The Consequences of Moving to a Cashless Society

Topic: Economics
Words: 1412 Pages: 5


Almost all modern people have ever asked themselves what the consequences would be if society became cashless. This is a rather complex question because numerous factors should be considered when answering it. While numerous humans enjoy paying with their smartphones and not having to search for the nearest ATM, such a tendency is not probably not entirely positive. Noticeably, a more rapid movement to a cashless economy is a result of the COVID-19 pandemic (Fabris, 2022). I am one of those persons who decided to stop using cash precisely because of the coronavirus, and now I need to determine whether this decision contributes to newer concerns. For example, while some state that this move can lead to insignificant financial stability considerations (Maitanmi et al., 2020), others predict the progression of numerous crimes (Rivera, 2019). Therefore, while this shift is probably inevitable, in order to be able to avert negative outcomes, it is especially crucial to determine the expected consequences as soon as possible.

Advantages and Disadvantages of Cashless Societies

The first article that can provide valuable information on the topic was found on Google Scholar. It is a 2020 paper titled “A Move Towards a Cashless Society Accelerates with the Novel Coronavirus Induced Global Lockdown” by Taskinsoy. Even though the research’s publication failed to receive grants from funding agencies, I selected this article because it is very informative and insightful in its discussion of cashless society outcomes. There is no reason to question the paper’s credibility because it is academic and contains tables, figures, and an extended reference list, while the author is from the Faculty of Economics and Business.

Both advantages and disadvantages of a cashless economy are examined in the study. For instance, Taskinsoy (2020) states that the positive consequences will include no spending on printing and distributing money, lower costs of paying globally, and “no time and space constraints for online purchases” (p. 31). Businesses and ordinary people will be able to save money and have some of their daily experiences improved. However, the main negative effect will be the inability of persons from low-income or underserved households to buy goods – they may lack mobile phones or internet access to pay online.

After reading the source, The most significant sub-question is how countries can avoid the negative outcomes of cashless economies. While the listed pros are quite valuable, it is still essential to consider the needs and resources of disadvantaged people and make sure that everyone receives an opportunity to pay online. This article allowed me to get a better idea of the world that probably expects us, and now I would like to know some more-specific implications of cashless societies.

Dangerous Effects of Cash-Free Economies

The second selected source that can help answer the formulated question is a peer-reviewed article. It is quite recent research called “Potential Negative Effects of a Cashless Society: Turning Citizens into Criminals and Other Economic Dangers” by Rivera (2019). This is a conceptual literature review that I selected because the title seemed intriguing, and I could not imagine how cash-free societies can face an increase in criminal activity. The paper is credible because an expert writes it, has numerous references, and is issued by a respected publisher.

Overall, the author makes rather disturbing predictions and outlines adverse results a move to a cashless economy may have. As stated by Rivera (2019), cash-free processes increase various forms of corruption and economic crimes. In case “citizens send more money into the underground market and/or adopt some form of zombie-money, it may make tracking their transactions even more difficult,” which can lead to the loss of the authorities’ control over the money supply (Rivera, 2019, p. 8). The following quote might make some people reconsider their views: “the more cashless our society becomes, the more our moral compass slips” (Rivera, 2019, p. 7). Since digital money will seem less real, it will have less value but lead to more computer crime.

This study made me raise my awareness and see the negative side of the tendency while not considering the positive one. Indeed, when an option is selected to solve a number of significant problems like corruption, digital criminal activity, and identity theft, it is expected that the solution will help. In case it does not improve the situation but worsens it, the authorities should pay increased attention and consider finding other ways of social development.

The Effects on a Central Bank’s Concerns

This report, which I found on Google Scholar, is prepared and issued by the Bank of Canada, which means that the information it contains is trustworthy and relevant. In this 2018 staff discussion paper called “Is a Cashless Society Problematic?” written by Engert et al., “seigniorage, monetary policy, payments, and financial stability considerations” are explored, which is why I selected it (p. 2). Generally, I hope that the information prepared by the major bank’s employees should be substantial, and it is also valuable to see how cash-free tendencies can affect banking operations.

