The merits and demerits of a cashless society


What does a cashless society hold in store for the stakeholders involved?

When examining the merits and demerits of a cashless society, it is important to understand that the impact of this shift does not affect all stakeholders equally and, therefore, the analysis must be further broken down into an examination of the effects on consumers, businesses and governments.

No more counting out change

The progression towards digitalisation of currency carries with it several benefits with regard to convenience. With the proper infrastructure in place, faster checkout times can be expected. The convenience of simply inserting one’s card into a machine or tapping to pay gives consumers a strong incentive to switch to non-cash methods of payment. The speed and efficiency of non-cash-based checkouts are contingent upon the effectiveness of the machines being used to process the payments.

Customers will have the added benefit of the diversi cation of payment options. They will no longer be restricted to merely cash on hand but will also have the option of using credit. Consumers travelling abroad will no longer have to concern themselves with the process of changing currency. This saves the tourist not only time but also money, as they will be able to sidestep the fees associated with converting currency. However, these fees and frustrations can only be avoided once a more effective environment of interoperability in systems of payment has been fostered.

Who doesn’t love free things?

Apart from just the bene ts with regard to convenience in a cashless society, consumers can also experience certain rewards and perks that they would otherwise be unable to access if they paid solely with cash. Some retailers offer customer cards, which can be used in the store to receive select discounts and accumulate loyalty points. Such campaigns offer customers select incentives to transition away from using cash.

Sorry, I don’t have any cash on me

A third category of benefits experienced by consumers, businesses and governments alike is the predicted reduction in burglary and theft. A US study reveals a reduction in crime in Missouri after Electronic Benefit Transfer (EBT) was implemented as a method of issuing welfare and food- stamp benefits to its citizens. With less cash in their wallets, people are less likely to become targets of robberies. In Sweden, the bank tellers’ unions and public transport unions lobbied against cash handling owing to fears of potential robberies. Armed robberies have fallen in Sweden following the reduction of cash on hand in these industries.

Cybercrime and fraud

However, the progression towards a cashless society is not without its aws. Cybercrime and privacy concerns are two fears that immediately come to mind when discussing this transition. These worries are certainly not unfounded. Although armed robberies may have declined over the past decade in Sweden, fraud-related crimes have more than tripled. In the US, the number of hacked credit cards sold online continues to rise. Amid such uncertainty, many consumers in societies where non-cash modes of payment are less prevalent are likely to be wary of the transition to a cashless society in the light of such statistics.

Are we being inclusive?

Another concern is the possibility that elderly individuals will be left behind as a result of the transition away from cash. While some of the difficulties elderly individuals can and will experience can be attributed to a lack of experience regarding these new modes of payments, some simply view cash as a more reliable and simple method of payment. Although some developed countries such as Singapore are deploying new methods of educating the elderly population on non-cash payments, there remains a risk that some would be left behind in a cashless society.

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