Moving towards a cashless society Essay

In history there was no money but passel utilise to evaluate commodities in pecuniary terms. People used to make trade of goods for goods that could be estimated to possess same monetary value as waved. The somebody who wanted to buy some commodity could make estimates of the commodity the seller has and compare its value in terms of worthiness to the commodity of exchange. Money was ulterior invented as a tangible form that includes written report and coin. Transactions were all handled in monetary value and different currencies were also put in dress for different nations. Different rates were also set up to be able trade efficiently on different currencies.Cash became the twenty-four hours to day ways of trading were one had to have paper money so that they could be able to acquire whatever they want. Banks were developed for easier and safe storage so that no one could get hold of in illegally. Cash or money has the following advantages like that the mode of hire is easie r and simple because no so much transactions are made. Counterfeit money is also easy to detect and systemic gambles are hardly a problem. There is no paper trail and is a peer to peer mode of payment. It also introduced lots of problem like theft and counterfeiting of paper cash.This led to the revolutionary of cashless society by introduction of cheques where people no longitudinal carry cash but writes cheques that authorizes withdrawals and payments in terms of cash. (Thorndal, 1994) Traditionally deposits have been used for payments at a outmatch. Deposits push aside be transferred in a number of ways payer initiated transfer, direct debit, standing order, check, reference card. With distance to distance payments or mode of trade the look at for are more fast and effective ways of communication and trade came into place. The introduction of ATM card was introduced by the banks to enhance trade.People no longer had to carry cash but could make withdrawals through these te ase. The electronic cash system came into place where people can buy things over the internet utilise card as a form of electronic commerce. This electronic cash system involves use of card that have been categorized as credit cards, electronic cash and smart cards. The credit cards involve creating an encrypted channel for use of cards for internet like VISA or MasterCard. Electronic cash uses curiously designed software where customer buys electronic cash for digital wallet then sends as payment to merchant.Examples are DigiCash and CyberCash. Smart cards include nexus less and swap cards like MasterCard, Visa, Quicklink, VisaCash, Protonn and Danmont. The growth of payment cards reflects their attractiveness to consumers over other forms of payment and credit. Payment cards offer consumers numerous benefits, including better management of ones expenses, improved recordkeeping, greater shopping convenience, reduction of the risk of theft, float for those who do not revolve ba lances, rewards from use of cards that are available for additional purchases, and, especially for debit cards, convenience in obtaining cash.I first discuss these benefits and then consider the benefits of payment cards when used to obtain credit. (Wallace, 1983) Payment cards throw in the towel consumers to manage their money better by making it possible to anticipate, plan, and match their obligations to their available funds. The payment cards allow consumers to smooth out unexpected expenditures such as car repairs or family emergencies . Payment cards also reduce the costs of record keeping and retaining several(prenominal) receipts.Checks also offer this advantage but payment cards do not require the additional inconvenience of recording in and then rebalance a checkbook. Payment cards can also reduce the time and transaction costs associated with shopping. Advances in technology have dramatically increased the speed of touch on card transactions which are now substantiall y faster than writing checks. If the ATM is outside of the consumers network the consumer must pay a fee to withdraw the money. In contrast transactional users of payment cards pay nothing to use their card.Transaction errors, such as receiving overly little or too much change, are also probably higher with cash than with electronic payment card transactions. Another advantage of payment cards is that payment cards can be used in a wide variety of outlets hence helping both consumers and merchants. (Krueger, 1999) Some Debit cards, PIN or online cards allow consumers to withdraw additional cash beyond the price of the purchase for which the card is used thus saving the use of ATM. Unsecured personal finance loans are expensive with much higher initiation fees than credit cards.Credit cards are attractive for consumers for both cost and convenience. General purpose credit cards have also substantially displaced retail store credit. We have also so many disfavor of using payment ca rds. One of this disadvantage in that they are risky for customers because they cay be incur fraud easily. People can use your card and pin number once cognize to withdraw or use your money. Credit cards are also expensive to acquire because they are costly. Payment cards are only welcome by registered merchants and hence are not applicable everywhere.Card users also incur high interchange fee and cost while transacting using this payment cards. (Prinz, 1999) Specific regulations need to make a cashless society of cards work smoothly. Regulation in the payment card need to be set receivable to the claim of interchange fees are too high and as a result reduces consumers to overuse payment card. Interchange fees arose from the structure of the Visa and MasterCard networks. Visa espouse a fixed interchange fee which was not linked to the merchant discount charged by individual acquirers.A uniform fee trim the transaction costs of negotiating separate interchange fees between acqui rers and issuers and eliminated the difficulties that issuers faced in monitoring in the merchant discount set by the acquirers. Visa and MasterCard trim back the interchange fees charged to supermarkets hence reducing the merchant discount. Some regulations were also imposed on regulating card frauds that many banks face. Fraud card detectors have been setup and laws governing the enactment of the card fraud have been set to punish those fraudsters.The winners of the cashless society are the consumers or users of the cards because they have been absorbed from the risk of physical theft of money. Even though there are fraudsters, the users are not exposed to so much risk of theft. Card users can in effect purchase things online regardless of the distance because all transactions are done to the and at a very high speed. The losers are the merchants or company providing this serve because the have to incur all the expenses of setting up this technology and infrastructure.Lastly the y incur the problem of making all transactions possible regardless the distance and parties involved. The merchants incur all this cost and expenses in this cashless society. (Buiter, 2005)ReferenceBuiter, W (2005) New developments in monetary economics Economic journal, Vol. 115 Thorndal, J. (1994) Prepaid cards and monetary Review Danmarks Publishers Krueger, M. (1999) Towards a Moneyless world Dept of Economics and finance University of Durham Press Prinz, A (1999) Money in the real and Virtual World Netnomics journal. Wallace, N (1983) A suggestion for oversimplifying the theory of money Economic journal