It’s not unusual to make payments other than with cash. The number of alternatives to using money to make purchases pay off debts, and more has increased. These cashless and contactless payment methods have become more popular recently. Cashless transactions have increased since the outbreak causing this to become the latest trendsetter.
Factors causing an increase in cashless transactions:
The internet has played a big part in the need for solutions that may be utilized for online commerce, even if convenience and eradicating the need to carry cash have been the driving forces behind all contactless and cashless payment systems. Beginning in the early 1990s, a wider range of people had access to the Internet, and businesses realized they needed to make it simple for customers to pay for their online transactions. Debit and credit card use is made possible thanks to payment processors. Some online retailers allow users to submit their checking account details or utilize third-party services to withdraw funds from their bank accounts. Today’s apps enable the use of a variety of payment methods, including reading actual cards and virtual credit and debit cards. All of them lessen the requirement for keeping cash on hand for transactions even further.
Benefits of a cashless society:
There are plenty of benefits of going cashless or indulging in digital methods of payment. They are:
- Online transactions indicate a reduction in labor costs and other overhead expenses related to handling money. An effective justification for e-payments is the decrease in transaction costs.
- Less use of cash will have a considerable negative influence on crime, particularly crimes related to money laundering. Consumer safety will be ensured by the capacity to track transactions, which is not possible with cash.
- Online transactions have sender and recipient information, which eliminates unreported and untaxed transactions and reduces the shadow economy. This suggests that shifting to online transactions could contribute to the development of a more stable economy.
- Companies can make inferences about user behavior based on transaction data, including employment, connections, interests, health, geography, and habits. Any business, not just banks or financial institutions, can benefit from using this information to offer clients a more individualized level of service.
- The development of a financial infrastructure which could completely do away with banks and financial institutions might potentially be facilitated by the usage of transactional data.
Disadvantages of the cashless mode of payment:
Going cashless can be more problematic than helpful, depending on your viewpoint. Here are a few of the biggest drawbacks of a cashless financial system.
- Electronic payments are less private than cash payments. It’s possible that you trust the businesses handling your data and have nothing to hide. But the likelihood that information will end up in the wrong hands increases as you post more information online. Both giving and receiving money can be done anonymously.
- Hackers are the equivalent of bank robbers and muggers in the digital world. In a cashless society, you are more prone to hackers. If you are a target and somebody drains your account, you could not have any other options for making purchases. Even if you are protected by federal law, it will be challenging to recover financially after a violation.
- You could run into problems like not being able to buy things when you need to because of bugs, outages, and inadvertent mistakes. In the same way, when systems fail, businesses cannot accept payments. Even something as basic as a dead phone battery could leave you feeling “penniless.”
- The poor and unbanked will likely struggle more in a cashless society than they already do until special outreach programmes are implemented. For instance, if buying smartphones becomes the standard, individuals who cannot afford them will be left behind.
- To acknowledge the financial impact of a cash purchase, you physically take the cash out of your pocket and deliver it to the recipient. On the other hand, using electronic payments makes it simple to swipe, tap, or click without realizing how much you’re spending. Consumers may want to reevaluate how they manage their money.
India and cashless transactions:
Since demonetization, India has made a fundamental shift away from cash during the past three years. To advance in this direction, the government has launched several projects, including:
- Increasing the use of cards, mobile wallets, and other digital payment methods
- Connecting your bank account, PAN number, and Aadhaar card
- Making sure diverse banking systems can communicate with one another
- The Development of the Unified Payment Interface
- Offering incentives to users who use digital payments
We have always had a cash-based economy. For a very long time, we conducted all our business using cash or other physical means. However, there are some negatives to this facet of Indian life. Printing money, moving it around, and securing it are difficult tasks. The average annual cost of using cash is 0.5% of the GDP of the nation. There are other reasons to transition to a cashless society in addition to this added expense. Younger people, who view it as a very quick and secure form of payment, are the ones driving the need for a shift to a cashless economy. Additionally, cashless transactions are easy and convenient, and they are quickly becoming the new standard.
In conclusion, it looks that a cashless society is in the near future, with cashless transactions set to become the norm. The simplicity, speed, and security provided by cashless payments are growing more alluring as digital technologies develop and customer attitudes change. The way we trade money and complete transactions is being revolutionized by mobile wallets, contactless payments, and cutting-edge payment platforms. To overcome these obstacles, such as assuring inclusivity, safeguarding privacy and security, and closing the digital divide, it is crucial to confront the shift’s concerns. We can create a future where cashless transactions are universally accepted, resulting in improved efficiency, accessibility, and financial empowerment for both individuals and enterprises, with careful consideration and ongoing developments in technology and infrastructure.