- A cashless economy is one in which all the transactions are done using cards or digital means. The circulation of physical currency is minimal. India uses too much cash for transactions. Most of the cash in advanced economies is floating around in the “world underground economy”.
The potential benefits of cashless economy are as follows:
o Faster transactions: With the cashless system, typically three times more people can be served using a cashless system than could have been if they were paying cash. No need for queues outside ATMs, no cashout during long holidays, no waiting for a deposited cheque to be credited, and no risk of carrying currency notes in the wallet.
o Managing staff entitlements: Free Vends, corporate cash, loyalty and hospitality spend are all entitlements which can be programmed on to the card, this can be refreshed, daily, weekly or monthly.
o Increased Sales: It has been demonstrated that with the introduction of a cashless system can increase sales by as much 20%.Vending and Catering purchases are often dictated by the amount we have in our pockets. With the introduction of a cashless system this is never a problem; the value on the card is available 24 hours a day, 7 days a week.
o Cash collection – made simple! : Time spent collecting, counting and sorting cash costs money. The cashless system offers a choice of top-up options including Payroll deduction, Credit & Debit card and Coin & Note. Removing all the cash from your site removes the security issues relating to cash handling significantly and reduces the risk of vandalism and theft from your vending and catering points of sale.
o Reduces Cash in Circulation: A cashless system prevent too much of cash in the circulation thereby curb armed robbery cases and cash related crime.
o Job Creation: The licensing and establishment of payment agencies will create jobs and new business opportunities.
o Curb on black money: Cash transactions and black money are directly linked, since a cash trail is nearly impossible to track. As such, electronic transactions and the ease of audit they afford should make the government’s job much easier in terms of curbing illegal transactions.
- However, the biggest threat to cashless economy is Plastic card fraud. Plastic card fraud involves the compromise of any personal information from credit, debit or store cards. The personal information stolen from a card, or the theft of a card itself, can be used to commit fraud.
- Fraudsters might use the information to purchase goods in your name or obtain unauthorised funds from an account. Plastic card fraud can also include ‘card not present’ fraud, such as the use of a card online, over the phone or by mail order, and counterfeit card fraud.