What Are the Advantages of Going Cashless: Millennial Mindset

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A cashless society can seem like something of the future but society is already moving in this direction. There are several powerful forces that are behind the move to a cash-free society, including large financial service companies and governments. Even the critics of a mainstream financial system also favor doing away with cash.  There are several nations that already making the push to eliminate cash with the push coming from both the government and consumers. India and Sweden are two examples of nations going cashless.

Advantages of Going Cashless

We are living in a “hi-tech” world and today money flows faster than ever. Carrying money around or to be afraid to lose your money when you travel is a past. There are many more advantages of going cashless for both an individual and a business.

Advantages of Going Cashless for Individuals

There are plenty of advantages of going cashless that individuals should be aware of.

Convenience

The ease of conducting a cashless financial transaction is one of the biggest motivators to go digital. You won’t need to worry about carrying cash around or line up for an ATM withdrawal. It can be safer if you are traveling. You also have the freedom to perform a transaction whenever and wherever you want. You don’t have to be present to pay as you would if you were handing over cash.

Track Spending

You can pay with cash without there being a record. If transactions are on the record because you are going cashless then it’s easy for people to keep track of spending. This can be useful when filing income tax returns and if someone has some additional scrutiny on how they spend money. It can also be easier for budgeting.

Better Budgeting

One of the advantages of going cashless is that it’s easy to see exactly where your money is going so that you can keep tabs on your spending. Various tools and apps will help you analyze your spending patterns and give you signs over the months. Having a better budget can open up a lot of different financial goals for you, whether that is buying a house, getting out of debt, saving for an emergency fund or retirement, or getting involved in investing.

Lower Risk

If you lose your cash, it can be impossible to get it back. However, it can be easy to block a mobile wallet or credit card remotely if you lose it. A loss of cash can cause a great inconvenience, especially when traveling. Some futuristic cards are even evolving to use biometric ID capabilities, such as eye scans and fingerprints, which are much harder to copy, so cash can be a safe option. If you cancel your card before any fraudulent transactions are made then you won’t even lose a penny. Even if there are fraudulent transactions made, the card company will usually reimburse you for purchases you didn’t make.

Build Up Your Credit

Having good credit makes it easier to get a loan and it takes a while to get a good credit score. In order to start building your credit, it is best to begin making purchases on a credit card. When you start putting purchases on your credit card today and then pay off your balance in full each month, it’s easier to make some big financial decisions in the future.

Rewards Points

Businesses may reward you for going cashless. For example, Starbucks will give you a free drink after you earn a certain number of rewards points, which you get by paying with their mobile app. Many credit cards also offer you rewards on your purchases.

It’s Cleaner

Nobody is cleaning the cash and bills and coins are covered in bacteria. With today’s payment machines, you are likely the only one touching your credit card.

Advantages of Going Cashless for Society in General

While there are plenty of advantages for individuals, there are also advantages for society in general.

Less Crime

Cash is easy to steal. Illegal transactions typically take place with cash so there isn’t a record of the transaction and the seller can be sure they are getting paid.

Paper Trails

Financial crime is much harder with a paper trail. It’s hard to evade taxes and hide income if there is a record of the payments you receive. Money laundering is harder if funds are always available.

No Cash Management

Top 10 cashless countries

It costs money to make coins and print bills. Businesses need to be able to store money or get more when they run out, as well as deposit cash when they have too much on hand. Moving money around and still protecting the large sums of cash could become a thing of the past.

International Payments

When going to a foreign country, you may need to get the local currency. Payments are easier if both nations will handle cashless transactions. Instead of having to figure out a different form of currency, a mobile device can handle everything for you.

Advantages of Going Cashless for Businesses

There are plenty of advantages of going cashless that businesses might enjoy.

Faster Service at Checkout

Using cash can slow down how fast you can serve your customers and this then increases your staff overhead. If your customer is getting out their wallet or purse to sort their bills and get change, things take longer. A credit card or contactless payment option is quicker and more efficient. Human error can be costly when it comes to making change. Giving out incorrect change adds up over time and this issue is removed when you go cashless.

Easier Financial Management

Adding up cash and then checking it against receipts and taking it to the bank adds up. You also need to collect and store change. Debit and credit card transactions are automatically reconciled and paid into the bank account. This frees up finances and reduces the administration overhead on staff.

Save Time and Money

Even though businesses do have to pay a fee for a credit card transaction, there is the fee to pay employees to count cash. These extra hours add up and by going cashless, you can actually scale up instead of spending time and money on cash management.

Reduced Risk of Theft

It may not be an issue for your business, but one of the main advantages of going cashless is that it lessens the opportunities for theft. There are plenty of stories of employees lifting a little extra money from the register, as well as criminals breaking in. A cashless transaction system reduces the chances of money loss.

Appeal to Customers That Don’t Carry Cash

Millennials and the younger generations are more attracted to digital wallets and other payment methods and aren’t likely to carry cash. By emphasizing that you appeal to these customers, you are seen as a more innovative business, which can make you more attractive to these customers as they look for products and services.

Businesses do need to be mindful of going completely cashless since it can be seen as discriminatory. It may even be illegal in some states and cities. There are common reasons why people may not have a bank account, which makes it harder to go cashless. However, if a business does want to go cashless to take advantage of the benefits then it’s still possible to accept cash while encouraging plastic and cashless payments. For example, install a cashless kiosk that can help speed up the ordering process or have one cashless location. Another tactic for the encouragement to go cashless for your customers could be to implement a rewards program for customers that pay with a card.

What Does a Cashless World Look Like?

