Money Matters
Cashless Society: here are the challenges
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re-dating the onset of Covid 19, a number of countries made the move toward achieving a cashless society. Subsequent to the pandemic, many consumers have made their desire to move toward contactless transactions known, and the banking industry has responded. Despite offering a variety of payment options in addition to debit and credit card facilities, which is undoubtedly an advance, there are some who are concerned that the customer is losing the option to use cash to transact.
possibly not as secure as they would expect. Digital transactions leave a footprint, whereas cash is anonymous. Many suppliers and financial institutions use the purchasing behaviour to market to the consumers. The nett result is that consumers may open themselves up to fraud by limiting their transactions to the digital space alone. During the pandemic, most consumers opted to purchase online and to transact digitally; data-breaches correspondingly escalated.
Resilience and system vulnerabilities Many South African establishments, especially restaurants, have moved to a cashless environment. This move is primarily used as a defence against crime. Countries like Sweden, who don’t have the high crime risk, have led the drive to move to a cashless environment but are now experiencing pushback from their consumers who still believe that cash has an important place in society. The concern by consumers in the move a cashless society is not baseless. There are several challenges or issues that need to be addressed before an entirely cashless society is completely feasible: The following are the key challenges that need to be considered:
Innovative digital technology infringes on security and privacy Consumers are becoming more aware of cybersecurity breaches and have come to realise that their personal information is
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Natural disasters and war have a negative effect on cashless systems and this in turn affects financial services negatively. If telecommunications go down for whatever reason, cashless transactions are disabled and consumers need to rely on cash. Whilst every effort is made to keep the systems up, 100% uptime cannot be guaranteed as this is dependent on infrastructure that can be destroyed or disabled.
Tracking spending Budgeting is part of everyday life; cash has the clear advantage here helping customers to monitor and adhere to their set budget. When a customer physically pays with cash, they are more cognisant of the cost of items and their balances. Digital payments allow for a disconnect between spending and monitoring and thus allow clients to overspend more easily. This disconnect means that some
consumers are prone to overspending and more likely to rely on an overdraft or credit card to bridge the gap till the end of the month.
Consumers resist change Many consumers are reluctant to change the way they pay, especially older generations. There is a sense of mistrust in new forms of transacting with many being wary of the new technology and are simply not comfortable or tech-savvy enough to try. Less affluent people also baulk as the new technology usually needs an app to be downloaded and they may not have the means to pay for the additional data required to do so.
Loss of control The old adage that cash is king still applies today. There is a sense of security in having cash in your wallet; as mentioned, banking technology can sometimes go offline and having the means to pay and not be dependent on a system is still considered astute. Transacting digitally makes consumers feel that they are out of control with their finances. The majority of people will still opt for a card transaction or cash and usually a combination of both; a cashless society is still a while ahead of us. There may come a time where cash, banking platforms, ATMs and alternative cashless applications are amalgamated into point of sales systems so that clients are at liberty to choose the method that they prefer and feel most at ease with; however, doing away with cash in its entirety is long way off. � my office magazine
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