A cashless system is one that switches the use of solid money with electronic and mobile money through the use of various technologies. The system has been around for years in the form of credit and debit cards, but it is gaining more ground with the introduction of mobile money and Bitcoin. There are several benefits that buyers and sellers can bet for embracing a cashless system, and some of the notable ones include the following.
It is Safer
In the past, the risk of transferring cash from one location to another used to be risky. There was never telling if someone was watching your movements, and this made it easy for people to be robbed while in transit. However, with mobile money and bitcoin, it will take more than being accosted for people to have access to your money. Most of the newer technologies have layers of security that range from special PINs, passwords, and authentication processes that involve phone verification service from the network provider. This has made it safer for people to transfer their cash from one point to another without having to worry about being attacked.
According to some studies conducted by various scientific organizations, it is estimated that a single $1 bill can have over 3000 different types of harmful microorganisms that are linked to all kinds of complications like pneumonia. Handling solid cash like that can be risky, and this is where a cashless economy comes in handy. You could go ages without ever touching any kind of money in your hand, conducting all your transactions through your smartphone seamlessly. That way, you protect yourself from unnecessary contact with dirty money that could put your health at risk.
It is Faster
Gone are the days where one had to wait for a cheque to clear for days before they could access money. People used to queue in banks to deposit and withdraw cash, and this used to waste a lot of their time, time that they could be using to do more meaningful things around them. With mobile money and bitcoin, the process takes place in split seconds. In online shopping, for example, once you have found the products you’re looking for, you simply pay the amount through your mobile phone or scan a simple code, and the money is wired to the buyer on the spot. This has accelerated the ease of doing business, making goods and services move much faster to the benefit of everyone involved.
The reason why many crime syndicates were able to stay off the radar of the authorities is the fact that they relied on cash transactions that are untraceable. It is very hard to keep tabs on a dollar bill because it can go through many hands in a single day. With mobile money and other electronic forms of payments, every money exchange and every purchase is recorded electronically and can be traced back to the people involved. This has been utilized in many countries to crack down on fraud and corruption as the trail can be presented in court as irrefutable evidence. Anything that appears abnormal can be flagged immediately and investigated on the spot.
A cashless system eliminates the middleman, making the ease of conducting business much easier and more efficient. In the past, interactions between a seller and a buyer, for example, had to go through another party that ranged from individuals and banks. But with mobile money being accessible to many people, even in the rural areas that had been neglected in the past, it is now easier for people to be connected, creating business opportunities where more people are getting empowered and self-reliant. The elimination of the idle man has reduced exploitation and made it much safer for buyers and sellers to forge a relationship that helps both parties grow.
Tax Evasion is Harder
With every cash use being traceable, this also gives the government the tools it needs to keep track of businesses and individuals that are involved in tax evasion. Although this works against small businesses, it is a good way for the government to increase its tax obligations. In the past, it used to be hard to tell how much people made since most insist on being paid in cash, giving them a loophole where they can declare less income. The UK, for instance, reported a massive loss of over $8 in revenues due to cash-in-hand payments that people have been engaging in every year.
With mobile money and bitcoin trading, keeping tabs on spending habits will be much easier, and the government can quickly zero in on the people that are trying to beat the system. The whole technology is far from being perfect, and there will always be people looking to game the system, but with time, this will become harder for them.
It Instills Discipline in Spending
Among the many features that the electronic form of cash handling brings to the table is the ability to see how you are spending. This insight is vital as it can help you identify the areas where you are wasting your money and help you streamline your budget with the ultimate aim of saving more money at the end of every month.
Some, like Mpesa from Kenya, come with apps that allow you to see where every dime has been utilized with a tailed summary of all your spending habits dating back 12 months. With information like this in your hands, it would be hard for you to blow money ever again, unlike in the past, where spending was not that controlled due to lack of the right information.
We are on the verge of switching fully to a cashless society. Many countries are already halfway there, and so far, the benefits that come with this system can be seen very clearly in the strides that businesses have made in the last five years. If you have been contemplating starting your own business, consider setting up electronic forms of payments to increase your chances of success.