards being implemented, electronic payment always entails risks of mishandling data. With the amount of information that will be generated with the continued adoption of electronic payment, malicious elements will be harder at work to get their hands on these data. On the contrary, cash transactions are always anonymous – and to some degree, safe.
Your Funds Can Be Hacked
While there is zero chance that a robber or a pickpocket could steal from you, hackers could actually do you more damage. It’s not unlikely that if someone is targeted by a particular hacker, his funds could be dried up, leaving you with absolutely nothing in your account at all. Even if there are some form of paper trail, restoring your funds after a breach could be complex and time-consuming.
Will cashless ever be possible for all?
If history has anything to teach us, it is that the world is constantly evolving. With the rise of e-commerce and digital payments, it is not impossible to say that physical currencies will soon be obsolete. What’s important to note is that every country in every region are moving towards this ideal at their own pace. The march for progress continues. For now, we have credit or debit cards, mobile payments and crypto/digital currencies that give us hints as to how a cashless society might evolve. Who knows? Something even more revolutionary might come along.