Cash has an unmistakable charm, but there is no denying that it brings numerous problems to society.
It is a common root-cause of violent crimes, and it facilitates money laundering since it leaves no paper trail. Managing coins and banknotes can be time-consuming and costly, and having to exchange currencies when travelling across international borders is not exactly painless.
Not to mention the use of cash is pretty unhygienic. Research shows that banknotes carry lots of pathogens; they may even harbor more germs than household toilets.
Although we have been using coins and paper bills for as long as we can remember, we might be better off without it. After all, Fortunly attests that we now have the technology to become much less cash-reliant.
Debit cards and credit cards are no longer the only non-cash payment instruments available. Thanks to decades of continuous fintech innovation, we are privileged to have digital wallets and cryptocurrencies in 2019.
And as fintech adoption grows, many countries will work on becoming completely cash-free sooner than you think.
While moving towards a cashless world feels inevitable by now, it is important to realize that ridding cash in all aspects of personal and business finance may create new problems.
Here are some of them.
Transparency is a double-edged sword.
Financial information is personal, and it should be treated as such at all times. Most of the world’s money is now electronic, but there is something scary about the thought of having 100% of your wealth stored digitally.
Laws exist to safeguard the financial information of individuals, but it is difficult to believe that there won’t be any data breaches.
Advanced technology makes our lives easier, but being too dependent on it can cripple us in many ways. If a cashless society’s financial infrastructure collapses, we could completely lose access to money.
Although we could diversify our finances with digital wallets and cryptocurrency, it’s still not a comfortable spot to be in.
The prospect of losing access to funds emphasizes the need to invest in non-digital valuable assets like precious metals. Gold and silver, despite their inherent flaws, have always been safe-haven assets, and they will remain as such in a cashless era.
Money management is more convenient when everything is digital, but financial discipline could become a greater challenge.
Using tangible cash lets you feel the pain of parting ways with the money you spend. Many of us rely on this strong emotion to stop us from overspending.
Electronic payment methods take away this somewhat necessary obstacle. This might not be an issue to disciplined individuals, but irresponsible people might struggle more in cashless societies.
Constant effort to curb overspending is paramount. Some nationalities and ethnic groups may thrive in this endeavor more than others since financial virtues are often cultural.
Nevertheless, frugality can be learned if embraced.
Fintech solutions are all about banking the unbanked and spreading prosperity to more people, right? Yes, advanced technology does promote financial inclusion, but it only works if the poor have the necessary tools to fully participate in a digital economy.
Electronics notoriously have short life spans, and periodic replacement of smartphones becomes a more expensive and less realistic proposition when purchasing and maintaining one is even an issue.
How would a homeless person be included in a cashless society where merchants cease to take coins and paper bills?
To be fair, many innovative methods are being tested today to extend help to marginalized individuals more seamlessly through charities. However, even developed countries still can’t seem to figure it out.
Ending our centuries-old relationship with cash is not easy. But, going completely cashless is a critical step toward dethroning fiat currencies in favor of new forms of digital money with intrinsic value.
There is a good chance that most of the adults alive today will get a taste of a cash-free life in the future.
It is important to think about the perceived negative implications of living in a cashless society now to help address them way before they turn into reality.