Cashless policy is an initiative introduced to help reduce the amount of physical cash in circulation, thereby encouraging the use of electronic platforms for settlements or payments for goods and services. The cashless policy seeks to curb some of the negative consequences of high usage of physical cash in the economy, including the high cost of cash, inefficiency, and corruption.
Going cashless does not only ease business transactions but also helps to authenticate and formalize the transactions. When a country is taking a step towards a cashless policy, a boost in economic growth is expected. Study has shown that the advent of cashless policy has also helped increase convenience, reduce cash-related crimes, reduce the cost of cash handling, etc.
The concept of electronic banking system began when the first automated teller machine was installed in 1970. The ATM allows deposits and withdrawal from remote locations to afford convenience. The advantages offered by ATM quickly spill over to encompass other areas of banking services, computerizing manual systems which brought about greater efficiency and time-saving.
The concept of ATM gave rise to smart cards, intranets and internet banking, electronic funds transfer, point of sales services (POS), and other electronic devices. Technological advancement has made cashless policy very relatable and part of our everyday life.
What seems as the white man tradition is starting to be the norm in most African countries. However, it has not fully been in operation due to some issues like high level of illiteracy among those that should effect the improvement or changes that are planned to be achieved by the introduction of cashless policy (Small and medium scale enterprises SME’s), inadequate infrastructures such as the provision of internet connection in commercial areas and the increase in internet fraud which has led to fear in the usage of cashless policy mediums.
Some of the advantages of cashless policy
- Saves money and time; one of the major advantages of cashless policy is that it brings about convenience. The time spent on long queues to make payment or withdraw cash is avoided. People can make payments for goods and services, settle debts, send money to their loved ones at the comfort of their homes. It eradicates the problem of counting and sorting of cash. This has been one of the greatest advantages the introduction of cashless policy has brought about.
- It is a good tool in tracking corruption and money laundering also several internet frauds. This is because majority of the transactions are automated. Therefore, tracing them and recovering is always easy in most cases.
- Reduces risk of carrying physical cash; cashless policy has eradicated the danger in carrying around physical cash. Carrying a huge amount of money around over time has made people target for robbers. However, this has been controlled by the cashless policy. You can make huge payments with a POS machine or make a direct bank transfer.
- Speed of transaction; the advent of cashless policy has made transactions easy and fast. You can make transactions worth millions in less than a minute! Transactions are now faster, and long queues are now in extinct.
- Economic growth; cashless policy and the ease it introduces in carrying out transactions has been a big advantage. Business deals are now easy and fast to execute. This has led to a boost in economic performance over the years.