Is a Cashless Society Really as Good as It Seems?

Is a Cashless Society Really as Good as It Seems

Electronic money can perpetuate discrimination.

In the past couple of years, we have all gradually shifted away from using paper money. Be it for the sake of hygiene amid the COVID-19 pandemic or simply for the convenience of not carrying our wallets around, cashless payments have become the new norm. Cashless payments are made possible by electronic money, that is, currency stored on digital databases backed by fiat currencies, like the U.S. Dollar, Indian Rupee or Japanese Yen. 

On reading so far, your first thought must be “Of course, electronic payments make our lives easier”, and you won’t have to worry about forgetting your wallet ever again. However, e-money is not without its vulnerabilities. Let’s take a closer look at how e-money works as well as the benefits and issues of a paper money-free society. 

What is e-money?

There are two kinds of e-money that people can use. The first type is hard money, which includes irreversible and highly secure transactions that take place directly through the bank. The second type is soft money, which includes transactions that take place through unified payment interfaces (UPI), online wallets (like PayPal) and credit cards. These kinds of transactions are reversible, so users can modify the amount of money sent to a source or even cancel them and get their money back within 72 hours of making the transaction. Although cryptocurrencies are not as widely used in everyday transactions yet, some companies are considering or already accepting cryptocurrencies, like Bitcoin and Ethereum. 

Why are countries going cashless? 

As of 2022, some of the countries that are close to going cashless include Sweden, Finland, South Korea, China and the United Kingdom, to name a few. Here are some common benefits of getting rid of paper money: 

Reductions in theft and robbery

The first and perhaps the most important reason for countries to go cashless is the reduction in the occurrence of robbery. If people don’t have their wallets on them, there is no way for others to steal their tangible money. 

Greater transparency 

Going cashless gives the government a clear paper trail to follow every transaction a person makes. This makes it harder for people to run illegal businesses, like human trafficking or drug dealing. Besides, it also helps prevent money laundering and tax evasion since the government can easily find out where you have received the money from. 

Instant payments 

If you consider paying someone through traditional means, you would either have to cut them a check, which would take a while to process, or go directly to the bank to make the transfer. This takes a lot of time and energy. In comparison, using e-money to make transactions only requires a click of the button. Not only are these transactions quick and easy, but they are also extremely secure due to the use of tokenization and authentication measures in the process. 

Issues with going cashless

Despite the positives, going cashless comes with its fair share of challenges, such as:

Increase of cybercrime

Although cashless payments have the potential to mitigate theft activities, people can fall prey to scams online, such as by being tricked into sharing their bank information (like credit card numbers). 

Besides, e-payments are also susceptible to hacks. While there are security checks in place, banks and other financial institutions can still get hacked. This can result in the leakage of personal information of their clients, thereby prompting criminal activities. 

Lack of literacy and digital infrastructure

One of the main reasons why scammers are able to get away with their actions is that people are not digitally literate enough to make secure cashless payments. A study conducted by the Washington City Paper says that 27% of the U.S. population would struggle to use credit cards to make purchases. If this is the case for a developed country, one can only imagine what it’s like in places where digital literacy is much lower. 

Low rates of digital literacy also have to do with insufficient access to digital infrastructure and support, like smartphones and laptops, especially for economically weaker sections of society. 

Discrimination against minorities

Society going completely cashless can be discriminatory to unbanked sections of society—which often include minority communities. These communities aren’t outside the banking system by choice but rather because of bureaucratic challenges, like the lack of access to banks in their neighborhoods and the inability to maintain a minimum balance and meet strict identification requirements. This, in turn, creates a situation where those who cannot use e-money are no longer welcome in certain businesses.

Tech glitches 

Finally, like any other kind of technology, cashless payment services are also susceptible to tech issues, like power outages, system crashes and internet instability. This could pose problems if merchants only accept e-money or if the customer only has e-payment options. For instance, you might find yourself in situations where payments might not go through (either on your end or the merchant’s end). 

So, is a cashless economy the way to go?

The answer lies in the extent to which we use e-money. If we are going completely cashless, the prerequisite is to address the above-mentioned issues and any other obstacles beforehand, which will take a very long time and strenuous effort. 

However, this does not mean that countries should halt the development of FinTech solutions or that businesses should stop accepting cashless payments. Ultimately, e-payments help cut down the time and energy which would otherwise be spent on counting cash, and lower the chance of businesses becoming a potential target for robbers. Instead, at least for now, cash payments should always be an option to ensure equal access to products and services for all. In light of this, some countries, like France and Sweden, have stepped in to ensure that cash remains a viable means of transaction. 

Some experts suggest that providing the unbanked population with free checking accounts can make cashless payments less discriminatory. Additionally, to make cashless payments more inclusive, efforts can be made in teaching people how to make digital payments and the diverse digital payment options available. As more and more countries are launching their central bank digital currencies, the adoption of e-money seems to be a growing trend in the years to come.

Also read:

Header image courtesy of Freepik


Share on facebook
Share on twitter
Share on linkedin
Share on email


Sophos Unveils Scam Tactics Costing Users Thousands of Dollars

Beware of Fake ChatGPT Apps: Sophos Unveils Scam Tactics Costing Users Thousands of Dollars

Sophos, a global cybersecurity company, has uncovered several apps pretending to be legitimate ChatGPT-based chatbots. These apps overcharge users, generating thousands of dollars each month. According to Sophos X-Ops’ latest report titled “FleeceGPT’ Mobile Apps Target AI-Curious to Rake in Cash”, these deceptive apps have appeared on both Google Play and the Apple App Store.

Essential Privacy Tools to Safeguard Your Devices

Essential Privacy Tools to Safeguard Your Devices

In the ever-expanding digital era, protecting sensitive information and ensuring data security has become paramount. According to a recent study conducted by MAGNA’s Media Trials unit and data governance platform Ketch, a staggering 74 percent of individuals say that data privacy is one of their top concerns.

4 Reasons Why India's EV Industry is Poised for Rapid Growth

4 Reasons Why India’s EV Industry is Poised for Rapid Growth

Hold on to your seats, because India’s electric vehicle (EV) industry is not just gaining speed—it’s shifting gears faster than a Tesla Roadster on Ludicrous mode. EVs are no longer just futuristic fantasies; they’re already ruling the roads of Delhi and zooming past their counterparts fueled by fossil fuels on the highways of Mumbai.

Microsoft-backed Secures Over US$250 Million in Series D Funding

Microsoft-backed Secures Over US$250 Million in Series D Funding

London-based artificial intelligence (AI)-powered composable software platform has raised a significant investment of over US$250 million in Series D funding. Led by Qatar Investment Authority (QIA), the funding round brings the total amount raised by the company to over US$450 million, resulting in a valuation increase of up to 1.8x.

Essential Gaming Slang Terms for True Gamers

Essential Gaming Slang Terms for True Gamers

Gaming is not just a hobby; it’s a culture with its own unique language. Understanding slang and jargon is crucial for having an immersive experience and connecting with fellow gamers. From the acronyms that define player roles to the phrases that capture epic moments, mastering these slang terms is a must for every true gamer.