Cashless Economy – 250 and 500 Words Essay
Cashless Economy is a situation where the cash flow within an economy does not exist. This implies, that all transactions have to go via electronic channels like debit cards, credit cards, direct debit, electronic clearing system. In this type of economy, payment systems like “Immediate Payment Service”, “National Electronic Funds Transfer” and “Real Time Gross Settlement” are used.
250 Words Essay on Cashless Economy
The different forms of cashless payments and modes
Cashless economy is performed by variety of different modes that includes mobile wallet, plastic money, and net banking. Let us see each of them in detail.
Mobile wallet is defined as a virtual wallet in your phone where you can store all your cash. This cash can be used in making offline and online payments. Nowadays, you will find several mobile service providers to offer such wallets through mobile applications. These applications can easily available for download on the mobile phone.
By using this application, you can easily transfer cash into wallets online with the help of credit card / net banking / debit card. So, each and every time when you buy anything online or pay a bill through the wallet, you need not mention the details of your card. Mobile wallets are mostly used for making bill payment and online purchases.
Plastic money is the other form of cashless economy. It comprises of plastic based currency such as credit card, debit card and prepaid cards. Plastic money comes in physical card form and are issued by banks. By furnishing the details of these cards at ecommerce stores, you can easily perform online purchases, pay your bills, withdraw money from ATMs, renew your insurance, or any other kind of financial transaction. These cards are easy to recharge via Net banking.
This is the last and important form of cashless economy wherein there is no need of any wallet. It is just an online fund transfer from a particular bank account to another one, a 3rd party account or a credit card. You can easily access this service on your computer or your smartphone. By logging in to the net banking account, you can easily do fund transfer via any of the services such as NEFT, RTGS or IMPS at very nominal transaction fee.
500 Words Essay on Cashless Economy
Advantages and challenges of a cashless economy
Deal with issue related to Black Money:
One of the most important advantages of cashless economy society is that it maintains a record of all financial transactions that happens using electronic medium. This makes it next to impossible to tolerate underground markets or black economies that prove dangerous to national economy.
Black money is riskier to perform criminal transactions, and criminal activities like human trafficking, drug trafficking, extortion, terrorism, and a lot more. Through cashless economy, you can easily curb circulation of false currency notes. This helps a lot in lessening corruption.
Increase tax base
Cashless economy makes it quite tough to avoid the payment of unpaid taxes. In this way any kind of tax violations can be reduced with this type of economy. Increased tax base also results in better revenue generation for the state. This helps in making greater amount of tax available to fund other welfare programs.
Digital transactions that are performed using cashless economy helps in promoting better transparency, accountability and scalability of a business.
Digital transactions help in offering convenience to users. It is a great way to improve market efficiency of the market as well.
Reduction in the transaction costs
Cashless economy is observed to be an effective way to bring down the transaction cost in the future. It is regarded as a good means to reduce the logistics and the entire cost associated in managing, printing, and transferring money. Online marketing eliminates the dangers linked with carrying as well as transporting greater amounts of money.
Challenges in making a transition to a cashless economy
Digital inclusion and acceptance of infrastructure
Lack of proper infrastructure acts as a key obstacle in establishing a cashless economy. Some of the reasons that pose a big challenge for the efficient setup of cashless economy are Inefficient banking institutions, inferior digital infrastructure, bad internet connectivity, absence of sturdy payment interface and inferior level of penetration of Point of Source terminals.
All these issues need to be solved. For smooth transition to digitalized economy requires increase in smartphone penetration, increasing internet connectivity, developing a safe and seamless payment infrastructure. All these are prerequisites for a smoother transition to a cash free economy.
For set up of cashless economy, financial inclusion is a must. This implies that each and every individual should gain access to banking amenities. They should have an account in bank online banking services and debit or credit card facilities.
Financial and Digital Literacy
Along with the inclusion, it is also needed to ensure digital and financial literacy for easy adoption to a cashless economy. It is required for people to become aware of the digital and financial instruments that are available in the market and the ways to transact via them.
Digital infrastructure is seen to be very much susceptible to cyber frauds, phishing, identity theft and cyber-attacks. Thus, it is important to establish resilient and secure payment interfaces to shift to cashless mode of payments. It requires enhanced defenses against cyber-attack, addressing privacy issues, data protection, robust surveillance to counteract attacks and robust cyber security architecture.
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