Cashless society:
What do we gain and lose when cash is no longer king?
( Adapted from: www.thebalance.com)
What do you think of a cashless world? A cashless
world may sound like something out of science fiction,
but it is on its way. Many modern financial processes
and transactions are now taking place without the use
of currency. To be more specific, a cashless society is
one in which financial transactions are conducted
without the usage of cash (including paper and coin
currencies). Instead, all transactions are conducted
electronically, with debit or credit cards or payment
services.
Like two sides of a coin, a cashless society has its
own advantages and weaknesses. The first advantage
of cashless society is convenience. People do not need
to carry cash when they want to make a transaction.
Another advantage is that crime rates are lower.
Carrying cash makes people a high-value target for
thieves. It will be impossible to track their money or
show that it is theirs once it has been removed from
their wallet and placed in a criminal’s wallet.
Similarly, in a cashless society, financial crime
should disappear. Cash is commonly used in unlawful activities, such as illegal
gambling or drug trafficking,
because there is no record of the transaction and the
money is easier to launder. If the source of the money
is unknown, money laundering becomes much more
difficult. When every payment people get is recorded,
it is more difficult to hide income and evade taxes.
Furthermore, going cashless is thought to be
more than just handy. Printing bills and minting
coins both cost money. Businesses must store money,
obtain more when they run out, deposit cash when
they have an excess of it, and in some situations, pay
firms to transfer cash safely. To defend their branches
from physical bank robberies, banks hire massive
security teams. In a cashless future, wasting time and
energy moving money around and protecting big
sums of cash may become obsolete. People may need
to exchange their dollars for local currencies while
traveling. If people are traveling in a country that
supports cashless transactions, though, they will not
have to worry about how much local currency they
will need. Instead, their mobile device takes care of
everything.
Going cashless, on the other hand, may be more
difficult than useful. First of all, electronic payments
do not have the same level of privacy as cash payments.
Hackers are the electronic equivalents of bank
robbers and muggers. People are more vulnerable to
hackers in a cashless culture. If people are targeted
and their accounts are emptied, they may be left
with no other options for spending money. Secondly,
glitches, outages, and unintentional errors can all
cause issues, leaving buyers unable to purchase items
needed. Similarly, when systems fail, merchants are
unable to take payments.
Finally, negative interest rates may have a
more direct impact on consumers once all money
is electronic. Negative interest rates, according
to the International Monetary Fund, lower bank
profitability, and banks may be motivated to raise costs
on customers to make up the difference. Customers
can easily withdraw their cash from the bank if they
do not like the fees, therefore banks are constrained
in their capacity to pass on those expenses. Customers
may have to accept any additional fees if they are
unable to withdraw cash from the bank in the future.
Cash currency is becoming less and less prevalent
as a result of several technological and sociological
shifts toward digital and virtual financial transactions.
However, there are other potential negatives to a truly
cashless society, and only time will tell whether cash
has a unique place in society.
1. What is a cashless society?
A) A society with limited access to cash
B) A society where financial transactions are conducted without the use of cash
C) A society with no electronic transactions
D) A society that only uses coins for transactions
E) A society where only credit cards are accepted
Answer: B) A society where financial transactions are conducted without the use
of cash
2. What is mentioned as the first advantage of a cashless society?
A) Lower crime rates
B) Convenience
C) Higher privacy levels
D) More difficult money laundering
E) Reduced negative interest rates
Answer: B) Convenience
3. According to the text, why are cashless transactions considered to reduce
financial crime?
A) Because hackers are unable to access electronic transactions
B) Because cash is commonly used in unlawful activities
C) Because electronic transactions have higher privacy levels
D) Because cashless societies have better security systems
E) Because it is easier to track money in electronic transactions
Answer: B) Because cash is commonly used in unlawful activities
4. What is mentioned as a potential disadvantage of a cashless society regarding
privacy?
A) Higher vulnerability to hackers
B) Lower crime rates
C) Difficulty in hiding income
D) Easy tracking of electronic payments
E) Lack of records for transactions
Answer: A) Higher vulnerability to hackers
5. According to the text, what may become obsolete in a cashless future?
A) Bank branches
B) Physical bank robberies
C) Money transfers
D) Local currencies
E) Mobile devices
Answer: B) Physical bank robberies
6. What is mentioned as a potential issue with electronic payments in the text?
A) Lower vulnerability to hackers
B) Difficulty in hiding income
C) Reduced negative interest rates
D) Glitches, outages, and unintentional errors
E) Convenience
Answer: D) Glitches, outages, and unintentional errors
7. How might negative interest rates impact consumers in a cashless society?
A) Consumers may enjoy higher profits
B) Consumers may face lower costs
C) Banks may raise costs on customers
D) Banks may reduce fees for customers
E) Consumers can easily withdraw cash without any fees
Answer: C) Banks may raise costs on customers
8. What is one of the reasons mentioned in the text for the decline of cash
currency?
A) Higher privacy levels in digital transactions
B) Increased prevalence of physical bank robberies
C) Sociological shifts toward digital financial transactions
D) Limited access to cash in society
E) Lack of security in electronic transactions
Answer: C) Sociological shifts toward digital financial transactions
9. What is stated as a potential negative consequence of a cashless society for
merchants when systems fail?
A) Increased vulnerability to hackers
B) Inability to track money in transactions
C) Difficulty in hiding income
D) Inability to take payments during system failures
E) Convenience in dealing with additional fees
Answer: D) Inability to take payments during system failures
10. According to the text, what might be a deciding factor in whether cash
continues to have a unique place in society?
A) Convenience of electronic transactions
B) Sociological shifts toward digital financial transactions
C) Higher vulnerability to hackers
D) Time and its impact on potential negatives
E) Increased prevalence of physical bank robberies
Answer: D) Time and its impact on potential negatives
