Essay on Cashless Economy

Introduction:

A cashless economy isn’t one where no cash changes hands. Rather, it includes exchanging cash by means of advanced and electronic techniques. In a cashless economy, most of the payments are made using digital modes which do not require cash to be present physically. A cashless economy is the trend of the day and many individuals have now switched over to having most of the transactions online.

History:

A cashless economy is a new concept having being introduced in the 1990s. However, the barter system of earlier times is often referred to as primitive means of a cashless economy when people did not have specific currencies.

Merits of Cashless Economy:

There are many advantages of a cashless economy. First and foremost you need not carry cash all the time with you. At one point it is convenient to just carry a card or an app in your mobile while in the end, it protects you from chances of theft.

Another advantage is that it helps in curbing the black money as the transactions are done electronically and are on record. It makes it easier for the government to monitor transactions where huge sums of money exchange hands.

A cashless economy is more convenient to use. You need not go to the bank and stand in queues to transfer money. Moreover, electronic transactions can be done anywhere, anytime. This reduces the dependency on the banks and makes the payments faster.

The cashless economy has certain advantages for the government as well. Since the cash remains with banks in electronic transactions, there are fewer chances of a cash deficit for the government. Moreover, since the transactions are recorded, it increases in the tax revenue generations as well. This increased revenue is helpful for the government in using it for different policies intended for the betterment of the people.

Additionally, electronic payments ensure that people do not use counterfeit currencies. This reduces the chances of the economy being affected due to the circulation of large fake currencies. This, in turn, helps in the prevention of terrorism as well as most terrorist activities are based on physical cash and counterfeit currencies.

Also, the need for large denomination currencies does not arise if the people switch to electronic payments in large transactions. For the small transaction, coins and smaller currency notes serve the purpose. This reduces the burden on the government to print new currencies.

Demerits of Cashless Economy:

There is the other side of the cashless economy as well. A cashless economy can only be possible if there is proper internet connectivity in the region. This is the basic requirement for any electronic transaction. Given the situation in countries such as India, not all areas have proper internet connectivity. This makes it impossible for the people living in such areas to depend on electronic transactions.

Another disadvantage of cashless economy is that not too many people in India are educated enough to understand the working of an electronic transaction. In fact, many people still do not have bank accounts. However, this situation has improved after the implementation of Jan Dhan Yojna by the government. Still, the concern for lack of information remains. This makes such people vulnerable to cyber-attacks and increases their chances of losing money to e-theft.

Another major disadvantage of this system is the reluctance of people to keep money in the banks. Even today, many people believe in keeping cash with them rather than using a debit or a credit card. It is difficult to make such people understand that electronic payments are in fact safer than physical payment methods.

Another disadvantage is that since physical cash does not change hands, people don’t realise how much they have actually spent in a day. Often this leads to budgetary issues for the people by the end of the month.

Conclusion:

There are advantages as well as disadvantages of a cashless economy. However, with the introduction of safer methods and stricter rules by the government, it is definitely the most sought option as of now. Cashless economy increases the speed at which the money is transferred from one person to another. Moreover, it provides transparency in the transactions as well.

On the other side, it is important for the individuals to follow the security procedures in place such as not sharing the card details with anyone. This is important to ensure no illegal transactions take place and the money remains safe.

On the government’s side, it is important for the government to address the issues related to achieving a proper cashless economy by providing financial education to the people along with better internet services. A cashless economy is definitely an integral part of our financial system now and is here to stay.