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

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

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 transactions reduce the cost of printing currency. Moreover, with easy traceability, it can deter black money and illicit transactions, leading to a more robust economy. With the push towards cashless transactions, even the remotest parts of India have seen increased accessibility to banking services.

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 ...

Cashless payments improve overall efficiency and reduce operational costs in a business. These types of payments are faster to process as customer service teams don't need to handle, count, or bank physical cash, and all accounting can be stored and completed digitally.

In addition to simply eliminating the costs and hassles of managing currency, going cashless may also reduce certain types of crime. The downsides of going cashless include less privacy, greater exposure to hacking, technological dependency, magnifying economic inequality, and more.

Findings This article discusses numerous negative effects to adopting a cashless economic policy, to include the proliferation of underground financing through the hawala system and organized criminal channels, the increased use of bitcoin, the more difficult task of tracking currency through bank reporting ...

A cashless society would rely on a complex network of digital systems, which would be vulnerable to cyberattacks. If these systems were hacked, it could have a devastating impact on the economy. Privacy is the third challenge raised. Cash can be exchanged anonymously, leaving no digital trail.

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.

2.1 Concept of Cashless Policy

This system increases convenience, create more service options, reduces risk of cash- related crimes and provide cheaper access to banking services and access to credit (Yaqub et al., 2013).

Why Eliminate Cash? Cash can be used in criminal activities such as money laundering and tax evasion because it is difficult to trace. Digital transactions or electronic money create an audit trail for law enforcement and financial institutions and can aid governments in economic policymaking.

Is America going cashless? ›

Summary: Americans are using cash less frequently and making payments more often by credit card or through payment apps. Yet, many CFI customers still like having cash as an option.

The cashless effect describes our tendency to be more willing to pay when there is no physical money involved in a transaction. It means that we are more likely to purchase something on a credit card than if we have to pay for it with cash.

Just fill in our quick form. 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.

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.

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.

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.