Strides Toward a Cashless Society and its Implications

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Strides Toward a Cashless Society and its Implications

Haoran "Breezy" Zhu, Staff Writer

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The development of cryptocurrencies further illuminates for us the possibility of a cashless society. With access to the internet, pocket computers, and blockchain as the distributed ledger, transactions can occur without physical notes and coins. In less than 10 years, the Bitcoin-spearheaded IT revolution has already created a $500 billion industry. Now, governments and central banks in China, Ecuador, the Philippines, the U.K. and Canada intend to issue their own digital currency. However, Cryptocurrencies certainly are not the only way we are marching toward a cashless society.

Around the developing world, QR codes, outcompeting Apple Pay and other similar payment services for consumers and businesses, are keen to go cashless. In China, for example, a new payment model created by tech giants has revolutionized transactions in urban areas. When I went home during breaks over the past three years, I almost never used cash. Whenever purchasing goods or services, all I needed was my phone with WeChat, a Chinese multi-purpose messaging and social media app, installed and a bank account attached. Almost every store in Beijing has a QR code taped somewhere, and to make a purchase, I would simply scan it with my phone and enter the Yuan amount. It takes less than five seconds to complete a payment. A similar approach of QR code payment has also been adopted in Nigeria and India. Currently, a more ambitious step is being taken by a global payments consortium that includes MasterCard, Visa Inc., and the state-backed China UnionPay Co. that would extend China’s QR-payment standard globally. This would help ensure security in transactions flowing between banks and card companies.

Before we go cashless, implications should be considered. With the exception of decentralized cryptocurrencies, governments and banks will gain more power over individual privacy as transactions become more traceable. On the other hand, going cashless could help inhibit criminal activities and improve the accuracy of statistical indicators such as inflation and GDP. Money would also be much harder to hide from taxes. Another thing to note is the convenience a cashless society brings us, making transactions faster and cheaper. The poor would benefit from this by having the capability to pay bills or accept payments online without the need of a bank account. It is also interesting to see how we biologically will react to a cashless system. American cash is 75% cotton and 25% linen, making it extremely absorbent to a variety of bacteria, according to Chris Mason, a microbiologist at Cornell University. Reducing physical money may potentially make us healthier. Psychologically, loss aversion – or the sting of losing money – is much stronger than the satisfaction of gaining that same amount. This may affect us because, when we spend with cash, we see that money going away. If you don’t see this with a card or phone, this might prompt us to spend more.

These are the implications and inferences people made about a cashless future. As to whether it will truly benefit us, we’ll have to wait to find out.

Reference:

https://www.iol.co.za/business-report/opinion/opinion-technology-for-a-cashless-society-exists-when-will-it-start-13045262

https://www.bloomberg.com/view/articles/2016-01-31/bring-on-the-cashless-future

https://www.bloomberg.com/view/articles/2017-07-19/china-s-cashless-revolution

https://www.nasdaq.com/article/the-push-for-a-cashless-society-could-be-an-opportunity-for-bitcoin-cm605217

http://www.businessinsider.com/cashless-society-health-effects-2016-10

 

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