The way people conduct business has changed throughout the years. Cash is being used less and less today, as people are exchanging funds electronically. Living in a cashless society does not sound like a bad idea… or is it? Going cashless brings on many dangers.
Living in a cashless society might sound ideal but it has many drawbacks. With the acceleration in the use of cashless payment anything, going completely cashless can bring on many disadvantages including increased hacking risks, loss of security, sacrifice privacy, technological dependency, and third party control.
With a global pandemic amidst us, it has accelerated the use of cashless payment as many people do not want to touch anything, in fear of getting sick. Although the use of cashless payments minimizes contact with others and offers speedier transactions, it puts many individuals and small businesses at risk of losing everything they hold dear.
Disadvantages of A Cashless Society
Living in a cashless society has its disadvantages that can harm businesses and consumers in many aspects, such as:
- A cashless society is unaffordable
- Increased risk of overspending
- Inflated credit card and banking fees
- Certain businesses would be shut out
- Creates a technology dependency
- Loss of security and privacy
Many People Cannot Afford It
The vulnerable population- undocumented immigrants, homeless persons, and people living in poorer communities are going to have a hard time staying afloat. This group of people depends on cashless jobs to meet needs Going cashless means all your money is tied into a bank account or credit card.
Not everyone has access to traditional banks. Some people live in areas where there are no banks available nearby or they just simply cannot afford it. Many banks require consumers to maintain a certain amount of money in the account.
Taking on odd jobs from time to time would not add up to what is needed to maintain a bank account efficiently. Having an inadequate amount in an account will result in higher bank fees. Many people can barely make ends meet, nonetheless pay bank fees. This will bring on more challenges.
Many people depend on cash-paying jobs to pay their bills and make ends meet. They simply cannot afford the devices needed to pay their bills online. Simplicity has become the way of life just to get by.
Those who are less financially stable, would not have any alternative methods of getting paid. This will result in unemployment and dependent on the government for assistance. Most of the time, they do not have adequate resources to apply for assistance, so it puts them in another jam.
In a country where a large population struggles to get photo identification in order to vote for our leaders, it’s hard to picture a society in which these same people can live cash free.
Increased Risk of Overspending
People who repeatedly get into debt, purposely eliminate credit cards and solely depend on cash. On the other hand, many do not want to get into debt and have found ways to manage their money without the additional crutch that a credit or debit card provides.
Knowing how much money is coming in and out of their wallet is especially important for people who are taking a hold of their finances. Having control of how much money is spent on a day to day basis is what brings balance and stability to their financial lives.
Many people use physical money to set boundaries around what and how they spend. These boundaries allow a sense of personal control while still being able to meet their daily needs. When people go to the store and pay with cash, they physically see the money leaving their pockets and realize the impact it has on their wallets.
There becomes an emotional attachment when funds are being depleted. Paying with cash also helps prevent impulse shopping. When we go shopping on an impulse, we tend to purchase things that we do not need and possibly regret the purchase somewhere later down the line.
In a cashless world of the swipe, tap, and click it would be so much easier to overspend. Managing money will become exceedingly difficult. In turn, the avoidance now becomes reality. Losing control of finances places a financial burden and control is lost.
Inflated Credit Card and Banking Fees
Financial institutions will impose higher credit card and banking fees upon consumers. Using cash is free for everyone involved. If we are forced to choose between a few payments, there will be an additional cost to spending our own money.
When we begin to rely on credit cards and apps, it would lead to negative interest rates which reduces a bank’s profit. Banks are in the money-making business. When the money is not coming in, drastic measures are taken. That is getting money from the consumer by any means necessary.
When an entire society is cashless, banks and payment processors can now monopolize how businesses do transactions. Banks and payment processors could potentially raise fees for operating costs which would be passed on to consumers. Businesses already pay a fee when consumers swipe their cards but can potentially pay even more. If businesses are imposed a higher fee to accept electronic payments, they are forced to place a percentage of that few onto the consumers by raising the prices of their products or charging a service fee just to see a profit.
There will be pushback from many consumers who would feel uncomfortable spending more just to get the bare necessities. Somehow, they will find a way to get what they need without feeling they are spending more.
