The Pros and Cons of Moving into a Cashless Society

There's no denying that we're moving towards a society of cashless payment methods. The use of cash these days is almost kept to a minimum with methods such as Apple Pay, credit cards, and so on. Although there's no actual society that is completely cashless, we are somewhat on our way to a cashless society.

What is a cashless society?

What exactly is a cashless society? To put it simply, It's a society wherein payments are made digitally or without physical cash; All transactions are done digitally, and there is no longer any need to use physical coins or banknotes.

Are we really moving towards a cashless society?

Many present-day transactions do happen through digital payment, usually through credit and debit cards. Cashless transactions like these have been around for a few years now, things like Apple Pay and PayPal are only the beginning.

Again, there is currently no actual cashless society as of the moment. Nevertheless, there are definitely some slowly making their way to a cashless society. According to the World Bank, countries that are already on their way or are closest to this type of society are Norway, Sweden, Finland, Hong Kong, and the UK. In general, Nordic countries lead the way in cashless transactions, with almost all people from Norway, Sweden, and Finland owning debit cards and the like.

Of course, the Philippines aren't that far behind either. According to the latest Visa Consumer Payment Attitudes Study, about 92% of Filipinos have been using digital payment systems to shop and pay, with about 61% of people using less cash from their wallets. Some added findings from this study are that the Philippines has the highest awareness of QR payments in the Southeast Asia region. This can also be attributed to how the COVID pandemic accelerated consumer expectations in the Philippines, therefore allowing it to become a cashless society by three years.

The start of using digital payments in the Philippines can be traced back to E-Government Pay, a means of payment enabling consumers to settle payments to government institutions. From there on, the Philippines made a somewhat swift transition to becoming a cashless society. Right now, E-wallet companies such as GCash and Maya have been what's in, highly contributing to the Philippines' cashless method of payment while offering solutions such as lending, crypto-trading, and micro-investments.

Pros and Cons of a cashless society

Of course, just as with anything, there are pros and cons to a cashless economy. Cashless payment systems have a variety of pros. There are a few cons to it as well, but the pros outweigh the cons overall.

Pros of a cashless society

Reduced Crime Rates

Physical cash is notoriously difficult to track and trace. At least in a cashless society, there's an electronic record of all transactions. Crimes such as money laundering and the like will be extremely difficult. It will also be a lot harder to conceal your income from the I.R.S. and evade taxes when every payment you receive is recorded.

More on this: having physical cash on you makes you an easy target for theft. Going cashless means you'll be less likely to be targeted by such crimes. Proof of this is how researchers found that crime in Missouri dropped by 9.8% as the state replaced cash welfare benefits with Electronic Benefit Transfer (EBT) cards.

Easier currency exchange when traveling Internationally and less time and cost associated with handling, storing, and depositing paper money

This is where cashless payment can really prove that it offers simplicity and convenience. Not only will you not worry about not having enough cash on hand, but you will also not spend time or resources on moving money or protecting large sums of cash. Moreover, you won't have to worry about currency exchange or how much of the local currency you will need to withdraw if you're traveling; your phone can handle it all for you.

Cons of a cashless society

Exposed personal information, technological curve, and increased likelihood of overspending

When dealing with cashless payments, there's no denying that there will be a loss of privacy with any of your purchases. Physical cash allows you to spend money and receive funds anonymously. Electronic payments will leave a digital trail behind them with a wealth of information about both your transaction and you. Even if you have nothing to hide, having your information available online can make it easy for it to fall into malicious hands.

More problems with going cashless arise from the fact that glitches, outages, and so on can easily cause problems. When the system itself malfunctions, there's no way for merchants to receive funds or for buyers to be able to buy what they want.

Plus, the poor and unbanked will likely have an even harder time since smartphones will become the standard way to transact. Those who are unable to buy smart phones or aren't that exposed to or aware of the technological know-how associated with digital transactions can be left behind.

Finally, one of the many cons of going cashless is that there will certainly be an increase in the temptation to overspend. Electronic payments are easily done with one tap, one swipe, or one click. This is vastly different from when you take out physical cash, where you can feel the impact of your spending.

There is no alternative source of money in the case of technical issues or hacker activity.

Hackers are the bank robbers of the electronic world. If ever we truly do go completely cashless, we will become more exposed to hackers. If ever you become targeted and a hacker drains you of all your money, you may not have an alternative way of spending it. It will be extremely inconvenient to restore your financial standing after you have been breached.

Moving towards a cashless society is a big change since physical cash is still our main way of making payments in our day-to-day lives. Despite how a cashless society seems to be on its way, going completely cashless remains a distant prospect.

Cash is still a reliable and secure way to spend. Plus, it can be easier to budget when making digital payments. Plus, cash especially matters to people with lower incomes and those in older age groups. Everyone deserves to choose how they spend and save.

Rather than going full-on digital payments, it's more likely that physical banknotes and coins will merge with the use of such digital payments. This is overall good since it will provide a balance between physical and digital spending, which will allow people freedom of choice.

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