Topic has been discussed in various posts with different topics and figured it might be interesting to discuss in a specific post. Below is a simple overview with some points I don't agree with, and others missing. https://www.thebalancemoney.com/pros-and-cons-of-moving-to-a-cashless-society-4160702 The Pros and Cons of a Cashless Society What do we gain and lose when cash is no longer king? BY JUSTIN PRITCHARD Updated April 19, 2022 REVIEWED BY KHADIJA KHARTIT FACT CHECKED BY KATIE TURNER A cashless society might sound like something out of science fiction, but it's on its way. Many present-day financial practices and transactions already happen without cash, and many financial institutions, service companies, and even governments are proponents of the shift. What Is a Cashless Society? A cashless society is one where cash—paper and coin currency—isn't used for financial transactions. Instead, all transactions are electronic, using debit or credit cards or payment services like PayPal, Zelle, Venmo, and Apple Pay. Many countries are moving in this direction, but it's difficult to tell which ones will eliminate cash altogether. In addition to logistical challenges, several social issues need to be addressed before a society can give up on cash entirely. The benefits and disadvantages below can give you an idea of the myriad of effects going cashless can have on money and banking as you know it. Benefits of a Cashless Society Those with the technological ability to take advantage of a cashless society will likely find that it's more convenient. As long as you have your card or phone, you have instantaneous access to all your cash holdings. Convenience isn't the only benefit. Here are some other benefits. Lower Crime Rates Carrying cash makes you an easy target for criminals. Once the money is taken from your wallet and put into a criminal's wallet, it'll be difficult to track that cash or prove that it's yours. One study by American and German researchers found that crime in Missouri dropped by 9.8% as the state replaced cash welfare benefits with Electronic Benefit Transfer (EBT) cards.3 Automatic Paper Trails Similarly, financial crime should also dry up in a cashless society. Illegal transactions, such as illegal gambling or drug operations, typically use cash so that there isn't a record of the transaction and the money is easier to launder. Money laundering becomes much harder if the source of funds is always clearly identifiable. It is harder to hide income and evade taxes when there's a record of every payment you receive. Cash Management Costs Money Going cashless isn't just convenient. It costs money to print bills and mint coins.45 Businesses need to store the money, get more when they run out, deposit cash when they have too much on hand, and in some cases, hire companies to transport cash safely. Banks hire large security teams to protect branches against physical bank robberies. Spending time and resources moving money around and protecting large sums of cash could become a thing of the past in a cashless future. International Payments Become Much Easier When you travel, you may need to exchange your dollars for local currency. However, if you're traveling in a country that accepts cashless transactions, you don't need to worry about how much of the local currency you'll need to withdraw. Instead, your mobile device handles everything for you. Disadvantages of a Cash-Free World Depending on your perspective, going cashless might be more problematic than beneficial. Here are some of the major downsides associated with a cashless financial system. Digital Transactions Sacrifice Privacy Electronic payments aren't as private as cash payments. You might trust the organizations that handle your data, and you might have nothing to hide. However, the more information you have floating around online, the more likely it is to wind up in malicious hands.6 Cash allows you to spend money and receive funds anonymously. Cashless Transactions Are Exposed to Hacking Risks Hackers are the bank robbers and muggers of the electronic world. In a cashless society, you're more exposed to hackers. If you are targeted and somebody drains your account, you may not have any alternative ways to spend money. Even if you're protected under federal law, it will still be inconvenient to restore your financial standing after a breach.7 Technology Problems Could Impact Your Access to Funds Glitches, outages, and innocent mistakes can also cause problems, leaving you unable to buy things when you need to. Likewise, merchants have no way to accept payments when systems malfunction. Even something as simple as a dead phone battery could leave you "penniless," in a sense. Economic Inequality Could Become Exacerbated Unless special outreach efforts are made, the poor and unbanked will likely have an even harder time in a cashless society. If smartphone purchases become the standard way to transact, for example, those who can't afford smartphones will be left behind. The UK is experimenting with contactless ways to donate to charities and homeless individuals, but these efforts may not be developed enough yet to substitute cash donations.89 