The Pros and Cons of Living in a Cashless Society

Cash hasn’t disappeared from our everyday life although innovation is already working towards replacing physical (paper) money with wireless payments systems via computers and mobile phones. Global IT giants like IBM have already taken steps to link biometric signatures to wireless payments to prevent identity theft in cashless transactions. There are many digital wallets available today, and all indications suggest that we will be living in a cashless society in the near future. In a cashless society, physical money is held by third parties like banks or the government.These third parties allow you to transact as you wish. This presents both pros and cons. Some people argue in support of a cashless society while others argue against. To help you make your own decision, below are the top pros and cons of living in a cashless society.

Pros of a cashless society

1. Reduced crime rates: Numerous studies have shown that going cashless reduces crime rates significantly. When people stop handling physical cash as much, the rate of crimes like bank robberies, burglaries, extortion, and corruption decline significantly. Going cashless creates a money trail that discourages crime.

2. Financial inclusion: A cashless society enhances financial inclusion. For instance, mobile money systems have made it possible to provide financial services to people who wouldn’t otherwise have access. Increased access to financial services like loans to people who didn’t have access automatically reduces poverty. Mobile money platforms have allowed many poor people in third world countries send and receive money as well as get access to small loans instantly. Such individuals wouldn’t have access to financial services were it not for cashless systems.

3. Increased tax revenue: A cashless society also enhances tax collection since more people have money trails making it harder to evade tax. Tax authorities also have an easier time finding tax evaders. Increased tax revenue means governments will have more money to spend on development among many other programs beneficial to citizens.

4. Boosts consumption: A cashless society offers little to no incentives for hoarding cash which in turn encourages consumption. When people are willing to spend more, the economy grows significantly. More jobs are bound to be created, and the overall standard of living also improves.

5. Unmatched security and convenience: Carrying physical cash comes with a lot of security risks and inconveniences. Your chances of being robbed are lower in a cashless society. Physical cash is also bulky, so a cashless society comes with unmatched convenience. You can carry around as much money as you want and transact hassle freely.

Cons of a cashless society

1. Money is controlled by third parties: As mentioned above, third parties such as public/private banks and the government are usually the custodians of physical cash in a cashless society. This gives them a lot of control. In simple terms, you must trust the third parties to act in your best interests. This is scary for most people since the control held by these third parties can be misused. Your money can be withheld if you become an “enemy of the state” for whatever reason. When you are in possession of physical cash, you are not at the mercy of anyone.

2. Unique security risks: Cashless societies may have reduced crime rates i.e. reduced bank robberies, burglaries, etc., however, they are still vulnerable to security risks such as cyber attacks and fraud. Since all transactions are digital, cyber attacks can lead to devastating losses. Crimes such as identity theft are easier in a cashless society since all your details are available online.

3. Unique inconveniences: In a cashless society, eventualities such as power or system outages can leave you cashless for hours or even days. Losing your phone or computer can also deny you access to money for a prolonged time.

4. Reduced liquidity may cause unemployment in some sectors: Liquidity is good for certain sectors such as the retail industry. A cashless society gets rid of liquidity causing unemployment in sectors which depend highly on liquidity.


Technological advancements are pushing countries to follow the cashless route. Although there are many pros of a cashless society, there are cons as well. The above information on living cashless offers a good basis for deciding whether going cashless is good or bad. It’s, however, important to understand that there is more to cashless living that what is covered above.

By Mark Scott

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.