The debate has been going on for years, and the statistics clearly show that cash payments are losing ground to digital transactions more and more every year. What was once a novelty led to a convenience, which has now become a virtual necessity for many.
The new debate now is whether or not we should transition to a completely cashless society. There is no doubt that most people enjoy the benefits of a digital economy, but would people want a society where cash no longer existed? Would that even be possible?
In late 2016, India attempted to remove 86% of the cash from circulation in the form of high-value notes, sending shock-waves throughout its cash-dependent economy. Clearly there were unintended consequences to such a drastic move.
But there are huge upsides to going cashless. First and foremost is convenience. Digital finance tools enable customers to access virtually all of their liquid wealth with the touch of a finger through the use of smartphones and other similar devices.
Another positive aspect of a digital economy is visibility. Entities such as the government, taxpayers, and businesses have a much more visible and complete record of all transactions, enabling better decision-making in the areas of business, tax policy, and crime prevention.
What are the downsides? Mainly, the impact on the poor and underprivileged who rely heavily on a cash-based system. An all-digital economy would leave them at a significant disadvantage.
In addition, governments and banks could have total control and insight into private citizens’ financial lives. The entire system would depend on technology, something that could fail or be compromised at any time.
So like many issues, there are pros and cons to such a move. Only time will tell the degree to which a cashless world could survive.