A cashless economy is an economic system where small amounts of cash are used in transactions. It is based on the transactions that are made using credit cards, debit cards, wallets or digital modes, electronic fund transfer, mobile payments, and internet banking.
This enhances less transmission of hard cash and it can reduce the diseases that may be spread from people passing the money from one person to another.
Pros of Cashless Economy
- Fewer currency notes in circulation
There will be few currency notes in circulation and this will reduce the burden of the government of printing the notes.
- Better disbursement
This makes it easier for money released for intended people to reach them as the middlemen will not be able to reduce or take the money for themselves.
- Reduced tax
When there is the use of cashless transactions, the tax will be reduced and this will allow the country to develop economically as the money will be channeled to other developing sectors.
- High seigniorage
Seigniorage is the profit from printing currency. When there is the use of cards the government will save a lot of money as they will have high seigniorage as it does not print the currency.
- Decreases crime
Crime rates will decrease as people will not rob others with the intention of getting their money hence having a morally upright society.
- Saves time
The time that is used to print money will be used for other important things. And also this will give an easier time to the sellers as they will not have to count the money after someone has made payments on a commodity.
- Improved economy
The economy of the country will improve as the resources that would be spent on printing of the money will be used in other areas of the economy hence improving the economy of the country.
- Less spread of diseases
The diseases that are spread through contact will not be able to spread through the handling of the same money by different people hence the risk of spreading the disease will below.
Cons of Cashless Economy
- It requires awareness and education
The members of the public have to be educated on the use of the cards for them to be aware of the transactions and this may be difficult to reach everyone to be taught.
- Loss of freedom
Individuals will not have the freedom to hold their own money which may be looked at the denial of freedom.
- Connectivity problem
Some means of the transaction need the internet for the transaction to take place and this may hinder some people the usage of the money in case the area has no internet.
- Some people may not deserve the cards
This will make them not able to use the cards as they are poor in that they do not access cash so the cards will not be of any help to them.
Cashless economy enhances the use of cards which comes with many advantages and most countries are embracing it. The drawbacks are not much hence countries can adopt the use of cashless services as it will render them a great improvement to their economy.