In a cashless society, all monetary transactions take place through the exchange of digital information, as opposed to the exchange of physical currency, such as notes or coins. In fact, historical research reveals that cashless civilizations have existed since the earliest days of organized human social life. The well-known barter system was just one of several popular means of exchanging goods and services.
Debit cards, mobile wallet apps, credit cards, POS systems, mobile banking, and digital currencies such as Bitcoin have made cashless payments possible today.
advantages
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No middleman is needed in a cashless society.
The cashless society seems to have a monetary system similar to the traditional one, where money is transferred during a transaction. Unlike conventional financial institutions like banks, this service requires a governing body to act as a payment processor. Savings from reducing production costs will be redistributed to initiatives that help those in need, such as a push to improve economically depressed areas.
A cashless society, encompassing the final leg of funds transfers, payments and payment networks, will further reduce the economic inclusion gap.
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A tool to combat corruption
When it comes to fighting corruption and gang activity, cashless systems can prove invaluable. Those most in need are, once again, those who can earn the most.
An estimated 1.4 billion people around the world live on less than $1.25 a day. At the same time, corruption, bribery, theft, and tax evasion add up to nearly $1.26 trillion in lost revenue for developing countries. That kind of money, if returned to those countries, would be enough to permanently lift 1.4 billion people out of poverty for a minimum of six years.
In a cashless society, where all transactions are done digitally, all financial transactions would be open to the public. If all parts of the chain were digitally linked, it would be possible to trace the flow of any financial transaction, including international aid and private investment.
Any numbers that did not fit could be immediately identified and examined. This would help forensic accountants and law enforcement to zero in on hidden funds and recover them more quickly.
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Crime prevention
You’re a less easy target for thieves if you don’t show hundreds of dollars in cash. Even if your credit cards or phone are stolen, most companies offer theft insurance to cover any charges made by an unauthorized user.
The use of cashless purchases also helps the police. When a transaction is made with a cashless payment method, a digital record of the time, location, and items purchased is left behind, which can be used by law enforcement to identify illegal activity or to monitor the whereabouts of a wanted criminal.
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Easier to make international payments
You will need to convert some of your dollars to the local currency when you go. However, if you are visiting a country that supports electronic payments, you can forget about getting local money from the ATM. Instead, your mobile device takes care of everything automatically.
cons
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criminal sophistication
As a result of the government’s ability to monitor digital transactions and block bank accounts, many criminal organizations, including terrorist groups and drug cartels, prefer to deal only with cash. That way, they can quickly secure their financial assets.
However, this provides a clear benefit for law enforcement. They can seize or destroy currency vaults, which can cripple criminal groups. With the advent of a cashless society, the cutting-edge law enforcement you once had is no longer available.
While a cashless system could make it easier to monitor criminal activity and freeze accounts, it would force many larger criminal organizations to resort to offshore banking, Bitcoin-style currencies, and other complex digital techniques.
These would make it much more difficult to identify and seize/dispose illegally obtained money.
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Negative interest rates could be passed on to customers
Negative interest rates may have a more direct impact on consumers in a cashless society. Negative interest rates are nothing new; they have been tested in countries such as Japan, Denmark and Switzerland.
When the interest rate is lowered, the objective is to promote the economy. However, it makes money lose purchasing power. He International Monetary Fund (IMF) He has warned that negative interest rates can cause financial institutions to lose money and lead them to consider raising costs for their clients as a way to make up the difference.
Banks can only pass on fees to a certain extent, as customers can always take their money out of the bank if they prefer to avoid fees. Future consumers may have to accept additional fees if they are unable to withdraw cash from the bank.
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Technical difficulties could hinder the ability to get some cash.
Problems making purchases can also arise at inopportune times due to technical difficulties, power failures, or simply human error. As a result, businesses are also unable to accept payments. A dead phone battery can leave you “out of pocket” in more ways than one.
Conclusion
A cashless society is expanding whether you like it or not. Whether or not a cashless global society is possible remains at the center of debate.
Transfers in a cashless society in a developing country can be instant, hassle-free and inexpensive. In addition, it can provide numerous economic and social benefits in developed countries. A more just and connected world could be built through this readily available way of sharing interests that transcends social rank.