New Zealand is currently evaluating the economic benefits and consequences of moving to a cashless society. In a series of articles, Payments NZ – New Zealand’s authority on paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More systems – listed the pros and cons of the potential demise of cashMoney in physical form such as banknotes and coins. More.
Among the arguments advocating for digital payments, it has been argued that cash encourages crime and tax evasion. Indeed, it might seem easier to rob a cash registerSee See-through register. More than to hack a digital system. Moreover, it is often argued that cash is used both in the underground economy and to finance criminal activities.
Nevertheless, a fully digitalised society has its disadvantages. First, it would exclude the unbanked and marginalized groups that have no access to conventional financial services: cash’s disappearance would leave them without a viable and accessible payment instrumentDevice, tool, procedure or system used to make a transaction or settle a debt. More. In addition, privacy and anonymity would greatly disappear in a world where every transaction is tracked at all times.
There are also fears that less competition between payment instruments could lead to higher fees for consumers, especially for low-value transactions. Finally, no system is immune from failures or cyber-attacks – and the consequences could be catastrophic without cash.
Payments NZ noticed that even if the use of banknotes slightly decreased over the past few years, the population seems to feel reassured when they have access to tangible moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More. The financial authority recognises that the human factor plays a significant role in the debate and that the country is unlikely to switch to cashless in the near future notably for this reason.
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