Given the Risks of a Cashless Society, Why Not Just Keep Cash? (2024)

FAQs

Given the Risks of a Cashless Society, Why Not Just Keep Cash? ›

In an economy with cash and cashless working together, when the latter is unavailable, people can continue to make essential purchases using cash. A cashless society would rely on a complex network of digital systems, which would be vulnerable to cyberattacks.

Identity theft and compromised personal information are potential dangers in a cashless economy, but privacy might be compromised in other ways too. When you pay digitally, you always leave a digital footprint, and this footprint is easily monitored by financial institutions.

A cashless society is a concept in which money changes hands through digital means rather than physical banknotes or coins.

Crucially, this substitution has significant consequences for social inequality: while people with higher incomes typically benefit from cashless payments through easy and frictionless payments and access to short-term credit, people with lower incomes become increasingly dependent on financial services for which they ...

However, cashless payments offer greater security because transactions are recorded and can be easily traced. There is also no need to carry huge amounts of cash to deposit into a bank account, which also reduces the risks of loss and theft.

For instance, using cash instead of credit or debit cards may help keep some people from overspending, because you can see how little is left in your wallet after every purchase. In short, getting rid of cash would impose hardships on society's most vulnerable people and could jeopardize our privacy.

With so much business still conducted in cash, don't expect it to disappear any time soon. Besides, some customers cannot pay with anything but cash, since they are unbanked or under-banked.

Why Eliminate Cash? Cash can be used in criminal activities such as money laundering and tax evasion because it is difficult to trace. Digital transactions or electronic money create an audit trail for law enforcement and financial institutions and can aid governments in economic policymaking.

Summary: Americans are using cash less frequently and making payments more often by credit card or through payment apps. Yet, many CFI customers still like having cash as an option.

Commonwealth Bank, ANZ, NAB and Westpac all confirmed on Friday that there are no current plans to go cashless. This comes after Macquarie Bank announced it would phase out cash and cheque services across all its banking and wealth management products from January to November 2024.

How long until cashless society? ›

Physical currency isn't becoming obsolete any time soon, so it's important to weigh up your options before deciding to go fully cashless in 2024. Ensuring you can accept some cashless payments though, is essential to keeping with today's trends and customer expectations.

The Drawbacks of a Cashless Society

Without cash, we would be forced to leave a record of everything we buy. While this may not bother some, there are many who worry that governments and/or corporations could use our purchasing histories as a way to track us, monitor us, and even intimidate us.

Nope. We might use less cash, but our society still has a long way to go before it's totally and completely cashless. And just because some stores didn't want to accept dollar bills for a while (and maybe still don't), that doesn't mean a cashless society is here to stay.

Norways is the most cashless country, with only around 2% of payments being made by cash, and 100% of the population having a bank account.

As of June 2023, about 943 million people in mainland China used mobile payments, bolstering the country's status as the world's largest cashless society.

No Cash Processing Costs

Businesses that have lots of cash often have to pay for armored car services. Small businesses spend billions of dollars per year on cash processing costs, but those that choose to go cashless avoid these expenses.

11% of US adults have completely stopped using cash, up from 5% five years ago (Source: Gallup) The average number of cash payments fell from 26% in 2019 to 20% in 2021 (Source: Federal Reserve) Between 2012 and 2022, cheque transactions declined by almost half (Source: Federal Reserve)

It is difficult to say at present what consequences this might have, but it will likely further limit financial access for groups in society that currently lack any means of payment other than cash. Competition and redundancy in the payments infrastructure will likely be reduced if the state is no longer a participant.

The main disadvantage of a cashless society consists of privacy issues and hacking of accounts. Prevailing poverty; backwardness and illiteracy; a large unorganized sector cannot switch to cashless economy so easily.