Have you ever imagined a society in which everything is bought and sold without using any paper bills or coins to pay or receive payments? The concept of a cashless society is no longer a prediction as it is beginning to invade our economic system and is changing our monetary system. With the help of new technologies, we can now make payments not only electronically, but also through wireless devices.
The rise of the mobile wallet seems to replace not only our traditional currency, but also our plastic cards issued by a bank. On top of that, you now can use your mobile phone to pay for your grocery items. All you have to do is to place your mobile device near the POS terminal, and afterward, the amount you purchased and paid will be deducted from your bank account.
How Likely Are We Going to Have a Cashless Society?
Although the popularity of online banking and mobile payments seems to put an end the existence of conventional money, there are still many countries that are not yet prepared for this concept.
On the other hand, some developed countries are pushing for this kind of system through economic treaties and agreements. The US and the EU are more likely to collaborate in order to promote a cashless society. There are reasons for them to push for it, but there are also factors that must be considered because a cashless society has both pros and cons.
1. Tax Efficiency
In a cashless society, every transaction can be monitored and tracked using log management tools. Because of this, the government can now easily trace every payment transaction. There is also a possibility that taxation becomes automatic.
2. Destroys an Underground Economy
An underground economy isn’t necessarily a bad thing, however, there is no taxation involved in this process. What makes it bad is when illegal transactions take place like drug trades and trafficking. A cashless society will end such horrific trade scenarios.
3. Increase GDP
In a cashless society, your money is in the form of checking and saving accounts. Most banks will have more benefits for credit transactions. As a result, you will be tempted to consume or invest, and this will contribute to a country’s GDP growth.
There is no cost in keeping your money physically. In a cashless society, most of your transactions have accompanying bank fees.
2. Technical Issues
A power outage, cyber-attacks, bugs, and other technical issues may be detrimental to the economy.
3. Government’s Inability to Print Money
Printing more paper money is one important option for a managed currency. When a government wants to alleviate pressure on the public and spur economic growth it tends to print money. In a cashless society, this cannot occur.
4. Technology Coverage
Technology has not yet reached many people around the world. A cashless society is only applicable to developed countries. It’s impossible to have a cashless society implemented in just one part of the globe as this may further complicate international trade.
The time will come that our society will automatically transform into a cashless society without any intervention, however, it’s not at that point yet. We are merely in the beta-testing phase if developed countries implement some sort of cashless society there.
Many countries around the world need to catch up both technologically and economically, and it will be through the developed countries that will speed up the process.