A Cashless Society

A cashless society is one in which every financial transaction is conducted electronically, rather than with physical currencies. As a society, we have moved in this direction through the years. Starting in the 1990s, non-cash payments began becoming popular and by the 2010s digital payment methods were widespread. But, we are not totally cashless yet and it remains to be seen whether we should even switch to a completely cashless society. On the one hand, physical cash plays a part in corruption, tax evasion, money laundering, and other types of illegal activities. Cash allows anonymity, thus making these illegal forms of activity much easier to carry out. However, on the other hand, the lack of this anonymity might lead to a society where individual freedoms are limited because the government has access to all your financial information.

Countries That Have Done It

India is at the forefront of cashless societies. A decade ago, nearly half of India’s citizens did not have any form of identification. But in 2009, the government launched the largest and most successful IT project in the world. They created digital identities for 1.1 billion people. This laid the foundation for a digital economy. Their next project was to get everyone to open a bank account, and within three years more than 270 million people had done so. They also launched a Unified Payment Interface, which was a way for banks and people to transfer money to one another instantaneously and without transaction costs, regardless of their bank. In a move to curb corruption and eliminate counterfeit bills, the Indian Prime Minister announced in November that the country was discontinuing all 500 and 1,000 rupee notes. It caused quite a lot of shock and resulted in setbacks for some people, but it was a bold move that will produce long-term benefit by accelerating the push to a totally digital and modern Indian economy.

Sweden is also quickly becoming a cashless society. Swedish buses have not taken cash in many years. Retailers, street vendors, and even churches, all prefer to receive payment in digital forms. Retailers are even legally entitled to refuse coins and notes. Cash transactions made up barely 2% of all payments in Sweden last year (compared to 32% in the United States). This figure is estimated to drop down to 0.5% by 2020. 900 of Sweden’s 1,600 bank branches don’t even keep cash on hand or take cash deposits anymore.

Pros and Cons of a Cashless Society

There are numerous advantages to a cashless society. One is increased security of funds. From bank robberies to purse snatchings, possessing cash puts a target on your back for potential robbers. While there are ways for robberies to happen to digital forms of currencies, through hacking, this is becoming less of a problem as digital security gets more sophisticated. There will also be decreased illegal activities, from exchanges on the black market, to under the table payments, to corruption. The processing of transactions will also become much more efficient – no more waiting behind people who are paying with cash or trying to write a check. Instantaneous payments instead of waiting for checks to post. It could also provide a boost to the economy through increased public spending - studies have shown that people are less likely to make small purchases when paying in cash because they don’t have the exact change or don’t want to break a larger bill (however, this may not be good for those who are trying to save money!).

However, there are some serious disadvantages to consider when thinking of moving a society to completely cashless. The first main issue would be that it could mean the end of privacy. Cash offers anonymity. If everything is paid in the form of digital payments, there is a digital trail of every purchase you make. While digital security is getting better, there are still hackers that can get a hold of this information. The second is it might give the government too much power – they can have access to this digital trail that you leave behind through purchases. It could also potentially have the power to totally freeze accounts of people and someone wouldn’t have any cash to make purchases.

In conclusion, a totally cashless society may not be the way to go, until we have some decentralized safety measure that ensures individual freedom. Otherwise, it could give rise to an Orwellian society where the government has too much power over people’s financials. There are major benefits in terms of crime and corruption prevention, however, so if safety measures can be attained then it might be worth going towards a totally cashless society.