Payment Providers Could Charge Fees If society is forced to choose from just a few payment methods, or if one app becomes the standard payment app, the companies who develop these services might not offer them for free. Payment processors may cash in on the high volumes by imposing fees, which would eliminate the savings that should come from less cash handling.10 The Temptation To Overspend May Increase When you spend with cash, you recognize the financial impact by physically taking the cash out of your pocket and giving it to someone else. With electronic payments, on the other hand, it's easy to swipe, tap, or click without noticing how much you spend. Consumers may have to rethink the ways they manage their spending. Negative Interest Rates Could Be Passed Onto Customers Whe all money is electronic, negative interest rates could have a more direct effect on consumers. Counties like Denmark, Japan, and Switzerland have alreay experimented with negative According to the International Monetary Fund, negative interest rates reduce bank profitability, and banks could be tempted to hike fees on customers to make up that deficit. Banks are limited in their ability to pass on those costs because customers can simply withdraw their cash from the bank if they don't like the fees.12 In the future, if customers can't withdraw cash from the bank, they may have to accept any additional fees. What Does a Cashless Society Look Like? Without cash, payments happen electronically. Instead of using paper and coins to exchange value, you authorize a transfer of funds from a bank account to another person or business. The logistics are still developing, but there are some hints as to how a cashless society might evolve. Credit and debit cards: Cards are among the most popular cash alternatives in use today, but cards alone might not be enough to support a 100% cashless society. Mobile devices could become a primary tool for payments instead. Electronic payment apps: Apps like Zelle, PayPal, and Venmo are helpful for person-to-person payments (P2P payments). In addition, bill-splitting apps allow friends to split their bills easily and fairly. Fintech companies like Stripe, Adyen, and Fiserv support business-to-consumer (B2C), business-to-business (B2B), or what they now merge into account-to-account (A2A) online payments in a reliable and speedy fashion. Mobile payment services: These services, along with mobile wallets like Apple Pay, provide secure, cash-free payments. Many nations that use cash sparingly have already seen mobile devices become common tools for payments. Virtual currencies: Cryptocurrency is already part of the discussion. Crypto is used for money transfers, and it introduces competition and innovation that may help keep costs low. However, there are risks and regulatory hurdles that make cryptocurrencies impractical for most consumers, so they might not yet be ready for widespread use.13 Examples of Cashless Societies Several nations are already making moves to eliminate cash, with the push coming from both consumers and government bodies. Sweden and India are two notable examples with two different outcomes. Sweden It's not uncommon to see signs that say, "No Cash Accepted" in Swedish shops. According to the European Payments Council, cash transactions accounted for just 1% of Sweden's GDP in 2019, and cash withdrawals have been steadily declining by about 10% per year.2 Consumers are mostly happy with this situation, but those who struggle to keep up with technological developments continue to rely on cash. Sweden is gearing up to become the first cashless nation in the world, with an economy 100% digital by 2023.14 India The Indian government banned 500 and 1,000 rupee notes in November 2016 in an effort to catch criminals and those working in the informal economy. The implementation was controversial, in part, because these notes made up 86% of currency in circulation.15 However, criminals weren't punished for hoarding untraceable cash, which had been the intent of the move. The Economic Times cited the Reserve Bank of India as it reported that electronic transactions had increased temporarily, but cash returned to pre-demonetization levels by the end of 2017.16
In Japan, cash is still preferred. Change is returned in a tray. We have to give up something in order to gain the convenience of going cashless. We lose control and being controlled. In authoritarian countries, the choice of what to purchase maybe taken away in cashless transaction.
You forgot the most important thing from the list of disadvantages: If the authorities say you have to take this clearly lethal injection or jump off the cliff and you don't obey they can close your access to your money just by one simple mouse click. There is no more free will or choice you are just forced to do everything the elite wants you to do. They have a 100% control on you. So the "cashless" economy is a very dangerous thing for your freedom. At least there should be legal digital currencies which can be used without any control and acceptance from your authorities. It must be under your full control what you wan't to do and when with the money you own.
