Moving Toward a Cashless Society
For a long time, people paid with cash, but that changed in 1958. At that time, Bank of America issued the first “credit card” in the form of the BankAmericard. Then, in the late 1960s, Visa introduced the first general-purpose card. It quickly became popular, leading to other companies offering additional credit cards.
From that time forward, millions of individuals chose to pay for things using credit cards instead of cash. After all, they could simply swipe a card where accepted and be on their way. Because so many people used credit cards, no one gave much thought to future payment options.
However, something else changed in the late 1990s. That’s when the Stanford Federal Credit Union began to offer its customers access to online payments. Just as with credit cards, it didn’t take long before other companies followed suit. By 1998, another significant change occurred. That year, PayPal introduced an online payment system with a global presence, changing the landscape forever.
Recently, something else happened that made some people feel excited and other people scared. Known as biometric payments, this type of payment system allows individuals to scan either their fingerprints or eyes to complete transactions. Initially, only Australia offered a biometric payment option, but today, it’s available from all major credit card providers.
Definition of a Cashless Society
It’s important to understand the definition of a cashless society. This entails using an electronic or digital system for all financial transactions instead of using paper money and coins. That includes standard credit cards, as well as different payment services that provide customers a way to pay online as Zelle, PayPal and Venmo.
Whether shopping for new clothes, buying airline tickets, buying a VPN service or picking up food at the local grocery store for dinner, in a cashless society, people wouldn’t use cash of any kind.
What Does This Mean?
It means the world is quickly moving toward a cashless society. Whether using a smartphone, application, or special card, it comes with both advantages and disadvantages. To better understand the positive and negative aspects of a cashless society, consider the following.
Benefits of a Cashless Society
· Convenience – Using an electronic system to pay for things eliminates the hassles of dealing with paper money and coins. No more digging in the bottom of purses or pockets to find the right currency.
· Reduced Crime – Unlike cash, electronic payment systems have state-of-the-art protection. In other words, for someone to complete a transaction, they must have a PIN, scan their fingerprints, use a specific code, or have their eyes scanned. As a result, this makes it incredibly difficult for someone to steal. Not only that, but it would also reduce the crime of money laundering.
· Trail of Proof – If someone drops a $20 bill on the street, there’s a good chance they’ll never see it again. In addition, when an individual isn’t given back the correct change at a store, they’ll likely wait days for reimbursement, if they even get it. The difference with a cashless society is that all electronic payment systems provide a minute-by-minute trail of proof. That would make it easy for someone to win a dispute.
· Time Saver – In a cashless society, people wouldn’t spend valuable time running back and forth to the bank to withdraw or deposit funds. In addition, they wouldn’t need to worry about storing large quantities of currency in a personal safe. Instead, they could use their time for important things or doing something they enjoy.
· Traveling Internationally with Ease – Today, it’s common for people to use credit cards when traveling abroad. However, many still carry cash. As soon as they arrive in a foreign country, they exchange their money for the local currency. To do that, they pay a fee. In addition, depending on the country and the currency exchange rate, they could end up losing some cash value. A cashless society would streamline international travel.
Drawbacks of a Cashless Society
With so many positive aspects of a cashless society, it seems strange that it would come with drawbacks. Here are some of the things that people don’t like about not using paper money and coins to make purchases.
· Old School Mentality – Especially among the aging population, the thought of going to a cashless society doesn’t sit well. Elderly people feel safe and comfortable doing things the old way. For that reason, they don’t embrace the idea.
· Data Breaches – Many people with a bank account or credit card know from first-hand experience that data breaches cause significant problems. Not only do they expose personal information but, in some instances, financial details too. Even when using the most secure site, a cashless society could lead to data breaches that put people at risk. It means without proper security measures in place, using electronic systems to pay for things could equate to sacrificing privacy.
· No Backup Money – Because a cashless society would depend on electronics, some people worry about what would happen in cases of cyberattacks or technical problems. Without paper money and coins, people wouldn’t have any way to get hold of the funds they need for emergencies or even day-to-day living.
· Overspending – Most individuals do a great job following a budget. However, some don’t. Either way, a cashless society could lead to overspending. To ensure this doesn’t happen, companies that offer different cashless payment systems would need to implement some kind of reminder. Even then, there’s a risk that some individuals would spend more than they should.
· A Big Learning Curve – Although millions of people adapted to using credit cards quickly, going cashless is an entirely different scenario. Removing all paper money and coins from society would require everyone to go through a steep learning curve. Sure, some people would have no problem grasping all the ends and outs of a cashless society, but many others would struggle.
What’s the Answer
At this time, a lot of things need to come together before becoming a cashless society. Using a digital system has many advantages, but until the government, financers, and merchants come up with solutions for outstanding questions and potential problems, people will keep making transactions as they have for years.