In recent years, we have a gradual trend towards the adoption of electronic payment methods. From digital wallets, to smart cards and Apple Pay, more payment technologies are now available to the public than ever before.
Not only that, but this trend towards a cash-reduced society has been accelerated by COVID19 as a result of hygiene issues associated with cash and the increase in online shopping. Although, a cash-reduced society doesn’t work for everyone.
In this article, we explore the potential issues of a cashless society, and explain why cash is needed for a sustainable future.
The problems of a cashless society
Depending on your views, going cashless might actually pose more problems than it solves. Here are some of the biggest downsides associated with a cashless financial system.
1. Electronic payments sacrifice privacy
Cash payments are completely private. Electronic payments however, not so much. You might trust the organisation(s) that handle your data, and you probably have nothing to hide. However, the more information you have stored online, the greater your chances of being targeted by malicious activity are.
If you have even the slightest worry about your data ending up in the wrong hands, stick with cash. It allows you to spend and receive funds anonymously.
2. Increased business costs
Although cashless payments come with advantages (such as not needing to take money to the bank), businesses become reliant on bank companies and credit cards, who charge extra for processing accounts. For some cards, 2% of the transaction can be expected, but can amount to even more with certain credit card companies. This would give card companies more power in the absence of cash and force businesses to pay unfair rates.
3. Cash helps reduce temptation to overspend
With cash, you physically recognise the financial impact it has when you spend it. Whereas, with electronic payments it’s easy to swipe, tap, or click without noticing how much you spend. If cash were to be removed from society, consumers would have to rethink ways to manage their spending.
4. Technology issues could cause problems
Even with technology and its advancements in recent years, systems still occasionally suffer from glitches, outages, and human errors. This could cause problems, leaving you in a sticky situation without the ability to pay. Even a dead phone battery could leave you ‘cashless’.
5. Payment providers could introduce fees
If society is forced down a cashless route, some companies could take full advantage. From charging to install payment apps, to introducing fixed payment fees, payment providers may cash in on the high volumes, eliminating the savings that should come from less cash handling.
To conclude: the future of cash payments
It is clear that a cash-reduced society would have a number of benefits including reduced tax evasion, quicker transactions and arguably better hygiene. However, we feel that the previously mentioned problems far outweigh these potential positives.
In short, we believe cash is here to stay. But knowing what will happen tomorrow is not clear and we must be prepared for all eventualities.