According to the authors, while it is possible to expect some concerns and disruptions, they will not be significant. Engert et al. (2018) are certain that it will be individuals’ decision to abandon cash, and “in response to these private choices, the central bank could decide to stop providing bank notes” (p. 6). As a result, the expected consequences of this movement are “a contraction of the central bank’s balance sheet,” failure to provide liquidity, and the removal of banks’ “obligation to supply cash to the public on demand” (Engert et al., 2018, p. 7). While the authors do not find these effects to be dangerous or severe, they also consider it crucial for the authorities and the community to pay attention to them.

It is hard to disagree that this article is very informative and interesting as it reveals the topic from a different side. While the impacts on individuals and governments are more obvious, exploring how banks will change their activities is also necessary. What is more, precisely, this paper suggested that it may be the initiative of ordinary people to abandon cash, and banks can only adapt to the circumstances.

Cashless Societies Can Reduce Corruption

I selected the fourth study in order to see how other researchers assess the ability of cash free economy to address corruption. In their peer-reviewed article titled “The Future of Corruption in the Era of Cashless Society,” Alaeddin et al. (2019) conducted a literature review to learn whether there is a connection between the shirt toward cashless payments and reduced economic crimes like taking bribes. Again, this study was found on Google Scholar, and this particular source proves that there may be different academic views on the same phenomena or issue.

Noticeably, while one of the previously discussed papers failed to determine that a cash-free economy may face fewer cases of corruption, this research proves this positive correlation. According to Alaeddin et al. (2019), a shift towards a cashless society can result in enlarged levels of accountability and transparency, meaning that almost all financial operations will be observed and controlled. Therefore, “making the money traceable is the main idea to control the leakage which cause corruption” (Alaeddin et al., 2019, p. 457). Noticeably, these positive effects can only be achieved if the systems remain secure and stable and the community puts enormous efforts, unites against the problem, and becomes aware.

A sub-question that emerged after I got acquainted with the article is what are those primary effects and factors that can define whether a cash-free economy can eliminate corruption and other economic crimes? Indeed, the need for cooperating people and stable systems is evident, but how can two researchers on one topic provide opposing opinions? While I admit the value of the idea that corruption can only increase when cash is no longer in use, I also trust this study’s findings and believe that transparency of operations is effective.


To draw a conclusion, one may say that a cashless economy is a controversial option that should be considered carefully. Like any severe decision, the abandonment of cash has positive and negative consequences. As evident from research, some are either insignificant or can improve the world and economy, but there are also those outcomes that may change depending on the efforts of people. In my opinion, a complete shift toward cashless financial operations is impossible in the near future because not all systems are secured, and not all concerns are addressed.


Alaeddin, O., Altounjy, R., Abdullah, N., Zainudin, Z., & Kantakji, M. H. (2019). The future of corruption in the era of a cashless society. Humanities & Social Sciences Reviews, 7(2), 454-458.

Engert, W., Fung, B. S. C., & Hendry, S. (2018). Is a cashless society problematic? [PDF document]. Web.

Fabris, N. (2022). Impact of covid-19 pandemic on financial innovation, cashless society, and cyber risk. Economics-Innovative and Economics Research Journal, 10(1).

Maitanmi, S. O., Adetunji, O., & Joshua, A. (2020). Evaluation of cashless policy in Nigeria: The pros and cons. Information Management and Business Review, 12(4), 39-46.

Rivera, J. W. (2019). Potential negative effects of a cashless society: Turning citizens into criminals and other economic dangers. Journal of Money Laundering Control, 22(2), 350-358.

Taskinsoy, J. (2020). A move towards a cashless society accelerates with the novel coronavirus-induced global lockdown [PDF document].

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