Without cash, payments will be electronic. Instead of coins and paper money to exchange value, you then need to authorize a transfer of funds to someone else or another business. The logistics for a completely cashless society are still developing but there are already some hints on how this can evolve.

Debit and credit cards are some of the most popular cash alternatives that are being used today. Cards online aren’t enough for a fully cashless society so mobile devices are also a primary tool for payments. Online card shops and finance sites can help you choose the right card for your needs.

Electronic payment apps, such as Venmo or PayPal, are useful for P2P payments. In addition, there are some bill splitting apps that allow friends to split bills in a fair and easy manner.

Mobile payment services and mobile wallets can provide cash-free and secure payments. In developed nations that don’t use cash as often, a mobile device is usually the most common tool for payments.

Cryptocurrencies are joining the discussion. These can be used for money transfers and then introduce innovation and competition that can keep costs low. There are currently risks and different regulatory hurdles that can make them hard to use for most consumers so they aren’t ready for widespread use.

Disadvantages of Going Cashless

While it’s important to note the many advantages of going cashless, it’s hard to talk about the advantages of going cashless when there are also some disadvantages to be aware of.

Privacy

Payments electronically do mean less privacy. You could trust the organization that handles your data, and you may not have anything to hide, but payment information can turn up in ways that are hard to protect. Cash allows you to spend money and get funds anonymously so you have more privacy.

Hacking Concerns

Hackers are the bank robbers of the electronic world. In a cashless world, it can be much scarier if someone invades your account since you don’t have different ways to spend. Even if you are protected, there are still inconveniences after a breach.

Technology Issues

Outages, innocent mistakes, and glitches can cause issues and may even leave you with no ability to buy things that you need when you need them. Merchants won’t have a way to accept payments from a customer if their system malfunctions. Even something as simple as a phone battery that dies means you are penniless.

Inequality

Those who are poor can have a harder time going cashless. They won’t have expensive devices that are often used for payments and those that operate in an informal economy don’t have ways to receive aid or get paid.

Fees

If you are forced to just choose between a few payment method options then you can’t expect financial institutions to give you a good deal. Payment processors could cash in on high volumes and eliminate savings that come from less cash handling.

Overspending

When you buy something with cash, you feel the pain of every dollar you spend. With an electronic payment, it becomes easier to just swipe without noticing how much you are actually spending and you will need renewed efforts to manage spending so you don’t overspend.

Negative Interest Rates

When money is electronic, the government charges banks a negative interest rate. They may pass this on to customers in the form of a fee, but there is then no longer any cash to pull from. Dropping the interest rate is usually a move to stimulate the economy but this means there is less purchasing power.

How to Start Going Cashless for Individuals

With so many advantages of going cashless, you may begin to wonder how you should start to go cashless.

Have Different Options

You want to make sure that you have multiple options, such as credit cards or debit cards, in order to make your purchases. It also helps to have cards from different credit card companies in case a store doesn’t accept Visa or American Express. Some stores don’t accept certain brands because the processing costs are higher.

Choose a Bank with a Good Mobile App

You want a bank that has a great online service. This will make it easier for you to check your balance or even make purchases using your app. The better the technology, the more options you have to manage your money. You also want to be prepared with payment apps, such as PayPal and Venmo. These apps help you pay family and friends and you can even use them at some businesses that don’t accept cards.

Be Prepared to Be Turned Down for Certain Purchases

Some vendors or stores will still only accept cash. Others may not accept card payments for purchases that are less than a certain dollar amount. There could be a fee to use a credit or debit card instead of paying with cash.

Consider Carrying Some Cash for Backup

Even if the goal is to go cashless, in today’s world you still may need to consider carrying some cash. Your child’s teacher may not accept a credit card to pay that bill so your child can go on a field trip. Having access to a debit card or ATM should give you some options to get the cash you need in a pinch.

Consider Your Budget

The cash/envelope budget is a popular way to get started on a budget and to better keep track of your money. This doesn’t mean that you can’t have a successful budget without using cash. If you have been using this budget and want to move toward being completely cashless then you need a system that works for you. If you don’t already have a paper and pen or electronic budgeting system in place, now is the time to start.

Going Cashless for Businesses

Before businesses should go cashless, one of the most important things to know is the customer and if they would be comfortable with this change. By going cashless, it’s possible to lose the elderly or low-income customers whose only form of payment is cash. Some businesses have been able to go cashless successfully, while others have received boycotts and complaints. It’s best to have some workarounds for customers if all they have is cash so you don’t need to lose them as a customer. Businesses should begin preparing for a cashless society and start to take debit and credit card payments, which has never been easier.

Ways to Go Cashless

There are different ways to go cashless.

  • Mobile Banking: You can use your smartphone to access your bank anytime from anywhere. When you use the app to check your balances, you can also make credit card payments on the go. Mobile apps don’t store your account information so it is secure and safe to use
  • Debit and Credit Cards: These are probably the easiest ways to go cashless. There are built-in safety features that make them safe to use
  • Mobile Wallet: A mobile wallet on your phone is an app that you use to pay retailers, service providers, and e-commerce sites
  • Online Payment Services: Online payment services offer one-stop solutions for different types of payments. For example, you can pay your taxes, credit card bills, or other bills
  • Online Banking: Checks are not the only way to pay through your bank account. Online banking services give you several options to send money

In Conclusion

Going cashless can be seen as the future and there are plenty of advantages of going cashless. Not only are there advantages for individuals but there are also advantages for businesses and society as a whole. While there are plenty of advantages of going cashless, it still helps to be aware of the disadvantages of going cashless and what can be done to make it much safer.