Cashless Economy Flashcards
Benefits of a cashless economy basic
Less human error eg losing a £5 note
Deliver new services make everyday life easier eg monitoring payments instantly
Digitalised economy is more convenient eg people can do bank transactions outside banking hours
More efficient eg dont have to stand and wait at the bank
Downsides basic
Homeless workers eg vendors as people dont carry cash
Cashless payments still come with potential fraud eg difficult for police to take transactions crimes seriously
Pros developed
Increased efficiency in transactions
Digital payments significantly reduce the time and effort required to complete transactions. Unlike cash, which requires handling, counting and physical exchange, digital payments can be processed instantly. This leads to a smoother flow of money within the economy, benefiting both consumers and firms. Additionally firms save costs associated with cash management such as security, storage and transportation. Financial institutions also benefit by reducing burden of cash handling, ATM maintenance and fraud related to counterfeit currency
A cashless economy can faster economic growth by making financial services more accessible.
Digital payments enable people in remote and underserved areas to participate in the economy without needing a traditional bank account. Moreover, electronic payments improve tax compliance by reducing under the table transactions and the informal economy. With more transactions being recorded digitally the govt can collect taxes more efficiently leading to increase in public revenue and better services for citizens.
Carrying large amounts of cash prevents a security risk
Making individuals and firms vulnerable to theft. Digital transactions eliminate the risk by providing secure payment methods. Many digital payments systems incorporate encryption, two-factor authentication and fraud detection to enhance security. Furthermore, govts and financial services can track suspicious activities more effectively in a cashless economy to prevent money laundering and terrorist financing
The role of debit cards
Debit cards play a crucial role in the transaction towards a cashless economy. As a widely used digital payment method, they offer convenience and security without requiring a credit line.
What is a debit card
A payment card that allows users to spend money directly from their bank account without borrowing
Risks developed
Privacy concerns and data security
Whole digital transactions offer security advantages they also raise significant privacy concerns. In a cashless economy every transaction leaves a digital footprint. This data can be used by firms for targeted advertising but it can also be exploited if it falls into the wrong hands. Cybersecurity threats pose another major ris
Exclusion of vulnerable groups
A fully cashless society may be inadvertently exclude certain groups including the elderly, those with disabilities and low- income individuals who rely on cash fir daily transactions. Not everyone has access to smart phones. If digital payments become mandatory some firms may struggle to adapt leading to potential job losses and economic disparity.
What does the cost of living crisis effect
Peope hold higher cash balances as a way of keeping greater control of day to fay transactions
