The birth of the internet has turned the world topsy-turvy in a short span of time considering the possibilities that were projected ever since its inception in mainstream businesses and eventually in our lives too.
While the initial introduction of the internet was to achieve a goal of making it available to every individual on the planet and it is a matter of time before that goal is achieved conclusively. The digital revolution has slowly led to a concept called ‘cashless’ or ‘digital money,’ which, with each passing day has gained more traction owing to its usability and comfort among consumers. In spite of the rigorous promotion of going cashless, there still remains a lot of doubt around its adoption, security, and validity.
Embracing the cashless technology is here to stay and for the good as the benefits are more than expected.
Physical Banking: An Ordeal Too Big To Be Ignored
Traditional cash transfer methods were a tad tiresome for consumers who invested quality time to accomplish the task. The criticism by people about the inefficiency in maintaining timeliness for the job assigned was heard loud and clear. The increase in population deteriorated the normal functioning of banks burdening the staff and the dependency on manual procedures as well as excessive paperwork.
Imagine depositing money in a traditional way. You had to:
- Postpone the day’s activities
- Reach the bank in time
- Carry the documents, if any
- Safeguard the cash
- Visit the bank to and fro in case of (mismatch in account details etc.)
- Spend more time if the bank was over-crowded
The aforementioned points are just a few of the many obstacles people had to encounter in a bank to get their job done. Technology played a major role in rewriting the way cash was handled by focusing more on what should be prioritized, streamlined, and executed in a jiffy than making people wait for an insane number of hours.
Smartphones: A Digital Catalyst
The affordability of smartphones and access to high-speed internet gave us a glimpse of how the future would shape up for digital transactions. Smartphones can be considered a great influencer for realizing the potential of going cashless. The peer-to-peer (P2P) services by financial institutions laid the foundation for the cashless ecosystem that eliminated the need for a third party as a mediator to facilitate the transaction between two individuals.
The World Of Apps
As the smartphones simplified the lives of people by helping them in internet banking, usability was a concern as many were finding it difficult to navigate through the banking websites before they could actually carry out a successful transaction.
The onset of apps has closed this gap with a friendly user interface (UI) allowing people to transfer money and conduct transactions instantly. However, the challenge was to fix the insufficient information regarding accounts and related services that were missing in the apps, unlike the banking websites that had complete information regarding the account holder.
With frequent progress in software technologies, it has led to continuous updates and tailoring of the apps that have overcome the lag individuals faced while accessing details about their account status including services, offers, and announcements by the respective banks. The development has paved the way for creating healthy relationships, credibility, and validity between consumers and the bank.
What Is A Cashless Ecosystem?
A cashless ecosystem as we understand is one that would eliminate the use of cash completely. No more worrying about pick-pocketers, thieves, fear of losing cash, or currency notes blown by the wind while counting! Purchases are a cakewalk and paying bills is smooth when using payment methods such as:
- Debit cards
- Credit cards (not reliable, can get you into trouble!)
- Payment apps
- Digital Wallets
The electronic transfer of cash means no visit to the banks, ATM, or handing over cash to the lenders. In a nutshell, it is cash at all times, on the go, anytime, and anywhere.
Are We There Yet?
The internet connected people so swiftly that it changed the whole game for the banking sector by making positive inroads in the processes that were carried out on a day-to-day basis. Firstly, it eliminated the paper and manual procedures that formed a predominant part of running a bank. Secondly, the long queues that were reminiscent of banks reduced.
Cybersecurity: A Speed Breaker
Hackers are increasingly affecting the plans of the cashless ecosystem by deterring consumers from being a part of it. Just like the digital world is evolving so are the hackers who find ways to access customer data and draw money. Cybersecurity has been debatable because people often complain of its effectiveness in safeguarding the privacy of customer data and securing financial transactions.
New technologies like blockchain and digital signatures, just to name a few, have instilled the confidence amongst people with their foolproof methods and decentralization of end-to-end processes. Also, many companies pioneering cybersecurity have raised the bar with their unique and secure technologies.
Benefits Of Cashless Ecosystem
Gone are the days when queues were a common sight in banks with long hours and laborious manual paper works. Only multiple visits to banks ensured the completion of a task. Verification of account holders involved long recurring processes that were time-consuming and inaccurate. Things look different today with digitization like digital signature, online registration, KYC, and other related documents necessary to authenticate a person’s background. The physicality has reduced big time, and banks these days are deserted due to the seamless digital processes in place.
The cashless ecosystem is comparatively beneficial over the traditional physical banking, where time is somewhat less critical than the task. The cashless ecosystem satisfies the two important criteria, saving time and focusing on factors that need actual attention.
Let’s get this straight, the benefits are simple but practical.
1. Benefit of managing your finance
Tracking your spending with paper receipts can pile up the garbage in your house and losing them is even worse. Cashless payments help in real-time glancing at your spending and naturally, the budgeting falls in place. Regular alerts or SMS puts you on the top and hence avoid overdrafting, low-balance, or late fees.
2. Benefit of Safety
Like we discussed earlier, carrying cash is risky, and once you lose it it’s gone. A payment app in your smartphone is mobile cash even if somebody gets hold of your phone, blocking through the broadband provider makes it invalid.
3. Benefit of Time
It’s just a few seconds that we are referring to for transferring cash and that explains everything about the benefits of the contactless transaction.
Are There Downsides?
At this stage, it can’t be ruled out and they will be fixed eventually. The disadvantages include:
- Unable to pay at a store if there is no power or bad internet connectivity.
- Credit cards can spoil the fun with high-interest rates.
- Processing fee charges.
- Obviously, if the store will only accept cash its game over!
Is The Future Cashless?
Not a tough question to answer, it is indeed the future. The rolling out of high-speed internet services will make it negligible which means more consumers get access to it and hence embrace cashless revolution. Personal payment apps will take over in the years to come. The cash-only situation will persist for some more time before people stop using it. Banks will focus more on fine-tuning the processes and better the customer relationship along with the creation of diverse products.