Everywhere you go, you can see the world is rapidly becoming more of a cashless society. We can pay for virtually anything on our phones or using our cards, and there are very few transactions that require cash anymore.
Of course, a lot of people still like the choice but it seems inevitable that we will switch to cashless at some point. What sort of impact will this have on the economy? Will it impact GDP? You should read this guide on What is GDP? to understand this better. What are some of the other economic impacts of not having cash to trade with?
More tax money raised.
Tax evasion is a big problem. People dealing in cash makes it harder to track when they are not paying their taxes. On top of that, those involved in criminal activities tend to deal exclusively in cash, as the paper trail created by banking can make it easier to track them.
If more money has to be spent and tracked in a legitimate way, and transactions can’t be anonymously hidden by using cash, then it stands to reason that there will be a lot more tax money raised. This should have an impact on the economy in general, improving public services and education, and boosting the money that can be invested by a particular country. Taxation is key to most economies and when used responsibly, tax money can help a country to grow.
Better international transfers and relations
We’ve already seen in many ways how much easier it is to move money around in the modern age. We can use our phones to transfer cash, and there tends to be wave after wave of updates with new privacy technology and new ways to transfer money or use Apple Pay or Google Pay.
All of this has already made it much simpler to move money around internationally and we expect this to continue. This may make it easier for companies to do business in certain regions and trade more freely.
Going cashless only impacts this indirectly, of course, but the same infrastructure will likely be used for a lot of different transfers all over the globe, and it will be easier to verify where money is going.
Charities need more support
This is one area in which some innovation and consideration may still be required. Think of the most popular ways to give to charities, and cash is still king in this scenario. Often, small charities in particular rely on things like donation boxes to raise money. This method of collecting is going to become harder.
It is important that there are ways for these charities to continue raising money – they still play a vital role in society and it may end up creating problems that need to be solved by governments if this gap in funding is not fixed. Inventive ideas for giving to charity in a cashless society are crucial.
Other ways that cashless societies will change
There are other ways in which a cashless society will make a big difference to the way we all operate:
Less crime. It is possible that fewer people carrying cash will mean that there simply aren’t as many targets for crime. Less crime may be reported as a result.
There will be more of a paper trail. This may mean less privacy, but it should also reduce the opportunities for fraud. If we’re not using cash then every single transfer of money will probably be tracked in some way – even crypto uses tokens to track money changing hands.
There is the chance for cybercrime or other issues. This is not exactly the most likely thing to happen, but there is always a chance that banks, and other financial companies could be hacked or that their systems could be compromised. This means that there is a risk to go along with the benefits of going cashless in society.
Summary
It is hard to imagine the exact impact that going cashless will have on the economy. There is still not one single country in the world that is completely cashless, and this seems unlikely to change soon, even though some countries now say 95% or even more of their transactions take place using a card or other cashless method.
In theory, a higher level of taxation income, and more convenience and safety for everyone will be the outcomes of going cashless, and managing your money should continue to become much simpler as time goes on and we move away from paper money.