The recent health anxiety surrounding Covid-19 appears to have accelerated the movement towards a cashless society cashless payments are on the rise in tandem with viral cases.
Yet our findings in the study Perceptions and Understanding of Money – 2020 indicate that the vast majority of Americans are not happy to permanently part with their paper money.
To be more specific, we found that 60% of respondents are against the idea of replacing paper money with “digital money only”. This could be a devil-you-know-a-devil-not situation where familiarity with paper money is the driving force behind the caution to give it up. Understandable, but if resistance to change for the sake of resistance were the driving force of man, any kind of progress would be impossible.
It’s possible that a better understanding of the benefits of digital transactions could change the minds of those willing to change their minds.
It is also possible that the movement towards a cashless society is a non-democratic issue– that is, it may be inevitable, depending on who wants to see a cashless society emerge. Embracing the benefits of digital money can ease your transition to a new financial frontier.
Covid-19 has accelerated the cashless revolution
Axios cites various figures and facts that indicate that increased health awareness amid the global pandemic has accelerated migration to a cashless society. The findings include:
- People in different countries are wary of physical money, which they see as a potential viral transmission channel
- 63% of consumers say they use cash less often than before the pandemic
- Payment for goods and services through apps and websites, rather than with physical money, has increased
Of course, we must bear in mind that quarantine measures have prevented many from accessing ATMs, paying in person for goods and services, or participating in activities where they would normally use cash. In a way, the increase in non-cash payments does not fully reflect consumer voluntary attitudes. However, it can be addictive.
The idea that your dollars and coins are dirtier than you’d like is–unlike the coronavirus–not new. A 2017 study found that a collection of accounts circulating in New York City contained various bacteria and viruses.
Many people’s aversion to unnecessary risk is exemplified by the widespread willingness to wear masks, quarantine and take other health-conscious precautions. Forgoing physical money in favor of mostly digital payments could increasingly be seen as yet another way to protect oneself from potential viral infections.
The benefits of going cashless
Even before “Covid-19” became a widely recognized term, advocates of digital payments praised the benefits of wholly or mostly cashless societies. We’ve already talked about the potential health benefits of avoiding dirty cash for cleaner payment methods.
In addition to health benefits, the benefits of cashlessness can include:
- Robbers and thieves will find it more difficult to rob you of your physical money
- Increased ability to detect illegal activities, namely money laundering, which could be more easily committed by flushing cash through companies, banks and other means without leaving a trace
- Commercial benefits, which Visa notes includes faster transactions (on average), less hassle for customers who would otherwise have to purchase, store, count and pay out cash, and the fact that customers are statistically more likely to spend more at a business with a card than with cash money
- Easy currency exchange
Some forms of digital payment may also offer more security. Security standards used to protect cryptocurrency wallets are adopted for other purposes such as Deloitte notes, and the continued application of such practices could further strengthen asset protection in a cashless society. Cryptocurrencies themselves may emerge as a more widely accepted medium of exchange as consumers are increasingly comfortable with cashless transactions as a rule rather than just an option.
The movement towards cashlessness is in line with the general shift towards global uniformity, for better or for worse. Some note that uniformity in itself is not necessarily a net positive– one of many criticisms of emerging cashless societies.
Criticisms of going cashless
It would be unfair to mention the future benefits of cashless without known drawbacks and still call unfounded criticism of the concept cashless.
First, there is the idea that moving all nations and individual cultures to a universal standard of exchange is akin to money laundering. There is something to be said about coming home from vacation with a paper bill or coin that you had never seen before or that you kept as a memory of your trip. Losing the uniqueness of different currencies is certainly a legitimate concern. But is it a greater loss than the potential benefits of cashlessness?
The answer to that question can vary, depending on your values and beliefs. Others criticism of taking societies cashless include that:
- The elimination of cash will be followed by the imposition of ubiquitous transaction fees on businesses and consumers which, without the alternative option of paying with cash, can be unavoidable and expensive over time
- Cashlessness represents a greater trend towards limited choice and autonomy
- A reduction in the number of cash services will eliminate a significant amount of jobs that revolve around cash handling, spending and managing
- Less cash and more traceable digital transactions mean less privacy
These are not unlawful concerns and are debated. Addressing these concerns with robust security measures and good faith will be necessary for a cashless society to operate as it should.
Cash was once king, but it seems that digital and card-based payments are increasingly taking over the day. With proper oversight and security, the transition to cash payment mechanisms could bring numerous benefits, and cryptocurrency-level security could be an integral part of the movement towards cashlessness.
There are certainly kinks to work out and concerns to address, but the age of Covid-19 has further strengthened the fact that a shift to all-cash payments can be not only beneficial but more necessary than many previously thought.
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