Hello everyone I am going to give you some information on cashless transaction.
Cashless Transaction which does not involve hard cash in it, it is more convenient and safe way to do transaction.
There are some advantages and disadvantages in going cashless
3.Tracking your expenditure
1.Higher risk of identity theft
3.Difficult for Tech-unsavvy
The biggest motivator to go cashless is the convenience of carrying out financial transaction with ease. You don’t have to carry lot of cash every time you go out, or stand in atm queue. It is more safe and easier way of spending while travelling and it also reduces the risk of theft. It will be most helpful when you need money in an emergency like in hospitals. Going cashless will benefit enormously.
Most important benefit is you will save a lot of time, you don’t have to go to banks to withdraw money and stand in atm queue. From the government point of view they don’t have to account the money manually.
It is one of the main motivator to go cashless. Governments is offering discounts on Rail-Reservation, petrol, highway toll to promote cashless transactions. They have cut service tax on transaction above Rs.2000. They have also cut 2% on card transaction which was applied earlier to promote cashless transactions. The payment apps like paytm is also given cash back offers on using paytm money for transactions. It is very easy to use paytm just need to transfer money to paytm from your bank account and then pay using paytm by entering the person mobile number or paytm account name.
3.Tracking your expenditure :
If all the money spent by you is on records you can see where have you spent the money with exact time and date, with this you can track every small transaction done by you. On the other hand if you do cash transaction you have to write down you transaction, but it is not possible to do that every time. From the government point of view the economy will get better cause all the transaction are on records which will increase the tax filling. You can also file you tax return more easily.
4. Small Gains :
Government is offering discounts to encourage cashless transaction. One more benefit is that you can pay the exact amount of money without worrying about not having change or getting change from shopkeepers.
5. Lower Risk :
Risk of theft is reduced, even if you card or mobile wallet is stolen it is easy to block it remotely, but obviously you can’t get your cash back. The futuristic cards are going to have biometric ID (finger prints, eye scan, etc), it will be extremely difficult to copy and making it a very safe option.
Now talking about disadvantages
1. Higher risk of identity theft :
There is always a fear of losing your money and identity to hackers. Hacking has always been a big trouble when talking about online transaction. With the rising incidence of online fraud,the risk of hacking is going to grow. Even the well-educated people are falling in phishing traps. The latest move by government to remove two-factor authentication process for online transactions up to Rs 2,000, is not a good idea. It does not matter how small or big the transaction is ,with absence of additional security the risk of thousands of identity is at stake. There are no stringent legal process to face this kinds of fraud.
2. Losing Phone :
For cashless transaction you are completely depended on your phone, losing it would be dangerous. If ended in wrong hands it can not only reveal your identity, but you could also be rendered helpless in the absence of physical cash or any other payment option.
The most important problem is when you travelling abroad or in small village, where banking facility is not adequate and there is lack of any other payment option. One more drawback is you always have to keep your phone charged, this will create problem when you are in middle of a transaction and your battery died.
3. Difficult for Tech-unsavvy :
Still the percentage of indian internet and smartphones users are not high. There are small towns and villages where internet, smartphones and digital payment mode are not used properly.
The older people find it difficult to adjust with these digital payment mode. The tech-unfriendly people find it hard to adjust with these methods of payment.
4. Overspending :
It is good to opt for digital payment methods like cards, e-wallet, but it opens up a big problem of overspending. If you go out for shopping with a budget with physical cash, you limit yourself to that budget. On other hand if you go cashless using digital mode for payment you find it difficult to control your spending and stick to a budget.
One more problem is that your smart phone has to be up to date to use all these payment apps, because there a security threat of losing your identity and your payment details to hackers, and these latest updated smartphones aren’t cheap cause these security update has to be updated every now and then and once the phone is outdated it is not safe to use it, so it is not possible to keep the same smart phone for more than a year or 2. And it is not possible for everyone to buy these new smartphones. So government should take some measure to solve this issue, if india needs to be cashless at large.
My verdict, opting for digital payment is good, but you also need to take care of the above mentioned disadvantages.To solve the last problem I mentioned, Government needs to provide with an updated smartphones at cheap rates to those who can’t afford it, and provide some video tutorial to those who needs it.This can solve some problems and india can really be a digital india.
Also published on Medium.