With easily available credit and debit cards from a multitude of banks and financial institutions in any country, are we turning into a cashless society?
As recently as November 8, 2016 in the country of India, the current Prime Minister and head of the ruling government unilaterally announced the demonetization of currency bills of two denominations – 1000 and 500 rupee notes with about 3 hours of notice to the citizens of the country.
In one fell swoop of financial genius, he achieved two important results from the demonetization announcement. Firstly, India is well on its way to turning into a cashless society and secondly, all illegal cash transactions have been put into a strangle-hold, while non-tax paying hoarding activity of cash, has been dealt a death-blow.
Are we, as a society, heading towards turning into a cashless society, where credit and debit cards and other plastic cards will soon become the only way to conduct financial transactions? Currently, in most countries we are still able to use both cash and digital money to buy essentials and pay for utilities.
Financial Institutions are On Board
More and more financial institutions and getting behind efforts to provide internet services to all corners of the world so that people will have easy access to cash and financial transactions. Turning into a cashless society appears to be in the future for nearly everyone eventually and it is simply an easier way to handle transactions. The world is becoming an ever more a global economy and it’s pretty difficult to send paper money and coins halfway around the world to pay for goods.
Cash vs Digital Money
Advantages of Cash
- Easy to carry around
- Works everywhere in open markets and department stores
- Easy liquidity
Disadvantages of Cash
- Easy to get stolen
- Easy to lose and not replaceable
- Difficult to use for long distance transactions
Advantages of Digital Money
- Easy to carry
- Easy to replace from issuing bank
- Difficult to steal money from card without passing security measures
- Convenience of cash withdrawal from local ATMs
- Easy for making long distance transactions
Disadvantages of Digital Money
- Some cards only work in some places
- Identify theft
Most Countries Not Ready to Turn into a Cashless Society
If you visit any country today you will probably find that you still need a little hard cash to buy essentials in the market and pay certain bills. Not everyone selling products have jumped into a cashless society mindset.
Not every country is as computerized as the US or Japan, or many other countries and much of their small business transactions are carried out using cash. Many mom and pop businesses, that are the backbone of many economies, still do business on a cash only basis.
Financial institutes charge vendors a fee for the convenience of cashless transactions and not all sellers are willing to pay those fees and venture into a cashless society. But, for larger purchases, your experience probably will be that most of your financial transactions will be conducted using digital money through your debit or credit card as people don’t carry a lot of cash with them anymore.
Digital money transactions through plastic cards are increasing at a very rapid rate as compared to cash transactions, in all the economies of the world.
As the digital age continues to infiltrate society, it appears that the use of cash will be a thing of the past before too many more years pass and all developed nations will have turned into a cashless society. Computerization of financial transactions makes using different currencies easy as purchasers simply use their credit or debit card to buy products and the computers apply exchange rates faster than lightning.