Plenty of reasons and excuses from governments and banks to track, tax and charge a commission on our money. Plenty of small business will disappear... And governments are ok with that. I used to go cashless 15 years ago... Today I carry cash and try to use it whenever I shop in any independent small business. This is how much I respect governments and taxes. Cashless is, in my opinion, stupid and manipulative. Small business suffer just from the lack of cash flow. Forget the governments raising vat and taxes to infinity.
Yup. It's the perfect method to trace an individual. Once the system is 95%+ electronic, the governments effectively have full control of all money flow. Then again they do crazy stuff with cash too, look at the US police cash seizures from vehicles, it's just legalised theft. You can do anything as the government if you pretend it's to catch criminals.
Based upon the responses that I've seen in this thread and many others on this site over the years, it seems like the argument really isn't "cash or cashless" because we never hear anyone who is in favor of cash say, "I just love carrying heavy bags of coins and stacks of bills around". Instead, their main bias towards cash always points towards a desire for privacy as it relates to government oversight, intervention and taxation. Privacy is one of the primary reasons that cryptocurrencies were created and continue to be developed and refined on a daily basis. Some are more private than others for sure. Whether its paper cash, metal coins, paper checks, electronic bank payments, cryptocurrencies, etc., they all are really the same thing, which are tokens representing the value of a certain amount of an agreed-upon currency, which for the sake of argument, is most often the U.S. Dollar. All of the tokens mentioned above have their advantages and disadvantages, but I think the writing on the wall is clear moving forward. Just like we created pure digital versions of documents, photos, news, videos, education, and music, there's no doubt that we are moving towards the pure digitization of money. So moving forward, the question won't be cash vs. cashless because cash is clearly on the way out with each passing day. The question will be "which digital token or payment method best represents my preferences"? For some whose preferences are speed and underlying price stability while still using the traditional banking system, that might be a service like existing Credit/Debit card payments, Venmo, Paypal, Zelle, Cash App, or even a stablecoin like USDC (once they are regulated, which they will be soon). For those that want to keep the banking system out of it for the most part, their choice may be a fast peer-to-peer transfer using a cryptocurrency such Bitcoin (over the lighting network), Litecoin, ETH, SOL, etc. For those that are privacy-focused, their choice will be something like Monero, Zcash, etc. And it goes without saying that all the new token transfers will take place via Phones, Tablets, computers, in-person merchant terminals, etc.
I'm a firm believer that cashless economies are around the corner, at least in Europe within 10 years and North America not long after. Smart government people are paying close attention to BTC and crypto in general, for technical weaknesses they can remedy when building a European dematerialized currency. While the unification process has made leaps and bounds over the last 50 years, Europe isn't as integrated as the US federation of states, for example. Big corporations and bad players are still able to find loopholes to beat any one nation rule that another nation or competing business may be more lenient with. European politicians are eager to clamp down on money laundering from criminal and non criminal activities and the total digital trail of a cashless economy is their way of reaching that goal. Unlike Americans and their paranoia of government, European citizens are generally trusting of their ecosystem and comfortable with the notion that freedom isn't absolute, that living in society means living with rules. For example, I think most European would agree that preventing money laundering is worth an additional government oversight if in return they benefit from the intrusion. For European governments, their ability to transition smoothly to a cashless economy will depend on their ability to demonstrate the benefits to their constituents, which I think are many. With full visibility over transactions, governments should be able to track capital flights and dark money easily, which in return should increase tax and penalty revenues. In return, governments could lower the various tax rates. They could also limit oversight to minimum amounts to allow some grey commercial flexibility. The handyman can do a small job of €100 without triggering a tax charge. This leads me to another benefit of a cashless economy. Sales taxes and income taxes can be combined into a single tax taken at the source of transactions. It's the principle of volume business. Tax X% of all transactions over €X and do away with sales and income tax. Of course, a digital currency removes the not negligeable cost of printing and safekeeping currency which can go to another state expense. On the unintended consequences, dark money could move to countries that keep paper currency and revitalize those economies as money flows to businesses and properties there. African countries may suddenly experience an economic boom!
Why would an average European care about "dark money"? Is it his or her primary concern when going shopping?