Dangers of a Cashless Society & What Business Owners Need to Consider
Banks are closing ATM machines and even many of their branches throughout the western world, leaving many people concerned about the dangers of a cashless society. They’re attempting to persuade you to use their digital banking and payments infrastructure. Financial firms want everyone to be able to access and navigate the broader economy through their systems, just as Google wants everyone to be able to access and navigate the internet through its search engine. So what are the dangers of a cashless society, and what should small businesses consider?
Going Cashless Can Reduce Expenses
One incentive is to reduce expenses therefore increasing overall earnings. Even in non-COVID times, going cashless has advantages. Weighing the dangers and estimating how much you might save vs. lose by transitioning to a cash-free model can help you decide if it would benefit your small business.
Contactless sales climbed by 27% in March 2020, according to the Electronic Transaction Association.
The urge for cashless choices is growing as a result of customer preferences and the present pandemic. However by replacing cash with standardized self-service apps, financial institution executives can gain direct control and monitor all consumer interactions.
What Steps Are Corporations Taking?
Many large corporations are in favor of cashless transactions and have implemented something known as “nudging” in an effort to persuade their customers. If a powerful organization wants people to pick one thing over another, the greatest technique is to make the alternative difficult to choose.
Self-checkout at supermarkets are an excellent example of this. To save money, the underlying aim is to replace checkout people with self-service equipment. However, supermarkets must persuade their customers. As a result, they initially promote self-checkout as a convenient option. When some customers choose that option, the supermarket can point to it as proof of a shift in customer behavior, which they can then use to justify a reduction in checkout staff. As a result, using the checkout with personnel becomes more inconvenient, and customers are more likely to utilize the machines. They gradually wean you away from the wait staff and “nudge” you toward self-service.
Similarly, financial organizations are attempting to move us closer to a cashless society and digital banking. Banks aim to decrease expenses, while payment corporations like Visa and Mastercard want to expand the number of digital payments services they sell. There are two elements to the nudging. First, they must make cash, ATMs, and branches more inconvenient. Second, they must promote the alternative energetically. They want individuals to “learn” that they want digital before “choosing” it.
Some of the Disadvantages of a Cashless Society
The recent Visa meltdown, in which millions of consumers who had become reliant on digital payment found themselves stranded when the dominant payment network went down, certainly put those without cash at a temporary disadvantage, and shined light on what some of the dangers of a cashless society might be. Although digital systems are “convenient,” they frequently have primary points of failure. Cash, on the other hand, does not. It does not rely on external data centers and is not controlled or monitored remotely. The currency system allows for a “off the grid” environment that is unmonitored, private and some say more secure.
This is also why financial institutions and financial technology firms want to do away with it. Cash transactions are not caught in the net that such institutions use to collect fees and information.
A cashless world does pose some risks. People who do not have bank accounts will become even more marginalized, and cut off from the cash infrastructure that once sustained them. There are also psychological aspects to using cash to encourage self-control, unlike using a credit card or a mobile phone to encourage spending. A cashless society also has significant surveillance implications.
Recently the bad aspects of cash have been under a bright light, linking it to the spread of COVID-19, crime and tax evasion, but few mention the negative consequences of digital payments, and the dangers that small businesses and many individuals may face with a cashless society. Even if going cashless becomes inevitable, it’s good to prepare your business for the negatives as well as the positives that may occur with the transition.
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