Here at cashless payments journal, we will always advocate cashless societies. However it would be unwise to not acknowledge the implications of going down this route. The socio economic hurdles arising from this transition cannot be ignored. In this article, we explore some of the hurdles that present itself in the journey to going cashless.
One of the biggest challenge is the issue of financial inclusion. A cashless society would hit the unbanked poor and homeless the hardest. Without access to payment tokens, the poor would find it increasingly difficult to meet daily necessities. Frankly, there needs to be dialog at state level to be able to scale up to these objectives. This would involve subsidizing payment methods and having infrastructure in place to register everyone. And this transition cannot happen unless the poor are provided easy access to banking services, which is a problem that has been left unsolved for decades! However, if this can be achieved, then it could potentially be the best way to ensure the poor get social benefits paid directly into their account, without money getting siphoned into the hands of corrupt officials.
Issue of Ownership
One of the most common arguments against going cashless is the loss of control. By signing on to a cashless payments providers and by signing on to their elaborate terms and conditions, consumers are potentially at the mercy of Institutions and Governments. Risk averse consumers paranoid over transaction, holding and interest fees, tend to prefer cash. This is where the anonymity of cryptocurrency shines! A decentralized yet public ledger is ideal for consumers worried about the issue of ownership. Sure, there are mining and transaction fees, but it is the lesser of all evils. Coins such as Monero have a strong use case by providing anonymity, low transaction fees and decentralization.
Any digital asset that is held online is always at risk of being under attack. Cyber attacks targeting vulnerabilities in the system happen far too often. The less informed fall prey to social engineering methods such as phishing, while Enterprise Businesses fall victim to DDoS attacks. Where there is digital, there is always a weakness that is left to be exploited. Even cryptocurrency is not immune to attacks given the latest news surrounding the hack of Japanese exchange Coincheck. The issue of security is one that will never go away.
Marginalization of society
Industries that are heavily dependent on cash would get marginalized. One recent example of this occurring was in India. The government attempted to demonetize cash in a bid to eradicate black money. This led to a surge in cashless payments companies such as PayTm. However, minimum wage workers and laborers were the ones who felt the biggest impact. According to this report from Forbes, the suicide rates among laborers and farmers started rising during the first few months of demonetization. Employees in industries such as construction, mining, factory etc where payment is offered in cash, got marginalized the most. Thus it would seem, developing economies would suffer the most, if their hands were forced into going cashless.
With the current state of technology, cashless is definitely seen as a financial instrument for developed countries. Given the socio-economic conditions that exist, the current hybrid mix of cash and cashless payments would continue, until smartphone technology and cashless infrastructure becomes economically viable or subsidized by the government.