- Physical artifacts such as coins and value-holding paper bills were used since ancient civilizations made the transition from the barter system.
- Today, cash remains the most-used form of payment in the Philippines.
- One of the main reasons experts don’t see a cashless future is that the benefits don’t outweigh the freedom that would be taken away from the consumers.
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There is a reason why many still consider cash as king.
Physical artifacts such as coins and value-holding paper bills were used since ancient civilizations made the transition from bartering items such as spices and silk.
Today, cash remains the most-used form of payment in the Philippines. But many proponents for “going cashless” believe the time of the paper bill is up.
Not so fast.
Despite the coronavirus pandemic raising concerns about paper bills’ cleanliness and viral transmission, I don’t see the Philippines going completely cashless anytime soon.
Here are some of the reasons why:
Going completely cashless would be a problem for unbanked people.
According to the Bangko Sentral ng Pilipinas, 77 percent of Filipinos are “unbanked,” with only 15.8 million Filipinos having access to banks while 52.8 million do not. Sixty percent of the “unbanked” said they don’t have enough money to open a bank account.
In the Philippines, banking has excessively high entry barriers.
To put it plainly, the Philippine banking system wasn’t built for people with little to no discretionary income. And when people with low and middle incomes use these services they are sometimes more hurt than helped. Most major banks, for example, require checking and saving accounts to carry a minimum balance to avoid incurring fees. They will either be charged for a fee or their accounts will not incur any interest if they go below this maintaining balance. These are all the consequences of having less money.
Opening a bank account with most major banks also requires many requirements that most people with low incomes don’t have. This makes them unable to access formal financial services such as a savings account.
A cashless society will give up all data privacy and security.
Payments made will be traceable in a digitized economy. Leaving behind such digital traces, online payment transactions are vulnerable. Such purchases enable companies to create personal profiles of a customer based on their patterns of spending. The issue of data mining also comes into play as countries head towards a cashless society. Cashless transactions leave a record in the company’s database as one makes a purchase, and this history is a way to forecast future events. Through a great number of records, data mining then helps the company to compile an individual’s profile from its database records.
Going all-digital, these data retrieved from transactions lead to widespread surveillance where individuals can be tracked by both corporations and the government. These records might also be available to hackers and could be made public after a data breach.
A cashless society is prone to cyber fraud and attacks.
When payment transactions are stored in servers, the risk of unauthorized breaches by hackers is greatly increased. There is also a high risk of financial cyber-attacks and digital crimes when going cashless. Many companies, including payment systems, already suffered data breaches. Electronic accounts are vulnerable to unauthorized access and transfer of funds to another account as well as unauthorized transactions made by hackers.
Attacks on telecommunications infrastructure or accidental breakdowns also prevent electronic payments from working, unlike cash transactions that can continue with minimal infrastructure.
Going completely cashless could promote overspending.
Consumers are less conscious of how much money they spend on a day-to-day basis when swiping their card to complete a transaction than when budgeting their money into a wallet and paying in cash.
The act of seeing your cash coming out of your wallet has psychological effects on most consumers. Consumer psychologists found that compared with plastic card users, shoppers who paid in cash to buy something increased their emotional attachment to the purchase.
Try to imagine buying a brand new smartphone in cash. The act of counting your paper bills one at a time gives you an emotional connection to the purchase. It could be a feeling of remorse when you see much of your hard-earned cash slipping away from you or the sheer joy of seeing your hard work getting rewarded.
Instead of single-mindedly promoting a cashless society, think about the consumer’s freedom to choose.
One of the main reasons experts don’t see a cashless future is that the benefits don’t outweigh the freedom that would be taken away from the consumers.
We live in a free country and that gives us the freedom to choose which payment method we would like to use.