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Cashless Economy : Boon or Bane – An Essay
A cashless economy describe an economic state whereby financial transactions are not conducted through money in the form of paper currency which includes physical banknotes or coins, but rather through the transfer of digital information using cards and digital gadgets. Traditional currency are replaced by electronic representation of money where the transactions are done digitally with the help of debit cards, credit cards, mobile banking, internet banking, card swipe at point of sales (POS) machines and digital wallets like Paytm, Phonepe etc. The utmost digitalization has affected every person and as a result India is moving towards cashless economy in order to minimise the dependency on paper currency.
Looking at the brighter side there are various advantages of going cashless and the most significant ones are that people are neither required to carry bulky wallets in their pockets nor there is any need to be kept waiting in the long queues of banks for withdrawing money. The smartphones today have e-wallets processed in them which can be used for making payments electronically. Importance of using smartphones for adopting cashless economy in the country can never be ignored as India is the second largest market for Smartphone buyers in the world. On the other hand credit cards and debit cards reduces our need to depend on paper currency by aiding us to withdraw cash through our nearby ATM machines and also making the payment system easier either online through digital gateways or offline at any vendor shopkeeper using POS devices. The cashless economy has the potential to make digital transactions quiker and seamless regardless of the location to anyone at anytime within a period of few seconds. Digital payments allows for full traceability of transactions thus making it easier to track black money, tax evasion, terrorist funding, money laundering, corruption and many other financial crimes. Going cashless also helps in reducing the cost of maintaining the circulation of paper currency and allowing the government to have better control over the flow of money when the time of crisis intervenes in order to implement damage control initiatives.
The major drawback of adopting cashless economy is that illiterate people do not know how to make digital transactions correctly even though they know how to use smartphones. Since the knowledge of digital transaction is not common among people and is limited to Urban centres mostly, makes it difficult to implement cashless modes. The poverty and illiteracy are some of the factors behind people facing difficulty to use these technologies. Also on the other end as we all know that every technology has its pros and cons and no system on internet is completely secure, hence the risk which is involved in digital transaction is lofty because the rising cyber frauds and hacking of bank accounts is common these days. Additionally one of the added burden upon people is that with the use of cards and internet banking transaction charges are attached on them, which is also putting a hindrance to people for adopting cashless mode of payments.
It appears to be a chicken and egg situation, where benefits of going cashless will only be realised if mass adaptation of digital transactions are achieved. Any government before adopting this model of cashless economy should properly analyse and evaluate its merits and demerits carefully and also give priority in providing a secure platform for digital transactions. Spreading financial literacy and awareness about digital mode of payments among illiterate people is supremely important in the rural regions of India to make cashless economy a reality and achieve financial inclusion.