We are all accustomed with the notion of paying and receiving any amount of money for any service with either cash or check. However, the trend to use non-cash transaction started to prevail during the decade of the 1990s when information, communication and contracts became digitized.
The use of electronic orientation became highly common. The genesis of 2010 marks the widespread use of digital payment methods and cashless currency which suggests a kind of system where no circulation of physical cash is involved. The transactions are done by computerized means.
Forms of cashless currency –
- Credit cards
- Debit cards
- Electronic bank fund transferring mode
- Virtual intermediaries which serves an alternative mode of electronic to methods which require papers like money order or checks
- Digital wallet systems
- Contactless payment
- NFC payment by e-card or smartphone
- UPI payment mode
Requirements for having a cashless society
A country which wants to go cashless and change its payment mode into electronic means needs –
- Reliable processing smartphones.
- Favourable and fast internet speed.
- A safe and secure platform for the transactions to take place.
- A good interface where the transactions can be successfully carried out.
Why should the world form a cashless economy system?
- Cost reduction – Printing, transporting and storing the cash cost is brought down.
- Risk reduction – Now, the worry over stolen or lost money is eradicated.
- Suspicious storage – Money laundering and terrorism financing are two of the biggest issues faced through all over the world. The storing of illegal money will be immediately caught with the digitized version of payment.
- Convenience – The biggest factor to go cashless is to have relaxed financial transactions. Saving time, no frustrating queues for ATMs and transact 24/7.
- Tracking facility – While physical cash bears the risk of getting mishandled, digital modes ensure that the money is tracked and thereby, confirming its security.
- Tax base increment – The fatal risk of black money or illicit transactions is solved when digital transactions are conducted. They track and monitor the records. In this way, proper actions can be taken against the evaders or criminals.
- Parallel economy containment – Referring to the previous point, this mode guards illegalities related to monetary issues. The transactions are transparent and therefore, corruption is minimized.
- Financial inclusion – In third world countries, barter system, loans from private money lenders are extremely risky and often deceitful. Cashless economy helps to form formal economy system and everything is legalized.
- Discounts – One of the major perks of going cashless is to receive remarkable incentives in the form of discounts, cashbacks and loyalty points whenever online shopping is conducted.
While the pros are many, the cons shall make sure that cashless economic system does not crumble down. Technological and electronic issues should be minimalized. The platform should be supported by high and powerful security systems. One has to be cautious with personal information as it may lead to data breaching. The country should facilitate such a society where people from every financial sector can access digital payment methods.
If these problems are carefully looked and dwelled upon with active solutions, cashless currency is going to embark an impressive step towards evolution.