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Is a Cashless Society as Beneficial as It Seems? Some Disadvantages Stand Out

The world is trending towards a cashless society benefits like convenience and theft protection are clear. However, concerns about overspending, digital fraud, and privacy issues with digital currency highlight potential drawbacks that need addressing before fully embracing a cashless future.

Is a Cashless Society as Beneficial as It Seems? Some Disadvantages Stand Out

The shift away from cash has been significantly influenced by the COVID-19 pandemic. Concerns over the cleanliness of cash discouraged its use, even though COVID-19 is not transmitted through dollar bills. Germophobic tendencies surged nationwide, and merchants installed plexiglass barriers at points of sale, further discouraging cash transactions. Additionally, the coin shortage of 2020 prompted many consumers to adopt digital payment methods, a behaviour that has since persisted.

Benefits of a Cashless Society

A cashless society offers several immediate advantages, but a closer examination reveals some drawbacks as well.

Convenience: Digital payments are undeniably convenient, allowing consumers to simply tap a card or smart device rather than count out cash and receive change. Additionally, digital payments often come with perks such as credit card rewards. However, this convenience can lead to overspending, with credit card debt on the rise.

Protection Against Theft: Merchants who accept only cards eliminate the risk of cash theft, as stolen cash is untraceable. Nevertheless, the digital realm is not immune to crime. Fraud on digital platforms, including numerous peer-to-peer (P2P) scams, is becoming increasingly sophisticated.

Curated Ads: The digital age has enabled marketers to tailor ads based on consumer preferences, targeting individuals with products they are likely to want. While this can be seen as convenient, it also encourages unnecessary spending, potentially increasing consumer debt.

Each digital transaction leaves a trail, providing valuable data to banks, retailers, and marketers. This data helps predict and influence consumer behaviour. Additionally, the federal government shows keen interest in this data.

Digital Currency

The Federal Reserve launched a centralised banking digital currency pilot program last year, with plans for expansion this year. This digital dollar allows the government to track consumer spending habits closely. The government could gain direct insights into various aspects of an individual's life, such as medical conditions, political donations, lifestyle choices, alcohol consumption, and other private behaviours. Smokers, among others, may find this particularly concerning.

This situation raises an essential question: what will be done with this information? Currently, no checks and balances exist for this newly developed digital currency.

Digital currency functions most efficiently in a fully digitised society. For instance, in the UAE, traffic fines are issued via SMS text messages. Police officers no longer pull over drivers; instead, they use AI to identify the driver and text a fine to the number registered to the vehicle.

While this seems efficient, it removes the human element. Consider a scenario where someone is speeding to reach the emergency room. Automated systems may lack the flexibility to account for such exceptions.

Law-abiding citizens might feel they have nothing to fear, adhering to the principle of "innocent until proven guilty." However, automated fines and temporary bank account holds in a digitised society may not always respect this principle. Some digital societies operate on "guilty until proven innocent."

The move towards a cashless society appears inevitable. However, it is crucial to establish consumer protections to ensure that the disadvantages do not outweigh the benefits.

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