Kasfia Rashid - “Money Matters with Kash the Bookkeeper”
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Hello! Welcome to Money Matters, the accounting show with no numbers. This season we are going back to the basics of business…. Plot twist…. The basics have changed! For some, cash is still something they use everyday. For younger generations, cash is becoming more and more obsolete.
Everywhere you turn right now, it seems like someone wants to chat you up about our world turning into a cashless society. Your neighbor’s talking about it, the frenzied news media is talking about it, your social media feed is talking about it . . . and there’s even a viral article on the internet about a cashless society that’s claiming Dave Ramsey wrote it (spoiler alert: he didn’t).
So, why all the hype about a cashless society all of sudden?
Thank you COV-ID! Since the pandemic more and more consumers don't want to touch things, including notoriously germ encrusted currency. Yuck. Add to that the billions of dollars spent every year online- the question has to be asked... are we headed toward a cash less society? And how does it look any different than the digital world we live in now? Let’s break down everything you need to know (and debunk some junk too).
Show Objectives - The Why
Once upon a time, you could walk into a store and buy something only with the cash in your pocket. It didn't matter if you had millions of dollars in the bank somewhere, you weren't getting that candy bar at the corner deli if you didn't have a physical coin or currency. Today, even the smallest hot dog vendors have a Square card reader! The ability to accept digital payments may become the linch-pin of the success of your business.
Millions of Americans don’t have bank accounts, which can create difficulties and hardships in normal times—but until recently, Americans were typically able to pay for goods and services in cash.
However, many businesses have gone cashless in order to simplify their Covid-era operations and reduce risk to employees, even though the risk of transmitting the virus through cash is believed to be low. And while the majority of small business owners (82%, according to a June 2020 report from Square), are still accepting cash payments, those who have gone cashless may present challenges to unbanked individuals.
Many experts believe that Covid-19 has accelerated a trend that was already underway—a shift to a cashless society.
Not only are there credit and debit cards, but there are also bank transfers, direct deposit, and online payments. What’s more, there are systems like Zelle that enable you to transfer money instantaneously to individuals, by either an email or text.
It’s simply too convenient to make payments electronically, particularly with the Internet, as well as the fact that merchants and vendors can now be hundreds or thousands of miles away.
In a real way, electronic payments just travel better than cash.
What You Need to Know - The What
A cashless society might sound like something out of science fiction, but it's already on its way. Several powerful forces are behind the move to a cash-free world, including some governments and large financial services companies.
However, no society has gone totally cash-free just yet. In addition to logistical challenges, several social issues need to be addressed before society can give up on cash entirely. The benefits and disadvantages below can give you an idea of the myriad of effects going cashless can have on money and banking as you know it.
Lower crime rates, because there's no tangible money to steal
Less money laundering, because there's always a digital paper trail
Less time and cost associated with handling, storing, and depositing paper money
Easier currency exchange while traveling internationally
Exposes your personal information to a possible data breach
If hackers drain your bank account, or you experience technical issues, you'll have no alternative source of money.
Those with no knowledge, bank accounts, or mobile phones will struggle to keep up with evolving cashless technology.
Some may find it harder to control spending when they don't see physical cash leaving their hands
What You Need to Do - The How
Without cash, payments happen electronically. Instead of using paper and coins to exchange value, you authorize a transfer of funds from a bank account to another person or business. The logistics are still developing, but there are some hints as to how a cashless society might evolve.
Credit and debit cards are among the most popular cash alternatives in use today, but cards alone might not be enough to support a 100% cashless society. Mobile devices could become a primary tool for payments instead.
Electronic payment apps, like Zelle, PayPal, and Venmo, are helpful for person-to-person payments (P2P payments). In addition, bill-splitting apps allow friends to split their bills easily and in a fair manner. Fintech companies like Stripe, Adyen, and Fiserv support business-to-consumer (B2C), business-to-business (B2B), or what they now merge into account-to-account (A2A) online payments in a reliable and speedy fashion.
Mobile payment services and mobile wallets like Apple Pay provide secure, cash-free payments. Many nations that use cash sparingly have already seen mobile devices become common tools for payments.
Cryptocurrencies are also part of the discussion. They’re already used for money transfers, and they introduce competition and innovation that may help keep costs low. However, there are risks and regulatory hurdles that make them impractical for most consumers, so they might not yet be ready for widespread use.
Previous: How to create your own Crypto Currency!
Next: No more Cash?? - With Portia Niles of Kronos Digital!
Written by Kash the bookkeeper
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