One of the biggest questions in front of the human civilization today is – whether physical money will disappear? In many countries, banknotes have already become relics. The irony is that We Chat and Alipay have completely taken over the markets of China, which is the birthplace of Paper Money. The reality is that, with digital payment transaction applications, paying and receiving money have become not only swift but also hassle-free. By scanning a QR code, you will now be able to send money to your beloved, to your grocery shops, and even your kid’s school fees. That is completely phenomenal and amazing.
The future of cash is indeed an ongoing debate, and the coalition will continue. While there are debates on the motion of the topic. Such digital payments make transactions safer and hassle-free. Cashless payments can also mitigate the dishonesty and laundering associated with cash. There are certainly strong points against the motion as well. These include- the disadvantaged and the poor people who are away from the reach of digital currency and can’t avail of such facilities of cashless payments. Also, in developing nations such as India, where a large section of people cannot afford a square meal every day, it is meaningless to expect digital payment mode in every sphere.
No argument can stand without any validated real-time proof. Here are certain pieces of evidence that give to the debate of whether cash – the historic barter commodity that once upon a time shaped the global economy is on the verge of extinction:
Debit cards and credit cards have long been the game chargers of the economy. The increasing use of other cashless online payment modes, such as Google Pay, PhonePe, or Paytm clearly points out that already a huge number of people have adapted themselves to the cashless mode. Credit cards and debit cards are a bit more complex, and not everyone can avail of them. However, these digital wallets and unified payment gateways are available to anyone who holds a bank account and can link these to the same. The amplification in digitization and the number of internet users have facilitated online transactions more than ever.
The use of cash is associated with crimes and corruption. Anything illegal, right from the crimes related to drugs to paying people under the table is all associated with cash. Bank notes were gradually becoming one of the potential corridors of the rising incidences of crime. The partial or differential elimination of cash from the economic network can help to mitigate or at least reduce the instances of such crimes. Also, it is easy to replace debit cards and credit cards if they are stolen. Even if your mobile phone gets stolen, you can prevent any financial loss by simply blocking the accounts. On the other hand, if only one banknote from your pocket gets stolen, it is not possible to replace the same.
With the lesser involvement of cash in transaction processes, companies can now think of reducing the staff in the bursar department. Lesser number of people are needed to control, monitor, and keep a record of the transactions than it was needed when all the transactions were cash oriented. Thus, electric payment mode is leading to the automation and digitization of the payment modalities involving lesser human intervention. This reduces the number of people needed to sit in the office physically to check out the accounts. Also, the incidences of mistakes in accounting bookkeeping drastically reduce with the payment modalities becoming digital.
There are two sides to every argument. The same is in this case. Even if there are plenty of arguments that support a cashless future, there are quite a few arguments that establish the need for an economy that involves transactions like cash. Let us have a look at some of them:
It cannot be denied that cashless payments are becoming increasingly popular. But that cannot shift focus from the use of cash. Various surveys reflect that even though there is rising use of electronic and cashless payments in the middle and high-income groups, the poor households (that constitutes the largest and major section of any economy) still rely on the banknotes and physical cash as their primary modality.
One of the major problems that most poor households face is that – they are not digitally literate. Also, they do not have access to high-end devices like smartphones or a stable internet connection that are the prerequisites for conducting a cashless payment. The next big reason for their abstinence is that poor people cannot afford the bank fees or the convenience fees associated with such cashless transfers ad transactions. Many people even get their bank accounts closed due to nonsufficient basal bank balance.
Not only the poor but the old people and the differently abled population are also unable to cope with the digital transaction method. People who are part of the rural population and do not have access to the internet are often deprived of the various facilities that would have made cashless transactions easier for them.
The elderly generation is not used to using the internet more often. Also, they distrust the digital transaction modes, apprehension that their money could get lost. All these reasons cumulatively form a barrier to the economy becoming completely cashless.
It is one of the crimes that is increasing at an alarming rate is that identity theft. In simple words, pretending to be someone that you are not or stealing someone else’s identity details to conduct any crime. This is easier and smoother in the case of online payment transactions. In real-time cash exchange, you cannot portray yourself as someone else, but when paying online or committing any crime online, it is easy to steal someone else’s details and pretends to be that person. In the next phase, if the crime gets caught, it will be the innocent person whose identity has been stolen who shall get caught and not the real criminal. This is one of the major drawbacks of online payment transactions or the crucial setback of a cashless economy.
The concept of a cashless economy may sound to be really fascinating, and it indeed offers a plethora of benefits in some cases, but there are certain prominent drawbacks of the same as well.
With the high rise in the number of digital transactions, there are certain clear indications that cash may turn out to be obsolete. But the change will take plenty of time to come about. There is a steady decline in the number of cash transactions, but in developing countries, the complete shift to a cashless economy is not going to happen soon.
Since barter has been the oldest form of exchange in the human economy and one of the main pillars over which the society grew, it won’t be that easy to eradicate the complete use of cash overnight. Cash is the centralized medium of economic transactions across the globe. It is accepted widely and is still the most common and most convenient way to buy and sell products and services.
Cash may disappear, and the globe may become unified digital with transactions happening over the smartphones and the complete evaporation of the physical bank note questions. But the primary fact that stands in front of us is when and where this change will happen. According to some financial experts, this change may take another 100 years to happen. Meanwhile, this hybrid model of online and offline ways of transactions is the best. It is the best way to get along with the economy right now.
For developed countries and the upper socioeconomic strata, the digital mode of payments may seem to be the perfect one and the convenient one, but in third world countries and for the lower economic groups, smartphones, a legit bank account, and the internet connection to operate the payments digitally – all of them are luxury. Thus it won’t be a feasible option to switch over to the completely cashless mode right at this moment.
There is another possible apprehension that is looming around in the finance world is – a cashless economy might take us back to the barter system of exchange. Extinction of banknotes is not a suitable decision completely. In this age, the commodity of barter will be the invisible cryptocurrency. But still, then, not 100 percent of the population is acquainted with crypto and its working. It took quite a few centuries for the world to get accustomed to money and currency and for the existing system to consolidate. It can be well expected that it will take a few more centuries for money to go completely extinct. Meanwhile, the cashless transaction with online wallets can keep on rising successfully.