Recently, I’ve had to move around and do many things without cash. This was not because I don’t need cash but because of what looks like a “forceful transition” to a cashless society. I’m not talking about ten thousand naira or some other huge figures, I mean not even one hundred naira.
And in my whole adult life, this is like the first time this is happening because at least, no matter how hard things are, there’ll be money for the next ride or the next snack. What makes this worse is that there’s money in the account, but it has been inaccessible due to the scarcity of cash in society.
I’m sure you and your neighbour can relate to this experience, so here’s my question: can we transition to a cashless society? Will every bike rider or cab driver accept to be paid via a cashless format? And I don’t mean Bolt or Uber drivers. I’ve had a few instances where my request to pay for a bike ride via transfer was declined.
How about the pepper seller, or the person that hawks plantain who doesn’t even have a bank account? How will they carry on business transactions? Will they be excluded from this cashless society? These are the issues.
In all honesty, the idea of transitioning to a cashless society is not entirely bad. Looking at the advantages it has. But before then, let’s dive into the meaning of the cashless policy and how it works.
Explanation of Cashless Policy and how it Works
The cashless policy is an initiative to reduce the use of physical cash in a country by promoting electronic payments. It aims to create an efficient, transparent, convenient, secure, and cost-effective payment system for individuals, businesses, and the government. This policy will use electronic payment channels such as debit cards, mobile banking, internet banking, POS terminals, and electronic wallets to make payments.
The transition to a cashless society occurs in phases, with a gradual reduction of cash transactions in various sectors of the economy.
Brief History of Cashless Transactions and how they’ve Evolved
Cashless transactions have a long history dating back to ancient civilizations in Mesopotamia. The first debit card was introduced in 1966 by Barclays Bank in the UK. This card allowed customers to withdraw cash from their accounts without needing a check or cash. In the 1980s, ATMs (Automated Teller Machines) became popular, providing a convenient way for customers to access their accounts and withdraw .
Over time, various forms of payment have emerged, including credit cards, debit cards, online payment systems, and mobile payments. The COVID-19 pandemic accelerated the shift away from cash, and today, people can make payments using digital wallets, QR codes, and cryptocurrencies. As technology continues to advance, more innovations in the world of digital payments will emerge.
Can we say Goodbye to Cash?
Cashless payment systems have gained popularity recently, and the trend will likely continue. With the advent of technology and increased digitisation, people increasingly use electronic payment methods.
But can we say goodbye to cash in society? Can every business transaction be done via electronic means? Considering the guy that hawks plantain on the streets, the woman that sells pepper in the market, and the young kid that sells sachet water in traffic, I doubt that.
Before dissecting if the transition to a cashless society is possible, let’s discuss the advantages and disadvantages of a cashless society.
Advantages of a Cashless Society.
First, the cashless policy promotes financial inclusion. Electronic payment methods allow people who previously did not have access to banking services to participate in the economy. With a cashless policy, people can access financial services through their mobile phones or other electronic devices, making it easier to make and receive payments. This is particularly important in developing countries where many people need bank accounts.
The cashless policy is also more convenient and efficient than cash payments. Electronic payments are faster and more secure than cash payments, which can be time-consuming and risky. With electronic payments, people can make transactions without carrying large amounts of cash, reducing the theft risk. Moreover, electronic payments can be made anywhere at any time, making it more convenient for businesses and customers.
Third, the cashless policy promotes transparency and accountability. Electronic payments record all transactions, making tracking and monitoring financial activities easier. This helps to reduce the risk of fraud and corruption, which is particularly important in government and corporate settings. Moreover, electronic payments make collecting taxes and other fees easier, which helps increase government revenue.
Fourth, the cashless policy can reduce the cost of doing business. Electronic payments are cheaper than cash payments since they do not require physical infrastructure such as bank branches and ATMs. This reduces the cost of banking services and makes it more affordable for people to access financial services. Read also: 7 Reasons To Plan Your Finances In 2023
Finally, the cashless policy is more environmentally friendly than cash payments. Electronic payments reduce the need for printing, transporting, and storing cash, reducing the environmental impact of money management. This is particularly important in a world where environmental concerns are becoming increasingly important.
Disadvantages of a Cashless Society.
As the famous saying goes, “everything with an advantage also has a disadvantage”. Having discussed the benefits of a cashless society, let’s see the downsides.
One, there’ll be the exclusion of individuals who need access to digital payment systems. Only some business people have a bank account. From my experience negotiating with a few traders this last week, I know that many people still need bank accounts. And in some cases, some do not see the need to.
Two, it leads to an increased vulnerability to cybercrime and hacking. Criminals will find another way to perpetuate their crimes if everyone goes cashless. There’ll be an increase in cyber crimes.
Three, there will be heightened dependence on technology. With a heightened reliance on technology, there’ll be the potential for system failures. The platforms used for these transactions will have much more traffic which can slow it down and lead to failure eventually.
Lastly, transaction fees and other associated costs will be a major downside. With cash, you spend the exact amount without any transaction deduction. Transitioning to a cashless society will mean embracing transaction fees and costs as part of our business operations.
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A cashless policy promotes financial inclusion, is more convenient and efficient, promotes transparency and accountability, reduces business costs, and is more environmentally friendly. Having discussed the advantages and disadvantages of a cashless society, a cashless policy is the future of payments despite current hindrances. This is because there are potential challenges and obstacles to the widespread adoption of a cashless policy.
However, if it’ll be, it is important to ensure that the transition to a cashless society is done in a way that does not exclude people who cannot easily access electronic payment methods.