Jan 10, 2020
In our increasingly digital world, cashless payments are definitely on the rise.
Mobile payments are becoming more popular across the globe. More Australians are doing their banking and managing their finances from mobile phones instead of computers.
Less people are withdrawing cash and instead opting for paywave or scanning their mobile phones.
So while more and more people essentially live cashless lives, the question still stands: Is our entire nation ready to become a cashless society?
Benefits of a Cashless Society
First and foremost, going completely cashless would be much more convenient. You’d never have to worry about carrying enough money with you because you’ll always have access to all of your funds via electronic devices.
There’s a possibility of saving on banking fees since banks wouldn’t have to pay to maintain ATMs.
If printed cash became obsolete, we could see the chance for more development and regulation of cryptocurrency.
Some people would doubtlessly feel more protected against crime since there would be no physical money for anyone to steal. Money laundering would also become a thing of the past.
Cashless banking also makes it easier to travel and exchange currencies safely.
Cons of Cashless Society
A cashless society, while convenient, does have some major drawbacks.
For one thing, paying in cash allows buyers and sellers a level of anonymity and privacy - that would disappear if all transactions became digital. There’s always a trail that links every online transaction to an individual. This could become an invasion of privacy from those who prefer to make certain purchases or sales without letting others know.
Accessing all of your funds digitally can seem like a convenience until the tech fails. Something as simple as a dead phone battery could leave you essentially penniless. And an Internet outage or system failure at checkout could turn a simple transaction into a huge hassle that winds up being more inconvenient than simply handing over cash.
Going cashless doesn’t guarantee a decrease in crime rates. In fact, we’d likely see an increase in the rate of electronic fraud, identity theft and hacked bank accounts. If all of your money is stored digitally and your accounts become compromised, you’d have nothing to fall back on in a cashless society.
Some financial analysts assert that going cashless could negatively impact interest rates. This would, in turn, prompt banks to increase their fees to avoid losing money. That could then cancel out any benefit derived from eliminating the expense of managing cash.
There are some other theoretical issues with getting rid of cash.
For example, how would the financially disadvantaged make purchases? Poor and homeless individuals likely wouldn’t have the means to maintain a bank account or electronic device to accept aid or make payments with.
Cashless banking would also pose a danger for those who are prone to overspending. It could make it more challenging to teach the concrete value of money to new generations.
Kids’ first experience with money and learning how to make purchase decisions usually starts with physical notes and coins. Using money strictly in the digital sphere could make it an even more abstract concept.
The other big one is the risk of taking on more credit card and personal debt - without cash, it is easy to just keep on tapping that credit card while that debt continues to rack up.
It seems that we’re not quite ready to go totally cashless. But there are some nations who are giving it a try. We’ll have to wait and see how they get on and determine which principles then apply to the Australian economy.
In the meantime, going cashless could be a convenient, secure and simple lifestyle modification for many Australians. We just recommend that you proceed with caution - carrying cash instead of relying on card is a great way to control your spending and stick to a budget, while also avoiding the risk of credit card debt.
Get the right financial advice from experienced experts.
Written by Ben Calder at Calder Wealth Management.
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