Cash is king! This quote is facing a serious threat as the world is marching towards becoming a cashless society. The recent trends suggest that digital money will soon replace physical cash. The Cashless society can be simply defined as an economic concept or state where all the financial transactions take place through transfer of digital information instead of physical banknotes or coins
Looking back into history then, we find that cashless societies existed since the time when human societies were in their nascent stage. Many exchange methods were prominent namely the well-known barter system, maize for beef. In today’s time too cashless payments are possible due to debit cards, credit cards, mobile wallet apps, point of sales (POS), mobile banking, internet banking, etc.
As we recognize the value addition attained from the QR (Quick response) code payment systems in some supermarkets and groceries, we should appreciate this is an evolution towards a cashless society, that will spur financial inclusion. We should be confident that the QR code system shall consolidate all cashless efforts made so far.
Sufficing to note that several nations are making moves to eliminate cash in the system. Notable among countries which are said to be cashless societies are Sweden and UK. For instance, in Sweden, it is common to see signs that say “No cash accepted” in shops and supermarkets. The buses in London do not accept cash, but the oyster card.
We should associate ourselves with the efforts geared towards running cashless transactions because that is the way to go. All of us should support the view that going cashless is possible with sufficient infrastructure and has benefits as well as a few disadvantages for any economy.
Promoting the cashless economy comes with a number of benefits, like the Convenience which eases financial transactions, and thus promotes digitization. Several discounts can be offered and tracked in a cashless economy. The users can also ably track their expenditures against the drawn budgets, which instills that budget discipline. At times having cash in our wallets gets too risk, which gets plugged by running cashless.
Those who support the cashless economy argue that it lowers crime because there is no tangible money to steal, and no money laundering as there is always a trail. Besides, time and cost associated with handling paper money as well as storing and depositing are eliminated. Imagine yourself having a wallet with only your prepaid visa card!
Exchanging currency can be a rigorous task for many while they do international travels. Cashless payment is a much easier option. There is no worry about exchange rates, for what one needs is a mobile device or a visa card with their bank account linked in it and that would be sorted.
With a cashless wallet, a bank customer will avoid counterfeit currency by using a visa prepaid card for the payments. The prepaid card gets loaded with cash at the bank to support the subsequent transactions. With cashless transaction, the counterfeit currency and illicit activities will have no place to thrive.
For banks, cash transactions involving colossal amounts of money are very pricy. It is normal for a customer to withdraw UGX 500m from one bank, and then move to deposit it in another, or pay it to a seller of a piece of land, who eventually banks it. The bank that releases the money, as well as the receiver of the deposit have pay for CIT costs, on top of the other cash management costs.
But critics of a cashless system also say that it exposes personal information to a possible data breach and technological problems can leave one with no access to money. Many argue that transactions by cash do not leave a trail. Whereas in case of the cashless transaction, there is a proper record. However, this record can support the authorities in weeding out unscrupulous elements.
They say the poor and those without bank accounts would have difficulty paying and receiving payment. We should confirm that the prepaid card issued at Centenary Bank does not require the holder to have a bank account, but applicants only provide a NIN card, a passport photo, and the cash deposit. For us, all the arguments are valid but since society is developing and technology is improving, we have no doubt that the cashless wallet would be more beneficial to the economy.
In as much as several innovations have been released by the financial service providers like ATMs, prepaid cards, mobile banking, online and agent banking to mention but a few, the cash economy has persisted in Uganda. We commend the efforts discharged and hope that the citizenry and business community would embrace so that together we would succeed.
The writer is a General Manager Commercial Banking at Centenary Bank
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