Rome was not built within a day. A cashless society won’t be realized overnight. It takes relentless, incremental and piecemeal progress to make that happen. India is getting to a tipping point where “cashless society” is no more considered to be a science fiction and is more of an inevitable means to thwart corruption, terrorism, money laundering, counterfeiting, tax evading, drug peddling, human trafficking, gambling etc. We need to consign cash to history, slowly and systematically.
Cash dominated economy mothers black economy. In the book “The Abolition of Cash”, author David Warwick animadverted that black market drains $660 billion from US economy, annually. According to a BBC Report, the global average growth of cash usage is 7% per year. This growth is alarming and poses bigger challenge to carry out cashless measures. Cash is still the king and is still superseding card transactions. In the same report, it is further mentioned that in 2012, there were 2.7 billion card payments, but an estimated 3.5 to four billion payments were made with cash.
The demise of cash is almost certain and the world is slowly moving in that direction. The UN has extended its wholehearted support to make cashless society a reality. It further recommends its member nations to go cashless. The UN Capital Development Fund through its ‘Better Than Cash Alliance’ (BTCA) aims to segue into cashless mode universally as a part of financial inclusion by making use of mobile phones and cards. The BTCA is financially supported by the Bill & Melinda Gates Foundation(US$3,000,000), USAID (US$3,000,000), VISA (US$3,000,000), Ford Foundation (US$1,500,000), Citigroup (US$1,500,000), UK’s The Department for International Development (US$ 250,000) and Ebay’s Omidyar Network(US$1,500,000). The BTCA uses the technical expertise and suggestions from the leadership of the donor organizations in their programs to replace the use of cash with payment streams. The involvement of such entities might give rise to the suspicion of their vested interests in the outcome.
India has joined UN’s ‘Better Than Cash Alliance’ by announcing its flagship financial inclusion programme Pradhan Mantri Jan-Dhan Yojana (PMJDY). So far 25.98 crore Jan Dhan bank accounts have been opened as of 14.12.2016, out of which 23.22% are zero balance accounts. Out of 25 crore accounts, 15.75 crore bank accounts are purely from rural belt. The amount that has been deposited in these 25 crore accounts exceeds Rs. 74 lakh crores. More than 20 crore Rupay cards have been issued so far, which is a gigantic step taken by Government of India to bring rural people and poor under cashless ambit.
The whole world is enthusiastically embracing cashless economy. A whopping 417 billion cashless transactions were made in 2014. The next step for India would be to formally ban large cash transactions like France, Spain, Italy and other countries in northern Europe are already doing. Given the perilous state of stagnating European economy, most European countries are transitioning themselves to a cashless society. Spain has banned cash transactions of more than 2,500 euros and France and Italy have both banned all cash transactions of more than 1,000 euros.
In Sweden, thousands of ATMs are being removed permanently and most banks of Sweden do not accept cash. 95% of the stores in Sweden have already gone cashless and a mere 2% of the Swedish economy is cash oriented.
Govt. of Denmark intends to eradicate cash by 2030.The Danish Chamber of Commerce is persuading Danish Government to let certain economic sectors the right to refuse cash.
According to Norway’s biggest bank DNB, 60% of Norwegian Cash flows out of Government’s jurisdiction. Therefore, DNB has publicly called for the complete elimination of all cash.
Half of all transactions are done electronically in Australia. According to Westpac Bank Research, Australia will be a fully cashless society by 2022.
According to a CNBC report , 86% of Belgians have access to debit cards and 93% of all their transactions are cashless. 69% of French have access to debit cards and 92% of all their transactions are cashless. 88% of Canadians have access to debit cards and 90% of all their transactions are cashless. 88% of British have access to debit cards and 89% of all their transactions are cashless. 96% of Swedish have access to debit cards and 89% of all their transactions are cashless. 79% of Australians have access to debit cards and 86% of all their transactions are cashless. 98% of Dutch have access to debit cards and 85% of all their transactions are cashless.
This trend is the harbinger of the end of cash as we know it and many other countries will follow their suit.
The truth is also that the governments will want to discourage its citizens from using cash. With each passing day, the financial regulations will become more rigid, restrictions will become tighter, physical money will become more exiguous before cash is entirely obliterated.
The need for the government to push everyone to use digital payment is to make them dependent on the banking system, perpetually. It is also a bamboozled move to bring back all the money into the banking system controlled by loansharking embezzlers. “Cashless Society” can also be a way of the government to gain full control of your finances.
Even in US, out of $US 1.4 trillion greenback is in circulation, each American has about $US 4,200 in cash mostly in hundred-dollar bills. Going cashless is a very bold move, but has a lot of risks. Government should address the risks, before going overboard over the ‘cashless’ agenda. Why should people keep cash in banks, when the interest rates go negative? Why should not they then hold on to their dear cash? In such cases, if money is not allowed to be kept, its pure robbery by banks.
Physical money can’t be hacked to nothing, infected by a virus, inflated by a mouse click etc. These things can happen with representative money. Government does not have a plan that addresses how folks on the periphery are supposed to live. How do you access your bank account, if you live under a bridge without power. God forbid there’s ever a power outage for any reason-all commerce would grind to a halt. This cashless drive can only be successful, as long as electricity and the internet hold up. Citizen’s obsequiousness towards government’s insidious initiatives can sometime backfire.
By bringing everyone onto digital economy, we are creating a monstrous system rife with more fraud and vulnerable to security breaches and disastrous glitches.
- What is the guarantee that there won’t be any bank bail-ins? In Cyprus, troubled banks removed funds from anyone who carried accounts of over 100,000 euros.
- Hackers can fiddle with your hard-earned money. 359,420,698 MySpace accounts , 34,842,089 Netease accounts ,164,611,595 LinkedIn accounts ,152,445,165 Adobe accounts,112,005,531 Badoo accounts , 91,436,280 Rambler accounts , 68,648,009 Dropbox accounts , 65,469,298 tumblr accounts have been hacked in the past.
- Wealth can eroded completely with a few key strokes
- Disgruntled and Crooked bank employees can copy, sell, fiddle with your data
- An electromagnetic pulse can wipe out your entire record.
- A virus can inflate, deflate, and wipe out your money.
- Digital footprints are hard to erase , even you want to erase them
- In a developing country like ours, where uninterrupted power supply is a pipe dream, going cashless does not suit our conditions.
Government cannot comb through your every single transaction to validate and provide protection. Reconciliation system is also not well evolved to protect you from transactional errors. Unless and until, these things are addressed, going cashless will always be a dream.