Small Payments - The Pros and Cons of a Cashless Society
Cash is on its way out. Near-term projections show it will only account for 12.7% of global point-of-sale transactions by 2024. 아이폰 원스토어 상품권
For consumers and businesses, the benefits of going cashless are clear. Real-time payments with the tap of a button beat fumbling with bills and coins.
A cashless society also creates a paper trail that makes it harder to commit crimes like money laundering or evade taxes. But the downsides are equally significant.
1. Convenience
Cashless payments are becoming more and more popular. It’s easy to see why: they’re fast, simple, and convenient. Instead of reaching into your wallet for loose change, all you have to do is swipe your card or tap your phone. This is especially useful when you’re buying something small or in a place where cash isn’t accepted.
In addition, going cashless can help you save money. The manufacture of cash is expensive, as is storing and transporting it. In contrast, digital transactions are cheap and convenient for both businesses and consumers. Plus, a cashless society can be less prone to fraud because there’s always a digital record of a transaction.
But the benefits of a cashless society don’t stop there. It’s also easier to keep track of your spending habits when you don’t have to carry around cash. It’s also more difficult to overspend when you only have to swipe or tap your card. Plus, a cashless society can make it harder for criminals to steal your data or hack into your account.
It’s important to remember, however, that not everyone has access to digital payment methods. The Balance points out that 24.2 million households in the United States were unbanked or underbanked in 2017. These individuals would find it hard, if not impossible, to purchase necessities in a cashless society.
In addition, a cashless society can lead to an increase in energy usage because digital transactions require more power than physical cash. It may also result in a higher carbon footprint, as well as impact recycling and waste management. Lastly, a cashless society can lead to economic inequality by excluding individuals who don’t have access to digital technology or bank accounts. This could create a black market where those without access to funds are taken advantage of by others. To avoid these issues, it’s essential to work with a trusted and reliable credit card processing company that offers various cashless payment options. The right solution will ensure that all of your customers have a seamless, secure payment experience.
2. Security
In a cashless society, a consumer doesn’t need to worry about getting the right amount of change, or misplacing or losing an ATM card. Instead, a small payment is made by tapping an app on a smartphone or debit card at the register, which makes transactions quick and convenient.
However, some people are concerned about the security of going cashless. As The Balance reports, a lack of cash could leave consumers more susceptible to technology failures and hacker attacks. For example, the recent Target system outage left many consumers without the ability to purchase necessities. In addition, if a bank, credit card company or other entity were to go out of business, a person would be left with no way to access funds.
Proponents of the cashless society argue that it will help reduce money laundering and tax evasion. They also note that it’s easier to travel abroad when there’s no need to exchange currency or find an ATM. In addition, there are cost savings involved with cashless transactions as opposed to traditional cash handling and storage. For example, there are costs associated with purchasing cash drawers, security, gas, trucks and maintenance, as well as the storage of large amounts of cash.
As the COVID-19 pandemic accelerated the shift to digital payments, some businesses are even replacing their standard tills with contactless payment technology to avoid cash theft and encourage customers to spend less time in line. Consumers are also reducing their use of cash as they’ve grown comfortable with digital wallet apps and contactless cards.
Cashless transactions are secure because a customer’s information is encrypted when making a payment. The information is never stored on a computer or mobile device, which reduces the chances of it being stolen by hackers or compromised in an attack against a point-of-sale (POS) system. Another benefit of using cashless payments is that a spending pattern can be identified, which can help identify potentially risky purchases.
A cashless society would mean the end of cash for some merchants, especially small ones. Credit card companies charge merchants 2-3% of every transaction, which can be a huge "tax" for some low-margin businesses. As a result, some merchants discourage or even refuse to accept credit cards, which further limits the growth of a cashless society.
3. Trust
Whether we’re talking about the growing popularity of mobile payment apps or a world without physical currency, it’s clear that our society is headed in the direction of cashless payments. But before you go all in, it’s important to weigh the pros and cons of this shift.
The good news is that there are many benefits to going cashless, including convenience and security. For example, if you lose your wallet or credit card, it’s easy to cancel your account and prevent criminals from accessing your funds. Additionally, cashless payments can help you track your spending, so you can stay on budget and reach your money goals faster.
However, going cashless can also be a big problem for your financial health. It allows your transactions to be tracked by third parties who aren’t involved in the transaction, which can be a major breach of privacy. In addition, it’s possible for financial institutions to make profits from your data – and not always in a way that’s beneficial to you.
For instance, many companies that collect your personal information sell it to third parties for marketing purposes. Additionally, a cashless system could be more vulnerable to hacking or other forms of fraud than one that requires physical currency. The recent Target incident is a stark reminder of the vulnerabilities that come with an entirely digital system.
Finally, there are those who are unable or unwilling to use cashless systems, such as the unbanked and underbanked. According to the FDIC, about 8.4 million U.S. households were unbanked or underbanked in 2017. Without access to banking, credit cards, or smartphones, these individuals would be unable to purchase necessities like food, housing, and medicine.
While there are some pros and cons to going cashless, the majority of consumers are already making their purchases online and using credit cards for their everyday expenses. If you’re interested in learning more about the trend towards a cashless society, check out this article from KTH Royal Institute of Technology, which highlights some of the ways Sweden is leading the charge. And don’t forget to keep track of your own finances with our free budgeting tool EveryDollar, so you can stay on top of your money.
4. Ease of Overspending
In a cashless society, it would be easy to overspend without realizing it. When you make a payment with a credit or debit card, it leaves behind a digital footprint, and this can be easily tracked by financial services providers. This can be beneficial for consumers, but it can also lead to overspending and financial debt. A cashless society also eliminates the need for people to carry around a wad of bills and coins, which can be a nuisance in busy public spaces.
A cashless society could be good for law enforcement, as physical cash is one of the most common targets for theft and robbery on the streets or in homes. Additionally, a paper trail of electronic transactions makes it more difficult for crimes like money laundering and tax evasion to take place. Finally, a cashless society would enable easier international travel as it wouldn't be necessary to exchange dollars for local currency in each country you visit.
Despite these benefits, there are still many reasons why most consumers won't switch to a cashless lifestyle. It's important to understand these reasons before making a decision about going cashless.
There are a number of key challenges that must be addressed before a cashless society becomes a reality. First and foremost, it's critical to ensure that all individuals have access to banking, credit cards, and mobile devices. Currently, more than 14.1 million Americans do not have a bank account and another 24.2 million are underbanked. These individuals would be left behind in a cashless society as they would lack the means to participate in these transaction networks.
Additionally, many low-income communities have difficulty participating in electronic payment networks because they lack the IDs required to open a bank account. In addition, the cost of credit card processing fees and equipment can be prohibitive for many small businesses and gig workers. These issues must be addressed on a country-by-country basis to ensure that the benefits of a cashless society are available to all individuals. This is an issue that will require close scrutiny and discussion, especially as more countries continue to adopt a cashless economy.
