The Revolution towards a Cashless Society
More than 3,000 years ago, the first recognizable coins were produced in the people’s republic of China and are still maintained as the primary means of economic exchange in the present day. However, today, the interplay between telecommunications, banking, and retail has translated led to the movement towards more digital forms of payment. Although cash is still used to pay for goods and services in most places, there is a radical shift in the number of people paying for goods and services using digital means. This research paper is based on the research questions: will a cashless society derive more economic gains to the world? and will a cashless society magnify the economic inequalities already in the world today? The research will demonstrate the substantial gains latent in the revolution towards a cashless society and point to the need to address this revolution’s hidden costs to redress the associated economic inequalities.
The most recent Covid-19 outbreak has accelerated the trend towards a cashless society since the virus has provided the impetus to avoiding unnecessary physical contacts. Massi, Sullivan & Straub (2018) argue that economies that are more dependent on digital modes can incur a boost in their GDPs by as much as 3 percent. Proponents of this theory highlight examples of successfully implemented cashless initiatives such as Bangladesh’s bKash, which has significantly boosted the economic transactions and inclusion (Massi, Sullivan & Straub, 2018). As the contactless cards, mobile payments, and open banking pressure the development of digital payment options, the need to carry cash is becoming slowly diminished while the countries adopting these fast enjoy economic gains.
Additionally, a cashless society would become a single sure tool of fighting against corruption. There is well-documented evidence of many people globally living below the poverty line, while others are squandering staggering sums of money from developing countries (Desai, 2020). If an end-to-end e-payments infrastructure were effectively implemented, there would be transparency in cash flows, which would improve transactions and flag down any suspicious transactions in a network (Poon, 2020). Also, this system would reclaim the corrupted money and help raise economic development in third world countries. In a cashless society, there will be no trips to the ATM or need to carry huge sums of money, which would reduce cash-related crimes (Maykuth, 2020). Besides, due to the ease of sending or receiving money enabled by digital solutions, the cards, these payment methods would generate significant financial and non-financial benefits.
The gradual reduction of reliance on cash would benefit those who need the service; consumers, businesses, and the federal governments. The governments would receive significant amounts of direct benefits due to increased tax revenues, savings, and administrative efficiencies (Desai, 2020). Businesses would also receive substantial direct financial benefits due to increased sales revenues and time saved in processing payments. Finally, consumers would save a lot of time from banking and also suffer less cash-related crimes. To this end, it is possible to outline the economic gains that various parties stand to gain from the revolution to a cashless society.
On the other hand, a cashless society would magnify the economic inequalities existing in the world. In his article, Worthington (2019) sounds a significant concern of the cashless system discriminating against the unbanked arises. In 2017, the Financial Inclusion commission stated more than two million adults in the UK without a bank account, while this number was 14.7 adults in the USA during a 2015 analysis (Worthington, 2019: Poon, 2020). If services and goods can only be accessed using the digital payment methods, this will be discriminative for the people without bank accounts. In the fast rates that cashpoints are disappearing and bank branches closing globally, there is a concern for economic discrimination resulting from a cashless society. Besides, while some countries have tried to protect the use of cash, this has been ineffective given that consumers have limited options on where to purchase their goods.
Additionally, most countries’ fast pace is transitioning towards the cashless model is threatening the vulnerable population. If cash suddenly disappears, the elderly, some with health difficulties, and the communities of color would be disadvantaged greatly (Worthington, 2019). Some have termed the sudden rush to a cashless society as analogous to making an identification requirement for voting. Such a transition would undoubtedly widen the gap between the affluent and the economically deprived. In the wake of the Covid-19 crisis, it has become apparent that small businesses such as those run by immigrants and which depend on cash-only payment struggles with cash infrastructure to grow (Poon, 2020). One solution to this problem that has been tried is the attempts to help low-income individuals to set up accounts to gain access to cashless services. However, this approach only addresses the tip of the iceberg; their lack of bank accounts without addressing their economic conditions. Although this approach may reduce the number of individuals without bank accounts, there is still the main problem of economic inequality magnified by the revolution to a cashless society.
In conclusion, a cashless society’s continual push is inevitable, given the interplay of strong forces behind this revolution. The world stands to benefit significant economic gains, as evident from the cases of Bangladesh and Sweden. A cashless society would mean more government revenue, improved security for the consumers, and easier cash transactions. However, there is a concern for the widening of the economic gap in society. There also exist tangible loopholes in the attempts to reduce the apparent economic segregation. As the world transitions to a cashless society, the hidden costs of this unavoidable revolution needs to be shared equally to avoid extending then disadvantages towards a certain population.
References
Austin, J. (2020). Here’s How a Cashless Society Will Impact the World. Future Branches Austin 2020. Retrieved 3 September 2020, from https://futurebranches.wbresearch.com/blog/cashless-society-strategy-impact-the-world.
Desai, M. (2020). The benefits of a cashless society. World Economic Forum. Retrieved 3 September 2020, from https://www.weforum.org/agenda/2020/01/benefits-cashless-society-mobile-payments/.
Massi, M., Sullivan, G., & Straub, M. (2018). How Cashless Payments Help Economies Grow. BCG Global. Retrieved 3 September 2020, from https://www.bcg.com/publications/2019/cashless-payments-help-economies-grow.
Maykuth, A. (2020). Is COVID-19 Accelerating the Shift to a Cashless Society?. Govtech.com. Retrieved 3 September 2020, from https://www.govtech.com/budget-finance/Is-COVID-19-Accelerating-the-Shift-to-a-Cashless-Society.html.
Poon, L. (2020). Coronavirus Hastens the Rise of the Cashless Economy. Bloomberg.com. Retrieved 3 September 2020, from https://www.bloomberg.com/news/articles/2020-07-14/the-costs-of-an-increasingly-cashless-economy.
Worthington, S. (2019). Depending on who you are, the benefits of a cashless society are greatly overrated. The Conversation. Retrieved 3 September 2020, from https://theconversation.com/depending-on-who-you-are-the-benefits-of-a-cashless-society-are-greatly-overrated-113268.