Technology has come a long way. Internet was just established in the 90s and now we're already talking about making the world cashless. But, are we ready yet? There are some pros and cons when it comes to a cashless society, and we're going to break it down in this article. But, before we get any further, let's take a look at what a cashless society is all about.
A cashless society is a world where cash no longer exists and every single payment is done digitally using the contactless payment system. The contactless payment itself was introduced in 2007 and has since garnered mainstream popularity because it pioneered a more simple and faster way of paying.
In its early stages, the contactless payment could only be made by waving or tapping either a card or smartphone over a reader, which then would accept the payment. But today, contactless payment can also be made using a human face. This has already become a trend in China.
The technology used in cards is similar but slightly different from the one used in smartphones. Contactless cards use radio frequency identification (RFID) technology. So basically, a chip that produces radio waves is planted inside the card. Then, an antenna is built to ensure a connection with a reader.
To make a payment, all you have to do is to place the contactless card near a contactless terminal. The terminal will then pick up the radio signal from the chip and transmit the data from the card to a card processing network like Mastercard or Visa. The network then proceeds to do a fraud analysis. If it's clear, a confirmation will be sent to the card issuer.
The card issuer then will confirm whether the card is stolen or not and whether it has sufficient funds. If all is clear, the card issuer will send a signal to the terminal to carry on the transaction. Your payment is approved and all of this process is done in just 2-3 seconds.
It works a little bit differently though if you use a smartphone or any other electronic device. Mobile phones use near-field communication (NFC) technology to conduct a contactless payment. NFC itself is a branch in the RFID technology family. Other than that, it works exactly the same.
Now that you understand what contactless payment is and how does it work, it's time to talk about the benefits and drawbacks of implementing it fully into our life. Let's begin with the positive side first.
Contactless payment speeds up the payment process. You won't waste any time counting your money or entering your pin number. You simply just tap-and-go. It means that in a cashless society, long queues in restaurants and stores will be non-existent.
2. Petty crimes will decrease
In a cashless society, pickpockets can't steal your money. Sure, they still can steal your other belongings. But, it will be much easier to catch than simply taking your coins. Also, drug dealers can't do business with a suitcase full of cash anymore. They have to transfer the money, which will be much easier for the police to track.
3. Exchanging Currency will be much easier
If you travel abroad a lot, then cashless society will be perfect for you. Every currency exchange will be able to be done digitally, saving you the hassle of going into the local bank and wait in a queue every time you visit another country.
With banknotes and coins, you can physically count the amount of money you have and limit yourself from overspending. The same thing cannot be said about contactless payment. The convenience of paying with cards and phones can cause a lot of people to overspend and blow up their budget.
2. Not everyone has access to contactless payment
One of the biggest critics of the cashless society concept is the fact that it can cause major social inequality. How can unbanked homeless people pay for their food? What about the older generation that doesn't understand the latest technology? Or those people who live in rural areas where banks are nowhere to be found?
3. Technology will never be perfect
No matter how hard we try, technology will never be 100% perfect. There will always be risks of system errors and data branches. If you lost your wallet, somebody can easily hack into your card and use all of your money. Or if the system suddenly collapses, people won't be able to buy anything at all because they can't pay with cash.
So, are we ready for a cashless society? Based on the pros and cons, no we're not. Although it offers a lot of benefits, the fact of the matter is almost 2 billion adults across the world remain unbanked. So technically, a cashless society can't happen at least in the near future.
The current system offers various payment options for people, from cash, cards, phones, stickers, and even faces. People can pay with whatever they're comfortable with. And maybe, it should stay like this for a while.
Want to find out more about contactless payment? Check out this infographic the folks at Milkwhale whipped up.