Could we be headed toward a cashless society? Although we still use physical money for goods and services, many people have already adapted to other forms of currency. Instead of paying with a $20 bill, for example, a debit card may be used. Others use accounts like PayPal or WePay to transfer funds for goods and services electronically. Going cash free could happen this generation.
There are some pros to a cashless society that benefit everyone, but going without cash does have certain disadvantages which must be considered as well.
What Are the Pros of a Cashless Society?
1. Accounting systems are much more accurate.
Most people don’t maintain receipt records. Many households don’t even have a budget. In a cashless society, spending figures are more accurate because a complete history of transactions is maintained. This means fewer people can get out of cheating the numbers on their taxes because there is a complete record of their activity.
2. Going cashless saves money.
The ink, paper, and even the designs on physical money all have associated costs with them. It takes money to turn wood fiber into paper. Designers have to be paid to create counterfeit-resistant bills. The machinery required to print the money has a certain cost to it. Although not all of these costs go away when a society goes cashless, there are fewer ongoing costs that must be managed.
3. It creates faster and more secure transactions.
There have been numerous instances of data breaches at retailers since 2012. The way financial data must be transmitted currently creates a problematic system of money management and transfers. A cashless society reduces this risk while creating faster transactions so that real-time profits or losses can be tracked. In theory, consumer spending could be better tracked as well.
4. It may be good for the economy.
There’s no denying that consumer spending is good for the general economy. Consumers spend money at a business, then the business spends money to purchase more inventory, and the cycle eventually leads to jobs to encourage more spending and more jobs.
5. It could reduce criminal activities.
Because a cashless society would require every transaction to leave an electronic “fingerprint” of it somewhere, it would become easier to track illegal transactions and catch those conducting them.
6. There would be fewer cash management requirements, adding to the cost savings.
There is a tremendous amount of money spent by financial institutions today to secure, count, and manage physical money. These costs are mandated because a certain amount of physical cash must be kept on hand to for people to have their needs met.
What Are the Cons of a Cashless Society?
1. People tend to spend more money.
We’ve already seen this happen as the use of credit cards has increased. When physical money isn’t present, people treat it differently. It no longer becomes a tangible item. This means that many households wind up spending more than they intended to spend on goods and services consistently, making it difficult for them to save money for emergencies, future needs, or even retirement.
2. It could create a new socioeconomic class.
We’re already seeing this con of a cashless society with credit card rewards programs. People who properly manage their debt and keep their cards clear of debt get to benefit off of those who have large rotating balances and high interest payments. The funding for rewards has to come from somewhere, right? Since people spend more when they go cashless, this means those who are rewarding for those spending habits will see bigger rewards.
3. New fees could be added to raise costs.
Handling paper cash has virtually no cost to it at all. Debit cards have a low processing fee, but credit cards have a certain percentage that must be paid on each transaction. That’s another way that rewards are funded: through the pockets of businesses. Retailers and service providers increase their costs to compensate for these fees. A cashless society would have a different type of processing infrastructure and that would undoubtedly have an associated cost.
4. Privacy would become a thing of the past.
Because each transaction would leave a trace, it would become possible for everyone to be monitored just as many people had their cellular phone activities monitored.
5. Criminal activity could become more difficult to prove.
If someone could steal a person’s identity in a cashless society, it would be more difficult to prove that there was criminal intent behind the transaction. The fingerprint left would be their own and it would essentially mean people would be forced to prove their own innocence.
The cashless society pros and cons show that to gain some benefits, we may have to lose certain other benefits we currently have. A lower level of privacy would potentially create better cost savings in the long run. Is that a decision we’re willing to make right now?
Crystal Lombardo is a contributing editor for Vision Launch. Crystal is a seasoned writer and researcher with over 10 years of experience. She has been an editor of three popular blogs that each have had over 500,000 monthly readers.