We are slowly but surely moving toward a cashless society. The trend comes with a lot of benefits for consumers. It also raises a few concerns we need to address in due time. The future of our savings in an economy that does not use cash is probably near the top of the list.
Concern #1: Privacy and Data Breach
Electronic transactions are much less anonymous than cash-based ones. While that has a positive impact on crime-fighting, private citizens who cherish data privacy find the prospect intimidating. There is room for concern about your savings in a cashless economy. You will always be a hacker attack away from losing your hard-earned money.
Concern #2: The Economically Downtrodden
People who are in the lowest tax bracket today use cash more often than anyone else in the United States. The most distinct disadvantage of going a hundred percent cashless is for them. Specialists feel concerned about their ability to successfully transition from the world of paper money to one that is entirely electronically based. Paradoxically enough, the new technologies may increase inequality in our society.
Concern #3: Consumer Habits
Consumers find it harder to keep track of their daily purchases when they use electronic transactions. Both studies and practical experience demonstrate that. That applies to both cases when you use PayPal to purchase things off Amazon and other electronic stores, or when you swipe your card at the register in your local supermarket. More often than not people tend to spend more when they do not transfer cash from their wallet to the purveyor of goods and services. It is only logical that saving money will be much harder that way.
Concern #4: Possible Government Regulations
The practical implementation of a fully cashless economy is still somewhat vague. People are rightfully concerned about what would happen to paper money if the government decides to make cash obsolete. Will cash expire unless people spend their savings in a certain way, or by a certain time? Eliminating cash storage may help in the fight against nominal negative interest rates. On the other hand, some experts warn the process may wipe out, or at least significantly decrease people’s savings. Opponents of the cashless economy idea point out that totalitarian regimes may use the technology. It will enable them to increase the mass surveillance of their citizens. Possible taxes and fees on person-to-person transactions will also have a significant effect on savings. After all, your family’s budget and savings account would suffer if you have to pay a tax or a fee each time you give your kids their allowance, right?
