Before all of you Technology lovers jump from your chairs and onto me, relax. I am not against a Cashless society where we use less of physical currencies or notes and more of Cashless payments.
But as a person of finance, it is but habitual that I look at any new innovation in my field from all angles. The world is not just for the elite and the ones carrying Smart Phones in their hands. The world consists of people inhabiting the remotest parts of the planet. With no phones no internet connection no Wi-Fi devices. If we transform into a cashless society before we provide them access to Wi-Fi in the remotest of areas, how will they be able to conduct transactions ?
The benefits of a cashless society is great. Number one will be an established paper trail for every transaction. And that paper trail will lead to lesser crimes, specially the major ones including corruption based on cash pay backs. It would also benefit the common man from having cash management issues.
The disadvantages are countless. Starting from the most basic one of access to Wi-Fi or land based internet for the ones living in remote areas. And in an ever growing hacking expertise of people as young as in their teenage years, theft of accounts filled with money will be hard to safeguard physically. Privacy will be another issue. With an absolute digital footprint available everywhere, it would become impossible to have any level of privacy. The abuse of women financially in relationships can also increase while men take away pass codes or get the women’s access to digitally available funds cancelled. Specially for the women who solely depend on their husbands.
Technology problems where the servers can be down. Glitches can happen. Unintentional mistakes take place.
Think about your phone battery dying when you need the money? Any solution to that in an emergency situation?
Another psychological factor
of physical money is that whenever you spend it, it hurts a bit because you are
physically parting with something you have in your pockets with your own hands.
Digital payments in my opinion will absolutely lead to overspending. People’s
minds are not trained to budget what you already spent a few days ago through a
One of the most difficult problems in a cashless society is that Central Banks, to spur the economy may promote negative interest rates. And negative interest rates are a huge problem for the purchasing power, money loses value.
Whatever I have written above by no means argues that we should remain a cash based society. All I am saying is that by having Digital payment companies popping up in every neighborhood, we might not be ready for the problems at large. We need to address those problems first, find the solutions before we proceed towards a cashless society. Otherwise the biggest travesty of justice plus inequality between the “Haves” and the “Have-nots” will increase tremendously.
Haves will be the ones who are digitally and technologically savvy and the have-nots will be the ones who have never even held a smart phone in their hands.
Author: Mir Mohammad AliKhan