What are the benefits and drawbacks of a cashless economy? | 5 Answers from Research papers (2024)

FAQs

What are the advantages and disadvantages of cashless economy? ›

On one hand, transitioning to a cashless system can reduce crime rates, streamline financial transactions, and simplify international payments. On the other hand, it raises concerns about privacy, cybersecurity risks, technological dependency, economic inequality, and the potential for increased overspending.

Cashless payment is much safer compared to cash payment. When customers pay with cash, there is a risk that it'll be lost or stolen. There is also a considerable risk of counterfeit notes. However, cashless payments offer greater security because transactions are recorded and can be easily traced.

It is expected that its impact will be felt in modernization of Nigeria payment system, reduction in the cost of banking services, reduction in high security and safety risks and also curb banking related corruptions.

Cashless society: advantages

When people are handling less cash, bank robberies, burglaries and corruption drop. Because cash is essentially untraceable, it's a useful tool for criminals, where digital currency is less easy to exploit, and can be shut down quickly if it falls into the wrong hands.

This could lead to a reduction in crime rates, particularly for crimes such as drug dealing and tax evasion. Increased economic efficiency: A cashless society could make the economy more efficient by reducing the need for cash handling and storage. This could save businesses and individuals time and money.

Going cashless can be safer, more convenient and more rewarding. As fewer people use cash in everyday purchases, it's a good idea to start thinking about how cashless payments can work for you and how to maximize those benefits.

A cashless society offers a range of benefits such as convenience, transparency and stability. However, there are concerns about financial exclusion , privacy and security. It has been suggested that disadvantaged groups are most likely to be disproportionately affected by the transition away from cash.

True, new cashless technologies may be more energy efficient than the old ones, resulting in climate co-benefits. Cashless payments are greener, since stopping the use of physical cash saves on environmental cost and reduces the need for transport, for example, to pay bills, receive payments, or withdraw cash.

What country has gone almost completely cashless? ›

Norways is the most cashless country, with only around 2% of payments being made by cash, and 100% of the population having a bank account.

A cashless society leads to privacy concerns as every transaction leaves a digital footprint that entities can monitor and potentially exploit. Embracing cashless payments requires balancing convenience with privacy risks, including cyberattacks, identity theft, and reduced control over personal data.

Banks keep an electronic record of transactions, and people access their funds through electronic systems. The advantages to cashless societies might include reduced physical crime (since there's no tangible money to steal), lower transaction costs, and the convenience of not needing to carry cash.

Crucially, this substitution has significant consequences for social inequality: while people with higher incomes typically benefit from cashless payments through easy and frictionless payments and access to short-term credit, people with lower incomes become increasingly dependent on financial services for which they ...

Reduced risk of theft: When you carry cash, you are at risk of being mugged or pickpocketed. With cashless payments, there is no physical cash for someone to steal. With cashless payments, you don't have to worry about losing physical currency, and your money is stored in a secure digital wallet.

A cashless society could make the economy more efficient by reducing the need for cash handling and storage. This could save businesses and individuals time and money. Additionally, a cashless society would make it easier for businesses to track their sales and profits.

Crucially, this substitution has significant consequences for social inequality: while people with higher incomes typically benefit from cashless payments through easy and frictionless payments and access to short-term credit, people with lower incomes become increasingly dependent on financial services for which they ...

Banks keep an electronic record of transactions, and people access their funds through electronic systems. The advantages to cashless societies might include reduced physical crime (since there's no tangible money to steal), lower transaction costs, and the convenience of not needing to carry cash.

A cashless society is one in which cash, in the form of physical banknotes and coins, is not accepted in any financial transaction.