Cashless Economy- Is it possible to achieve?
It’s hard to imagine a cash-free world for the entire humanity. Still, after establishing the credit and debit card technology and with the growth of mobile payments, about 80% of the money transactions worldwide happen with cash. The global attachment to cash will not be helping some of the countries’ economies all the time. The cash weights heavy, and it is also more severe and the most expensive thing to transport and store.
By stepping into the world of digital transactions, the reliance on cash would be eventually eliminated from many countries; this information was reported by the research conducted by the Harvard Business Review and experts from the University of Tufts.
Bhaskar Chakravorti is, the senior associate dean of the international business and finance at the Fletcher School of Law and Diplomacy, which is a part of the Tufts University, said that to determine the countries, which would be benefited from the payment system, the researchers and the experts have considered the cost of cash from the four major views or perspectives. They are customers, banks, businesses, and the government.
From the consumer’s point of view, those costs include the ATM fees and the cost of travel to the ATM or the bank branch, where the customers could withdraw the cash and the possibility of losing cash.
In the business view, those costs included storing cash and keeping that cash secure, and transporting the cash in vehicles when needed.
From the government’s point of view, this money includes the cost of printing and the tax gap or the amount of money that the government failed to collect from the unreported or under-reported cash transactions.
The U.S. spends about $200 billion per year to keep the cash circulation.
The following countries have the highest potential for unlocking value by moving to a cashless society. The U.S., Japan, Netherlands, Belgium, France, Germany, China, Czech Republic, and Brazil.
China has made more progress in transitioning its citizens to the mobile wallets; in this aspect, China has beaten the U.S. and China has also imposed high costs on the citizens, those who use cash. Both China and the U.S. are the ready markets to transform to the digital market, and they are prepared for digital money and to unlock the huge savings, both in time and money.
Many countries said that there is still a significant way to travel before entering into the cashless world. And the transactions could become costly for most countries because the correct and suitable infrastructure would be needed to support the cashless economy.
The head of the digital banking solutions for ACI worldwide, Mark Ranta said that changing the attitude and the habits of a particular thing or a person is not the easiest thing. For example, having the cash physically and giving it to someone is the experience; some people use it for handling their budgets, and some use it for the check spending habits.
Swee-May Ngeow, the Managing Director of Accenture Payment Services, said that moving into digital transactions will be the most efficient way of doing the business because all the transactions are made visible. In addition, it is transparent because the transactions may be tracked. But not everyone will view this from a positive perspective. Some people use the money for its ambiguity.
Another major obstacle is that the cash transactions happen instantly, but many digital banking transactions will take hours to complete the transaction. This delay should be eliminated, then there will be the possibility for some countries go cashless.
This digital banking would require the individuals to have the equipment, mainly like a smartphone, to make the transaction; sometimes, the retailers need credit or debit card transactions.
In the emerging and the developing countries, smartphone ownership has increased rapidly; reports say that about 54% of the smartphone ownership has grown, and about 87% people own a smartphone in the advanced economies.
There are about 2 billion adults in the world who don’t have bank accounts. And the number of adults with bank accounts is increasing year by year. For example, from 2011 to 2014, there was a 20% increase in people having bank accounts.
In the U.S., in a recent study, it was found that about 8% of people don’t have any savings, checking, or money market account. In most cases, people who don’t have a bank account are considered the one who doesn’t qualify to be too expensive. In some of the savings accounts, people who don’t have the minimum deposit amount are charged. In such cases, cash is the last alternative.
Potential problems with the cash-free transfers
Eventually, some problems and risks will be associated with the cashless society. In volatile financial systems, customers are satisfied with having the cash on hand and their money stored in digital bank accounts. Additionally, the credit card companies take down the cutoff amount per transaction done with their cards.
There has been an unfavorable response from the Europeans, they wish to go by cash, their governments have some restrictions towards cash. They have cyber-security concerns.
Privacy in a cashless world
Governments and their recognized agencies love the transactions in the electronic mode. It is harder to hide money from the tax person without cash. The police and government departments prefer trackable records, which is difficult with the cash mode. France and Spain framed laws to limit cash transactions. In France, it is illegal to use cash more than 1000 Euros.
It is believed that banning cash would put a full stop to the black markets. Credit card transactions are made trackable, and electronic transactions would lack the single transaction a person makes.
The digital cash is technically possible. But governments are not taking action to track all the modes of transactions.
Once such a system exists,n it will be the focus of the government and police agencies. But Moree importantly, the intelligence services will be tied up with insurance companies, fraud squads, tax collectors, and even marketers.
Rich and poor
People who are considered rich tend to be better equipped. But for poor people, cashless transactions are just a dream. For them, the prepaid credit card is the alternative way. They can use vouchers to buy at grocery stores and other places to buy the essential things.
Many people in the economy are not bankable and can’t receive credit for the range of seasons.
About 8% of the U.S. population are unbanked, nearly 20% of homeowners are unbanked; that is, they have a bank account, but they use the other modes of financial services.
Sweden is on the front lines to support cashless transactions. People under the low-income category have also adapted to the cashless scenario. Even homeless people have the credit card, which they received by some trust.
With this cashless system, all the products are expected to deliver at the footsteps, same like the online shopping. Still, we have a long way to go achieve this. And this will be possible in the future.
Anand Rajendran is CEO and Co-Founder of Zoplay.com, the best PHP scripts development company in India. Zoplay is a part of Casperon Technologies, a leading social and mobile development company that developed Zoplay Scripts. I’m a Tech geek, Digital marketing expert, Entrepreneur, and Atheist who loves to write everything about PHP Scripts and mobile application development.
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