In recent times, due to the advancement and development of technology the way people handle financial transaction has changed. This has lead to the idea of a cashless society where most financial transactions are done digitally through numerous electronic methods reducing the use of cash or physical money. This major transformation on how we pay or purchase goods and services also affects the way we view money, save money and make business deals with others.
In this article, we will talk about three major reasons that can lead to a cashless society as well as some of its shortcomings.
FACTORS THAT COULD LEAD TO A CASHLESS SOCIETY
1. Advancement and development of technology: technology keeps improving and getting better as the days goes by. The creation of new tools, upgrading existing tools and using them in an efficient way to provide solution to problems adds to the advancement of technology. As technology keeps advancing and progressing, the way we handle money keeps changing too, here are some ways in which the advancement of technology has affected the way we use money.
i.Digital transactions and cashless payments: traditional cash methods have served the society well for years as a matter of fact; it has always been our go-to on finance. However with the increasing flaws of this traditional cash method, digital or cashless transaction haven taken over and has gained popularity.
Cashless transactions or digital means of payment refers to electronic exchange of money where cash is replaced by several methods such as mobile banking, E-wallet, credit and debits cards which allow users to pay or purchase goods and service online with their fund linked to their bank account.Digital transaction has gained popularity because it is very convenient and easy to use; one can do financial transactions from the comfort of home or anywhere in the world without limitation provided there is internet access unlike traditional cash method; it is safer; unlike the traditional cash methods like banks where a lot of people complain of missing funds without them making them making any financial transactions, digital transactions proves to be a safer method of handling money due to its use of blockchain’s decentralization, encryption and multi-factors authentication, its speed and efficiency in handling financial transactions makes life easier etc.
ii. Digital Cash management for businesses: Cash management is very important for businesses. It involves handling expenditure and income to make sure there is enough capital to run a business smoothly. Technology has made a big difference on how cash management works. It has made things easier and more efficient. Businesses can now use computers and software to keep track of their money and make smart decisions. This helps them manage their cash better and keeps their finances stable. Technology has benefited many businesses especially large business organizations in managing financial risk with advanced tools, enabling them to take protective measures, make informed decisions and respond quickly to changes in the market.
2. The fail of traditional cash methods: the fail of traditional cash method is another major factor that could lead to a gradual transition towards a cashless society.
Traditional cash method involves physical handling of money, counting and storage. This process is time consuming, inefficient, stressful and prone to mistakes. Traditional cash methods has failed in so many ways recently and The big problem with this method is that; money can easily be stolen or mismanaged, high rates of conducting financial transactions and maintenance charges, high cost of printing and distributing cash most times leads to unavailability of funds, and counterfeits are circulated through the use of cash thereby causing individuals and businesses to lose lot of money. However cashless system tends to reduce this risk to the minimum by providing a detail trail which makes it easier to track and manage finances, making financial transactions easier, convenient, safer and efficient.
3. It is very convenient and efficient: the efficiency of cashless method cannot be compared to its inefficiency. It has in fact proved to be the best method of handling money with numerous benefits. One of the most uncompelled benefits is the speed and accuracy to handle transactions, with just a click several transactions are done accurately saving time for other activities. Individuals do not have to queue or stand for several hours to conduct financial transactions which in most cases still do not work.
Furthermore, the security aspect is another important aspect where cashless method excels, the use of decentralization, encryption and multi-factor authentication helps to ensure the safety of funds and even sensitive information that could endanger an individual or businesses. The cashless method's efficiency has become a clear advantage, providing benefits that will reshape the future of finance and business.
Short-comings of the cashless method or society
Despite the numerous benefits of a cashless society, it still has some challenges or short-coming which should not be overlooked, here are two major challenges of a cashless society.
1. Heavy dependence on technology: dependence on technology can be a big challenge when technical issues or network failures occurs. Technical issues can lead to unavailability of funds which can be very challenging especially in times of emergency where access to fund is important for survival. In places affected by disasters, like storms or earthquakes, there might be no electricity or internet connection. So, if people can only use digital payments, they may not be able to get help or buy necessary things, making the situation worse and delaying the recovery process.
2. Digital divide or technology gap: digital divide is a gap between those who have access to modern technology, like the internet, and those who do not. It creates differences in opportunities, information access, and participation in the digital world. This can lead to unequal situations for people with and without digital connectivity and skills. Older ones and those in rural areas are always the victims of digital divide as they often lack access to smart gadgets and internet connection which are the basic tools of a cashless society. Therefore it will be very challenging for them to participate in a cashless society.
Conclusion; In conclusion, the drive towards a cashless society is fueled by technology advancements, shortcomings of traditional cash methods, and the convenience of digital transactions. Cashless payments offer faster and safer financial transactions, better cash management for businesses, and lower risks of theft and counterfeiting. However, challenges like dependence on technology during emergencies and the digital divide need to be addressed. Overall, the cashless approach brings exciting opportunities and benefits, shaping the future of money and finance.
And as the world and technology keeps advancing, it's important to find a balance between using technology's benefits and its challenges. This way, we can build a strong and inclusive cashless society where everyone regardless of age or location enjoys the advantages while reducing the short-comings to the minimum.