Advantages and Disadvantages of Cashless Economy
In this growing era of technology everything is changing very fast and so financial instruments such as currencies. Online transactions are becoming more popular day by day due to its numerous advantages which is also promoting a cashless economy. Many countries are moving towards a cashless economy. Governments, financial institutions, and companies are proponents of cashless economy. Let’s know more about the cashless economy and its advantages and disadvantages.
What is a Cashless Economy?
A cashless economy is such an economy where paper currency or coin currency is not used for financial transactions. In a cashless economy all financial transactions are done electronically using debit card, credit card, internet banking, or through UPI, PayPal, Zelle etc. Many countries in the world are moving towards a cashless economy and eliminating cash transactions.
Advantages of Cashless Economy
Technological advancement has made fast online transactions possible and in near future it will expand its feather more which will establish cashless economy in great extent. Cashless economy is also keen to produce lot of benefits to the mankind, society, economy and well as environment. Some of the advantages of cashless economy are as under:
- Fast and seamless national and international transaction.
- Reducing cost associated with handling, storing, depositing, and transportation of paper money
- Reducing crime rates involved in carrying cash
- Automatic digital paper trail, and less money laundering and other illegal transactions.
- Easier currency exchange while using for international transactions.
- Reduction in tax evasion
- Environment friendly
Disadvantages of Cashless Economy
However, many countries are moving towards cashless economy and promoting electronic transaction, it is very difficult to eliminate cash altogether and rely only on digital transactions. Below are some disadvantages of cashless economy.
- Less privacy and exposes your personal information leading to possible data breach
- In case of technical issue, all transaction system may collapse and there will be no alternative
- Technological dependency for digital transaction
- Greater exposure to hacking
- Additional charges for digital transaction
In addition to this, for digital transactions everyone should have at least a smartphone to transact, but, those who can’t afford smartphones will be left behind.
In this fastest changing world advancement in every sector is essential. Therefore, acceptance of digital transactions is inevitable which is also paving the way for a cashless economy. However, dependency only on online transactions through credit card, debit card, internet banking, UPI, digital currency etc. is neither good nor possible for every person and every economy. A combination of higher portion of digital transaction and lower portion cash is essential for better functioning of the economy which might be totally replaced by only digital transaction in future.