Pros and Cons of Cashless Payment
What Is Cashless Society?
Nowadays, when almost everything has been moved to the virtual environment, the cashless society has become popular. So, what does it mean exactly? and What Are the Pros and Cons of Cashless Payment?
You went to a restaurant, ate your meal and paid the bill. When the bill came, you took cash out of your pocket; but the waiter said they did not accept cash. What do you think?
A certain age group around the world answered this question by saying “I think times have changed.” This period is known as the cashless society movement.
What does cashless society mean? It is an economic concept in which financial transactions are carried out in electronic format instead of using banknotes.
In a simpler sense; You should not use cash for all your purchases. Instead, you use mobile banking, internet banking, mobile wallet, credit or debit card.
Digital wallets such as PayPal, Google Wallet, MoneyBookers, Payoneer and Amazon Go can be used for cashless transactions.
In fact, in many countries of the world, such payment methods have begun to be preferred instead of cash. However, 100% passage was not achieved.
Covid 19 and cashless economy: After the coronavirus emerged in China in late 2019 and spread around the world, the cashless society came to the fore more. Considering that money is a dirty tool, we can also understand that it can cause the spread of diseases.
Interest in a cashless society has increased in the last few years. However, various discussions continue. One wonders what people who do not have a bank account or do not use a credit card will do. Additionally, it will be difficult for individuals over a certain age to get used to this process.
This concept, also defined as cashless economy, has become more applicable with the introduction of digital currencies.
However, the discussions on this issue show that there is still time for this. It is also a fact that currencies are still seen as more reliable than cryptocurrencies.
How do you create a cashless society?
The use of non-cash transactions in daily life began in the 1990s, when electronic banking became widespread.
In the 2010s, intermediaries such as PayPal emerged. Expectations have increased with initiatives such as digital wallet systems such as Apple Pay, contactless payments with smartphones and NFC (near field communication).
With the development of smartphones, mobile applications of banks entered our lives. By logging into the application, we are now able to perform all transactions without going to the bank.
Thanks to the point that smartphones reached in the 2010s, contactless payments began to be made by bringing the device closer to the POS.
However, just like contactless cards, these also experienced trust issues. You may have heard about fraud in the news by withdrawing money from contactless cards without your awareness.
Of course, there are various precautions and security systems for this. However, the lack of knowledge and experience on these issues benefits fraudsters.
At the same time, it is not easy for people over a certain age to stay away from such technologies and erase years of habits. Technologies are more easily adopted for the younger generation.
Currently, Sweden is one of the pioneers of the cashless society movement. Many stores in the country started not accepting cash.
According to the European Payments Council; cash transactions accounted for just 1% of Swedish GDP in 2019. Cash withdrawal transactions in the country show a steady decline of approximately 10% per year.
It is known that Swedish consumers are satisfied with this situation. However, it cannot be said that it is fully accepted by the citizens of the country.
India, on the other hand, wants to implement a cashless society to prevent corruption and the informal economy in the country.
Pros and Cons of Cashless Payment: Advantages of Cashless Economy
The cashless society, which brings about many discussions, has remarkable advantages.
Eliminates the Obligation to Carry Money
Currently, people who do not want to carry money with them are living their lives without cash. Many people find it more comfortable to carry cards in their wallets instead of banknotes.
Debit and credit cards and virtual wallets managed from smartphones eliminate the need to carry cash. This way you don’t have to deal with disorders.
Of course, there is still the danger of dropping cards. However, if you drop the money, you will not be able to find it. However, you can cancel your card and secure it.
You also have the convenience of paying fractional fees. For example, you usually do not get 1 cent change for a product that costs 99.99 TL. However, you pay in full for card payments.
Additionally, even if you only take banknotes with you, you will receive coins as change. This may also be difficult to keep in your pocket.
Low Crime Rates
Carrying cash makes you a target for criminals. Once the money is taken from your wallet and ends up in someone else’s pocket, it will be difficult to prove it was stolen.
Research on this subject shows that crimes based on money theft have dropped by nearly 10% with a cashless society.
Similarly, it provides protection against financial crimes. Transactions such as illegal gambling or drug operations often occur with cash so that there is no record of the transaction and the money is easy to launder.
If the source of funds can always be clearly identified, money laundering becomes much more difficult. When you have a record of every payment you receive, it will also be harder to hide income and evade taxes.
Briefly; Black money, fraud, tax evasion, corruption and shadow economy are prevented.
Printing and Managing Cash is Expensive
There is a cost to managing and issuing cash, not just for people but for businesses as well. Printing banknotes and coins is a specialized business. Special pressures are made to prevent counterfeiting, and each of these increases the cost.
Likewise, it is costly for businesses to store money. In a cashless society, it is beneficial for a business to receive payment for its work electronically in many ways.
Being registered and preventing payments with counterfeit money are some of the benefits of a cashless society for businesses.
International Payments Made Easy
If you send money to someone during business hours, it will be in their account within a few minutes. However, when you consider the old systems, it is not possible for the money sent by mail to be received by the other party within a few days.
When you consider this example on an international scale, you can guess that the process takes much longer.
Additionally, carrying cash on a trip abroad can put you in difficult situations. However, thanks to the cashless society, you can directly convert the TL in your account into the currency of another country.
Pros and Cons of Cashless Payment: Disadvantages of Going Cashless
Privacy Issue
With cash, you have a certain amount of privacy. However, there is no confidentiality in electronic transactions. These transactions will definitely be recorded by the bank.
You may not trust the organizations that process your data. The more information circulates on the Internet, the more likely it is to fall into the hands of malicious people.
Technological Problems
No matter how perfect technology is, we may encounter some disruptions.
In electronic payments; Errors, interruptions, and single digit errors can cause problems. Likewise, malfunctions may occur in traders’ systems.
For example; You may encounter the situation of not being able to receive payment by credit card because the electricity is out. Likewise, your phone must always be charged in order to use your mobile wallets actively.
Facing Hacking Risks
Hackers are the bank robbers of the electronic world. Calling for a cashless society is a move that could increase hacking incidents.
If you fall into the target of a hacker, your accounts may be emptied. No matter how secure a password you choose, it is child’s play for hackers to crack it. Similarly, you may be exposed to theft with your contactless cards.
Economic Inequality May Increase Further
Unless private social assistance is fully operational, payments are likely to become difficult in a cashless society with poor and unbanked people.
Overspending May Increase Attractiveness
When you spend cash, you become stressed as the money in your wallet decreases. You can even stop buying a product.
However, you don’t realize how much you spend on electronic payments. By making a few clicks, you can pay more than you would normally spend. If you have a high credit card limit, things can get a little more complicated.
Payment Providers May Charge Fees
You may have seen that various deductions are made from your cards, such as membership fees and usage fees. You can also pay a certain fee to send money.
When using a mobile wallet, certain fees may be charged for secure transactions. In short, you may encounter certain fee deductions for the electronic payment system you choose.
Source: https://borsanasiloynanir.co/nakitsiz-toplum/
Other Posts: Pros and Cons of Cryptocurrency Coins