More than four fifths of the world’s population lack access to bank accounts, and a cashless economy would be transformative for these individuals. The challenges are immense: how do you create an economically inclusive society without slowing down commerce? And what will happen if (or when) everyone has one currency?
In the cashless economy, transactions are made electronically and there is no need for paper money. This can make life easier in many ways. However, it also has its disadvantages like the lack of privacy and security.
We have produced a 1000-word essay about cashless economy for kids and youngsters in this post. In this section, you’ll learn about the function of a cashless economy, as well as its benefits, drawbacks, payment options, and obstacles.
Essay on the Cashless Society (1000 Words)
Massive digitalization has impacted every aspect of our life in recent years. Demonetization is an important stage in India’s transition to a cashless economy.
Cash-free India is a fantastic project undertaken by Prime Minister Narendra Modi’s administration to lessen the Indian economy’s reliance on cash.
The importance of a cashless economy
The cashless economy will play an important part in the country’s growth. Our nation will be free of corruption and counterfeit money thanks to this strategy. Tax evasion is rare since cashless transactions are noticeable. India would be able to attract more taxpayers under this arrangement.
The benefits of a cashless economy are many.
The following are some of the advantages of a cashless economy:
- Effortlessly and exclusively – accelerating the financial transaction procedure;
- The ability to see every transaction – this improves transparency. It’s because all internet payments are audited, and the economy’s money flow is transparent. It limits the parallel economy’s scope.
- Simple tracking – Every transaction is kept track of.
- Tax Coverage – Because all online payments are calculated, tax coverage becomes more flexible, and avoiding taxes becomes more difficult.
- Financial Integration – With the use of technology, all financial transactions, such as income tax computation, GST, and information needed to submit returns, may be linked into the system.
- Cost of managing the money — If a currency is used seldom, the printing and maintenance costs will be decreased.
DisThe benefits of a cashless economy are many.:
The following are some of the significant drawbacks of a cashless economy:
- Confidentiality concerns – every organization has access to client information;
- The population does not apply to everyone; the uneducated and old cannot utilize this method of payment. Small payers or sellers of fruits, vegetables, and other items, for example, may not find an online amount feasible or viable.
- Overhead Expenses – Online payments and bank activities may incur overhead expenses.
- Setup costs for a technical network – this is a one-time cost that should be provided in order to cover as much geographical territory as feasible.
Modes and forms of payments that do not need cash
1. Mobile Wallet or Pocket
This is a virtual wallet that you may use on your phone. You may keep money on your mobile device to make online or off-line payments. These applications are available from a variety of service providers through a mobile app that may be downloaded to your phone. You may use credit/debit cards or internet banking to send or receive any amount of money to these wallets using these methods online.
2. Plastic money
This includes debit, credit, and prepaid cards. Banks or non-banks may provide this service, which might be physical or virtual. They may be bought and recharged online via net banking, and then used to make online or POS transactions.
3. Use of the Internet Banking
This is an online means of moving funds from one bank account to another, or from one credit card to another, or from one third party to another third party. This may be done using a computer or a mobile phone.
RBI’s Cashless Fund Transfer Modes
Each means of cashless money transfer is defined by RBI Mobile as a “prepaid payment instrument” that uses a card or a mobile phone. Shrewd cards, appealing strip cards, net records, net wallets, adaptable records, portable wallets, or paper Bouchers are all options. They are divided into four categories:
- Open Wallet: They allow you to buy items and services, withdraw money from ATMs or banks, and transfer funds.
- Semi-Open Wallet: These wallets do not allow you to withdraw or withdraw funds. Currently, the customer must spend what he has on hand.
- Closed Wallet: This is a common option among e-commerce businesses; when a product is canceled or returned, or when a gift card is used, a specific amount is canceled with the seller. Flipkart and Book My Show Wallet are two examples.
- Semi-Closed Wallets: These wallets don’t allow you to withdraw or redeem cash, but they do allow you to buy products and services from specified merchants and give financial aid in designated places. Paytm is one such example.
The difficulties of transitioning to a cashless society
1. Digital inclusion and infrastructure
The lack of proper infrastructure is a major impediment to building a cashless economy. Inadequate financial resources, a shaky advanced foundation, a lack of a web network, a lack of strong computerized payment interfaces, and limited access to POS terminals are just a few of the challenges that must be overcome.
2. Access to financial services
Universal financial inclusion is a crucial prerequisite for the eradication of a cashless economy. Everyone should have a bank account that includes financial services, debit/credit cards, and internet banking.
3. Financial and digital literacy
To make the transition to a cashless economy, it is not enough to provide economic and digital inclusivity. Citizens must also be informed of the economic and digital tools available and how to use them to transact.
4. Information security
Cyber assaults, cyber fraud, phishing, and identity theft are all becoming more common in digital infrastructure. The most recent cyber assaults have become more sophisticated and well-organized, posing a clear and present danger. To become cashless, it is thus vital to build safe and adaptable payment interfaces.
5. Personality traits Changing Attitudes and Habits
The absence of e-payment channels, digital illiteracy in e-payment, and a lack of cash-free transactions characterize the Indian economy, as does the third habit of handling currency.
6. Intersection of Urban and Rural
While metropolitan regions have high-speed internet, semi-urban and rural areas may not have a consistent network connection. So, despite the fact that India has over 200 million cellphones, rural India still has a long way to go in terms of mobile transaction processing. There is a significant urban-rural split in terms of ATMs, POS terminals, and bank branches. This chasm is required to begin a cashless economy.
10 Thoughts on the Cashless Economy
- In a cashless economy, you don’t need to carry cash, plastic cards, or wait in bank or ATM queues.
- Savings may be increased in this economy by using reward points and loyalty perks.
- It is necessary and beneficial, particularly if you are traveling abroad.
- The government of India, led by Prime Minister Narendra Modi, has launched a drive to make India cashless.
- Although there would be challenges in creating a cashless economy, it is vital to begin efforts in this direction.
- India is a large nation, and internet transactions are not accessible across the country.
- There are various benefits of using digital technology to manage cash flow.
- The government saves a lot of money on currency production and circulation because of this feature.
- Cashless tax collection makes tax collection easier and encourages economic development.
- People’s reliance on cash is steadily lessening as a result of this development.
Conclusion
With considerable hurdles like as illiteracy and a lack of proper infrastructure, making India one of the few nations with a cashless economy would be a key endeavor.
However, the advantages of a cashless economy outweigh the disadvantages. I hope you like this cashless economy article.
The “essay on cashless economy upsc” is a 1000 word essay that discusses the pros and cons of a cashless society. The author discusses how students are affected by the change in society, and what it means for them.
Frequently Asked Questions
What is cashless economy essay?
A: The cashless economy is the idea that people will use digital and online payment methods to buy goods. This means they wont need coins, notes or credit cards in order to purchase products from stores anymore.
What is a cashless economy?
A: A cashless economy is when all transactions are done through electronic means, such as credit cards and debit cards.
Is India ready for cashless economy essay?
A: This is a difficult question to answer.
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