Certain Businesses Would Be Shut Out
Many businesses calculate how much money they need or want to make daily, weekly, and/or monthly to meet financial goals. In a cashless society, it could potentially limit the number of customers that visit their establishments.
Many potential customers will be turned away because of their inability to pay for their purchases electronically. This can put a big damper in meeting their financial goals because when customers are turned away that is money lost.
When systems are down, merchants would not have the capability to conduct business. In a cashless society, businesses will not be able to accept any form of payment which will bring on additional stress.
Many businesses are not equipped to not take cashless payments because they are just making enough to fulfill day to day expenses. Only accepting credit would put a strain on their profits. Sometimes it is not easy to raise prices to cover the potential loss because higher prices do not entice customers to spend money.
Creates a Technology Dependency
In order to live in a cashless society, you must have dependable internet service to be able to manage and move money around. We all know that technology is not always reliable, and many people do not always have consistent access. People who live in rural areas do not have adequate access to internet service. Additionally, people who live in poor communities cannot afford internet services.
Glitches, outages, and accidental deletions can leave you with the inability to purchase the things that you need or want, potentially at crucial moments. Not having the ability to get what you need can leave you stranded with no other alternatives. Something as simple as a dead phone, can prevent you from making a purchase and leave you penniless in a matter of seconds.
The older generation has lived with cash for many years and many still conduct business with cash today. They are not comfortable navigating through the internet or applications as it can be overwhelming. They may struggle with adjusting to a technology-dependent culture.
Cashless transactions rely solely on technology, which we know is not always reliable and is often affected by wind, storms, wildfires, brownouts, and more. It can bring a society to a complete halt if there is a system-wide malfunction.
Lose a Sense of Security & Privacy
Having the choice of choosing how to pay for your purchases will be completely gone. People will no longer have the choice of whether to swipe their credit card or pay with cash. Many people make the choice to pay with cash because it brings a sense of security knowing that no one can track their purchases. Sometimes people do not want to feel like they are being watched and would rather pay cash for their purchases.
Conducting business electronically translates into limited to no privacy. Every time your card is swiped, clicked, or tapped; your payment information becomes accessible to all. When your personal information is exposed or your credit card is lost or stolen, it makes you vulnerable to identity theft and fraudulent purchases.
Hackers are well known for tapping into banks and robbing consumers blind. In a cashless world, it would become much easier for someone to tap into your bank account and wipe it out, leaving you penniless for weeks, or months while you struggle to get the situation resolved, potentially losing your vehicle, your home, and your reputation in the process.
Living in a cashless society may sound good but it brings on many dangers that must be considered before we can fully on board. Millions of people would be at risk for increased isolation, exploitation, debt, and loss of quality of life.
The Bennies of a Cashless Society
What are the benefits, aka the positive impact of a cashless society?
Transactions would become faster and opportunities for personal theft will be reduced. A cashless society will give consumers behavioral insight on their spending which would help in becoming more conscious of how money is spent. The government would be able to track tax evasion and illicit finance transactions more rapidly.
You’ll be “protected” by the government, meaning that if your transactions are deemed questionable (by those controlling access to your money), your accounts will be frozen for your own well being until the matter can be investigated.
Going cashless means that all cash is gone, eradicated, zip, zero, zilch. It doesn’t mean, you can occasionally use cash as you see fit, such as at a fair, or a child’s lemonade stand. It means that every single dime is now completely traceable, and 100% controlled.
In short, by going cashless you can guarantee the loss of the following, at a minimum:
- No More Odd Jobs- if you’ve ever struggled to get through a month, taking on an odd job to help get you through, too bad, you’re out of luck.
- Forget money in graduation cards, Christmas cards, Weddings, or Birthday cards, no Wishing wells at weddings, No money tree.
- Your child won’t learn the value of earning and saving change in a piggy bank, watching their money accrue with their efforts.
- Private sales will be a thing of the past, imagine it, you’ve purchased an item, maybe a couch- paid taxes on it when you bought it, but now, in order to sell it because you need some extra cash or want to put the money towards something else, you’ll likely have to pay taxes on the sale. After all, the government is going to want their “fair” share.
- Say goodbye to those rainy day funds, the change you save from the couch cushions, the savings challenges that help you accrue a bit of spending money for a special occasion.