A cashless society has long been envisioned by science fiction writers, futurists, economists, banks and governments, to name but a few. It’s a view of a world where there are no bank notes or coins, and all monetary transactions are digital.

So how close are we to this idealized world? Is it actually possible? And do we really want it?

Banks, corporations and governments certainly want it. A lot of businesses want it, and a lot of people want it. But not everyone wants it. And some people really want it, but can’t have it. 

Let’s first look at just a few reasons why certain groups want to move to a cashless world.

Why do governments want a cashless society?

    • Cash costs money. 
      • It costs money to make it.
      • It costs money to design it. 
      • It costs money to implement anti-counterfeit measures.
      • It costs money to keep records of it.
      • It costs money to physically house and secure it.
      • And of course it costs money to destroy it when the notes become dilapidated.
  • They want tax.
      • Cash transactions make it much easier to understate incomes and lower tax liability.
      • Cash transactions can also go undetected and evade tax completely.
  • They want to reduce crime.
      • Less cash means less cash related crime,such as robberies, cash in transit heists and muggings.
      • Crime and terror syndicates rely on cash to remain undetected, including sending cash out of the country.
  • They want to eliminate cash hoarding.
    • Cash hoarding takes money out of the financial system, which can trigger market panic.
    • In severe cases this can cause recession.

Why do banks want a cashless society?

  • Cash is expensive to handle in the bank as it requires resources and time.
      • Tellers need to inspect and sort the cash before it gets placed in the counting machines.
      • Staff are needed to physically move the cash from the teller to the vault, processing and wherever else.
      • Cash needs physical storage space and high security.
  • ATMs are expensive.
      • ATM machines are costly to buy and install, and require maintenance and security.
      • Cash has to be transported to and from ATMs, meaning logistics and security.
      • ATMs are prime targets for crime.
    • Cash is dirty and becomes decrepit.
      • We know cash is filthy and can spread germs and viruses.
      • Cash notes become worn out and unusable and need to be replaced by the central bank.
  • Digital transactions are easier to trace.
  • There are more opportunities for fees and charges with cashless services


Why do businesses want a cashless society?

  • Cash means security measures.
      • Cash requires security measures and is a high target for crime.
      • Cash requires secure transport to the bank.
      • There are very few fraud protection options for cash transactions.
  • Cash is expensive.
      • Bank charges on cash deposits and withdrawals are substantial.
      • Insurance on cash businesses can be very expensive, if even available.
  • Cash is vulnerable to human error.
      • Cash can be miscounted, either incoming or given as change.
      • Counterfeit notes may not be spotted at time of transaction. 
      • Cash can be physically misplaced or lost.
  • Cash takes time.
      • Cash takes more time at the point of sale than cashless options.
      • Reconciling the cash register at the end of business takes time and effort.
      • Cash takes longer to appear in your bank account, impacting cash-flow.
  • Customers who pay cash are less likely to impulse buy as they may not have the physical cash for additional purchases.


Why do consumers want a cashless society?

  • Cash is a security risk.
      • Cash is vulnerable to theft, including violent crime.
      • Cash can be lost or misplaced.
      • Your cash could be counterfeit and you may not know until it is too late.
  • Cash is inconvenient. 
      • Cash transactions in the bank or at the ATM take time and require a physical presence.
      • Cash transactions in shops or businesses take more time than cashless transactions.
      • Cash is bulky.
      • Cash deposits take longer to reflect on your bank account.
      • Cash is dirty.
  • Cash is expensive.
      • Bank fees and charges on cash transactions such as deposits and withdrawals are expensive.
  • Cash is limiting.
      • You may not have enough cash to cover additional purchases that may arise in the store, or unexpected price increases.
      • You may not have enough cash to cover an emergency spend. 
      • You are mostly restricted to brick and mortar stores, and are excluded from online shopping.
      • You are restricted to purchasing from vendors who accept cash, and many do not anymore. 
  • Cash does not improve your credit score.
  • Reward schemes are mostly not available on cash transactions.
  • Your cash can literally become worthless if you hoard out of date notes or coins once they become withdrawn from circulation and are not exchanged timeously.

So those are just a few reasons why there is a push for cashlessness. And some parts of the world are certainly getting closer, and we will talk about those more in a forthcoming article.

But it’s not a straight line to this cashless future, by any means. Governments, big business and the banking sector have the drive and the resources to achieve their goals, but what about smaller business and consumers? 

There are a lot of disadvantages at this point in time in being truly cashless, for both smaller businesses and consumers alike. Here are just a few small examples. 

Disadvantages of true cashlessness for businesses:

  • You exclude potential customers who only transact in cash.
  • You may be subject to exorbitant fees and charges from banks and financial institutions.
  • You may not be able to trade at all if your payment system crashes or you lose power and cannot accept electronic payments.
  • You are vulnerable to cyber crime.
  • It may not be legally possible to move away from cash, depending on where you are based. For example, the city of Philadelphia was the first major US city to ban cashless businesses in 2019. 
  • You may be in an industry that is considered high risk by financial institutions and therefore they will not provide financial services to you.

Disadvantages of true cashlessness for consumers:

  • Privacy is a real concern for many individuals, and that does not imply that they have devious intentions. 
  • Access to technology and technical literacy is required and there are many vulnerable individuals in this area, including the elderly and impoverished.
  • Personal information may be vulnerable to data breaches.
  • There is a risk of being a target of cyber crime.
  • There is a risk of overspending and racking up debt.
  • Technical issues can cause the inability to transact at all.
  • If there is a problem with your bank you have no alternative means of transacting if you have no cash.
  • You may have had previous financial issues and are now excluded from certain financial products.
  • You may not legally be able to have a bank account, depending on your circumstances and where you live. For example local legislation may require you to have a fixed address in order to open a bank account, that would exclude the homeless and migrant individuals, for example.  

So as you can see, while a cashless world may be a good idea in theory, we are a very long way away from it.

At Baer’s Crest  we understand the pros and cons of moving towards this cashless far-future. We have payment solutions for businesses and their customers who want to transact safely and securely, without the obstacles that they have previously encountered. Talk to us about the right options for your business.