Cashless Society - CAPF Essay Notes, GD Discussion, Pros & Cons

By Naveen Singh|Updated : October 26th, 2022

In a Cashless Society, financial transactions are carried out using digital information rather than actual banknotes or coins (usually an electronic representation of money). Cashless societies, based on barter and other forms of exchange, have existed since the dawn of human civilization. In the current day, cashless transactions are now feasible because of the use of credit cards, debit cards, mobile payments, and digital currencies like bitcoin.

For the GS portion of the CAPF exam, this topic is crucial. For the CAPF Group Discussion, this article explores and focuses on the topic of a "Cashless Society."

Table of Content

Cashless Society: Scope and Prospect

A "Cashless Society" is one in which all transactions take place electronically through means such as direct debit, credit cards, debit cards, electronic clearing, and payment systems like India's Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), and Real-Time Gross Settlement (RTGS).

Indian is the fourth most prominent user of cash in the world. A cashless India will not only curb unaccounted wealth but also be used for tax avoidance instances, increasing the system's transparency. India will evolve as an improvement in the credit card system and better financial inclusion.

Cashless Society: Current Position

After demonetization, the Indian government made a concerted effort to introduce the paperless economy to the general public through its flagship initiative, "Digital India," which is also accurate. It provides choices, including card-based and internet transactions. The real benefit of a Cashless Economy, which will be better understood by the points below, is that it eliminates corruption and counterfeit currency.

  • Cash-centric sectors, like agriculture, real estate, etc., have been affected by demonetization.
  • The government continuously promotes the cashless economy by opening bank accounts and direct credit transfers to banks.
  • According to the World Bank, India’s black money, estimated in 2010, is one-fifth of the GDP, where 90% of the transaction is done in cash.
  • Two hundred fifty million bank account has been opened in 2years, gradually shifting towards cashless.

Advantages of a Cashless Society

The demonetization era can be linked to the cashless economy, which clarifies the benefits of this procedure. Apart from this, most black money, corruption, and fraud have been successfully stopped with the introduction of digital payment platforms, another incentive to choose cashless transactions. The following list of advantages of a cashless society will highlight some of these:

  • The cost associated with accounting and handling cash is high and will reduce when we go cashless.
  • Less cash will decrease crimes like corruption, hawala transaction, theft cases, etc. it will also increase the transparency in the system. The government needs to take measures related to online scams and theft incidents.
  • The production cost of coins and paper will reduce.
  • Cashless transactions are more advantageous when traveling internationally because they simplify foreign transactions.
  • The government can use the data from transactions and improve their policies like urban planning, energy management, housing, etc.
  • It will also boost economic growth as spending will be higher than earlier. For example, Singapore witnessed 0.1% growth because of cashless transactions.

Disadvantages of a Cashless Society

Going cashless may be more problematic than helpful, depending on your perspective. If a cashless society has some benefits, there are also some disadvantages, which are discussed below in some detail:

  • Cybersecurity is another problem regarding the cashless economy. On October 2016, the details of over 30 lakh credit cards were exposed at ATMs. Just a month later, PM is motivating people to be cashless. Is cybersecurity in place?
  • The sudden surge in card transactions will lead to connectivity issues during the demonetization period. The connectivity issue needs to resolve before dreaming of a cashless society.
  • Internet cost is sustainability high in India, with no wi-fi in public places.
  • Not having enough bank accounts for every individual is another hurdle.
  • Proper infrastructure needs to be in place. The bank should be fully equipped.
  • Smartphone availability and public infrastructure should support a sustainable mobile society, e.g., public charging points.

What Does a Cashless Society Look Like?

Without cash, transactions occur online, and you authorize a transfer of money from a bank account to a person or company rather than exchanging value through paper money and coins. Although the details are still being worked out, there are some indications of how a Cashless Society might develop.

  • Cards are among the most widely used forms of payment today, yet a cashless society may only be supported partially by cards. Alternative payment methods could be made primarily using mobile devices.
  • The topic of cryptocurrency has already come up. Cryptocurrency is utilized for money transfers, fostering innovation and competition that could aid in lowering costs. Cryptocurrencies may still need to be ready for widespread use because of hazards and regulatory obstacles that make them unworkable for most customers.
  • These services offer safe, cashless transactions alongside mobile wallets like Apple Pay. Mobile devices have already replaced traditional payment methods in many countries that use cash infrequently.

Is India Ready for Cashless Economy?

To change behavioral patterns, one must provide smooth, secure, and simple payment processes. The rapid growth of smartphones, e-commerce sites, and card payment options will increase the adoption, innovation, and opportunities for consumer choice. According to Worldline India Card Payment Report, 2014-15, the credit card base grew by 9.8 % in the past year, showing greater consumer acceptance of credit cards. Card transactions, both by debit card and credit card, are on an upward trajectory. The private sector has to come forward to drive the change. The government should also give some incentives for electronic transactions and try to achieve a less cash-dependent and cashless society.

The Cashless Society is a welcome idea, but it will be a good situation with preparation. The government needs to consider some policies, serving banks, more liquidity into the system, and better connectivity, and this should be done to better convenience the public. Candidates can bookmark this page to prepare for Cashless Society Group Discussion for CAPF Exam.

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FAQs on Cashless Society

  • A society that doesn't use paper or coin money for financial transactions is known as a Cashless Society. The only form of payment is by electronic means, such as PayPal, Apple Pay, or credit or debit cards. Although many nations are headed in this direction, it is difficult to predict which ones will completely phase out cash.

  • Going cashless has drawbacks such as reducing privacy, increasing vulnerability to hackers, increasing dependence on technology, exacerbated economic disparity, and more. A fully cashless society might one day be enabled through the widespread usage of credit and debit cards, electronic payment apps, mobile payment services, and virtual currencies.

  • Certain firms would stand to gain the most from a cashless society. Businesses profit from processing costs when customers use their apps and services to send and receive payments, even though some people prefer using debit and credit to cash for convenience's sake.

  • The Digital India Program has been the cornerstone of a genuinely cashless society, offering convenience, speed, and transparency at a meager cost to the government, businesses, and the general public. A Cashless Economy is both coming and inevitable with further innovation.

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