Most objects of living and everyday sustenance have been transformed and shaped by advancement in technology and needless to say the ways we carry out transactions have also taken a turn. One such change would be the introduction of the phenomenon known as the cashless economy. A cashless economy is one where money flow is done entirely through digital platforms without the actual physical presence of currency like coins or banknotes. It is interesting to know that the present-day system of currency actually evolved from a system of bartering, which indeed can be portrayed as a type of cashless economy in itself. Today the cashless economy has become a reality due to the presence of digital transactions and cryptocurrencies like bitcoins.
Cashless economy is being considered vital mostly because at the rate at which the world is progressing, with almost all mediums of recording, exchanging and managing commerce have shifted to a digital platform. Some countries have now set a limit to the amount of money that can be transacted through digital means, mostly as a step to curb the circulation of illegal money and to keep track of their records. The first step towards cashless banking happened during the 1990s when banks introduced online banking facilities for their clients. By 2010, digital payment platforms like PayPal had become extremely popular. Much of these transactions could now be carried from their smartphones. According to the latest surveys, about 70 percent of the US populace preferred their debit cards over cash, and 1 out of every 7 people in the United Kingdom no longer engaged in cash transactions. Similar trends could be observed in Sweden were about only 2 percent of the total value transacted was in cash and only about 20 percent of all the transactions were through retail.
Why opt for a cashless economy? This has been a question asked by many and some of the benefits of a cashless economy are described below.
The first advantage is that it provides lesser business risks and reduced cost of the transaction since security and physical processing of cash takes up quite a lot of time and money. Next is the reduction in the number of diseases being transferred via physical cash handling. The transaction speed is extremely quick for cashless transactions. Next is the elimination of high currency notes which helps to reduce criminal activities and keep track of the circulation. Rather than conducting surveys the old fashioned way, it becomes much easier to now track the financial records of their customers by just looking into their history of digital transactions. This also facilitates easier consumer budgeting. Coming to the drawbacks; privacy is often a cause for concern with data leaks and theft becoming common. This also provides a huge issue for those people who do not own any bank account and hence cannot be registered on any digital platform. Since most of the payment history is stored in servers, there is an increased chance for fraudulent activities to occur. And perhaps another issue would be overspending since consumers cannot exactly keep a very precise track with the swiping and online transactions.