If you believe a cashless future isn’t possible, did you know certain countries already began transitioning to a cashless society? Sweden, for example, is frequently considered the most cash-free country in the world. According to the Swedish tourism authority, most bank branches don’t handle cash and most places don’t accept it.
But Sweden isn’t alone in its move toward cashless payments. Other governments, like India, Denmark, and Australia, have taken steps to reduce consumer usage of cash by eliminating small bills.
Like it or not, there are benefits in moving away from cash and towards more flexible, contactless payment options. But there are plenty of drawbacks too. And, it’s especially true for consumers who don’t rely on the traditional banking system.
Pros and Cons of a Cash-Free Society
— Less money laundering and tax evasion
— Fewer instances of violent crime and theft
— Consumers may find it easier to stick with a budget when they don’t have physical cash to spend
— Faster transaction times
— Access to contactless payments, which can stop the spread of contagious illnesses (coronavirus)
|— Every dollar you earn or spend is tracked|
— Would be a hardship for a large portion of society who is considered “unbanked”
— Potential for Fees
— Third parties are given control of your money
— Technology downtime
Advantages of a Cashless Society
If you’re using plastic and rely on technology to manage your money, you may not notice a significant change in your life if society stopped relying on cash. However, those who don’t use technology might find giving up cash makes everything significantly more manageable and less time-consuming. Other benefits include:
Reduction in Money Laundering and Tax Evasion
When every dollar is tracked through credit cards, debit cards, and other forms of technology, it’s difficult to launder money or avoid paying taxes on your income. Moving to a cashless society would instantly make fraud considerably more challenging to pull off.
According to the National Bureau of Economic Research, the move from cash-based welfare payments to cashless EBT payments led to a “substantial drop in street crime as measured by either reports or arrests” over the last few decades. It’s easy to believe the same principle will apply when fewer people have cash in their wallets to steal.
Potential for Better Budgeting and Money Management
While you can make a monthly budget with cash, doing so can be extremely burdensome since you’ll always need to carry cash around with you. Meanwhile, it’s hard to pay bills online with cash, so you’ll need to have a way to make payments online anyway.
With a cashless budgeting app, however, you have the potential to monitor each dollar you spend, and you’ll never have to carry a wad of cash around.
Paying with cash and accepting cash takes time and energy. You have to count up the exact dollar amount to pay for your purchase, and your cashier has to count the money, make change, and enter it all in their register.
With cashless transactions, on the other hand, you insert your card into a terminal and it’s all done for you.
Finally, don’t forget many retailers offer contactless payment options, meaning you don’t even have to touch the payment terminal to use your credit card. This can lead to much better hygiene when it comes to handling money since it’s been proven the cash is filthy and covered with microbes that harbor disease.
Disadvantages of a Cashless Society
Going cashless may seem great, but every significant societal change comes with its share of pros and cons. Besides the fact you couldn’t slip a $20 bill into a birthday card anymore, here are five disadvantages of a cash-free future:
Every Dollar is Tracked
The fact criminals will have a harder time hiding their transactions in a cashless world may serve as a relief, but that doesn’t mean you’re comfortable having all of your transactions tracked. Once you’re living in a cash-free society, a third party will have a record of every purchase you make. Even if you have nothing to hide, this is disconcerting to say the least.
Hardship for the Unbanked
A 2017 survey from the Federal Deposit Insurance Corporation (FDIC) showed 6.5 percent of U.S. households were “unbanked,” meaning they didn’t have a traditional checking or savings account. It’s easy to see how a cashless society would make it hard to pay bills, and it’s a shame since a large portion of the unbanked population is made up of marginalized groups.
Potential for More Fees
Using cash is free for every party involved. On the flip side, third party payment platforms can charge fees to consumers, and retailers have to pay fees to accept electronic payments. If society moved away from cash, it would be crucial for consumers to watch out for and minimize fees they might be charged to manage their money.
Third Parties Have Control
It’s easy to worry about a world where third parties have full control over every dollar in your possession. You may fear not having any cash makes Americans vulnerable to government control or third parties who might be inclined to drive up fees for each purchase we make.
Not only could a third-party have control, but technology doesn’t always work the way it’s supposed to. Yet a world without cash is one where we would all be dependent on technology to access our money.
Why You Should Consider Going Cash-Free
Regardless of the steps to move away from cash, and toward digital payments, you have the option to decide for yourself. While there’s nothing wrong with having cash in the house to use for tips or fun money, there are personal advantages that come with not using cash for regular purchases and bills.
While cash budgeting is still a “thing,” many people are finding technology makes managing their money faster and more seamless. Not carrying cash also reduces the chance you’ll be a victim of theft, and — let’s face it — carrying money around is a huge pain anyway.
At the end of the day, you may find there are more benefits to managing money with technology than you realize. Online apps and digital payments make it easier to budget alongside a partner or spouse, for example, and you may never have to revisit a brick and mortar bank.
How to Get Ahead without Cash
If you want to learn how to better manage your money and you don’t want to deal with bills and change, there are plenty of steps you can take right away. The following tips can help you get ahead with technology instead of dollars and cents:
- Sign up for Qube Money. A cashless envelope banking app can help you manage your money and reach your savings goals at a much faster pace. Qube Money offers the best of both worlds because you can set up digital envelopes called “qubes” that help you spend less in every area of your life. Qube Money is a cashless full-service banking platform that enables you to save for goals, pay down debt, pay bills, invest, and create a wealthier future. Try the free version of Qube Money (coming soon) or sign up for a lifetime membership today.
- Set limits and track your spending each month. Moving away from cash and toward digital payments makes it significantly easier to track your spending throughout the month. You won’t have to carry cash or write down your purchases. And you’ll never have to keep an envelope of receipts.
- Make your savings automatic. Another benefit of digital money management is the fact that you can set up automatic transfers or use roundup technology to fund savings or investment qubes/accounts.
- Enjoy the perks of digital banking. Finally, don’t forget how much easier digital banking can make your life. Features like online bill pay, mobile check deposit, direct deposit, payday two days early, high-yield savings accounts, subscription controls, automatic payments, and more, can easily save you a few hours per month.
The Bottom Line
Technology has changed the way we live. Especially when it comes to how we make purchases, pay our bills, and manage our money. Instead of being worried about a cashless society, consider embracing the benefits instead.
There’s much to be gained by using technology to smartly and effectively manage your money. And chances are, cash will always be around for those who need it.