Cashless Policy – Meaning, Definition, Introduction, Benefits, Importance and Disadvantages
Cashless Policy – Meaning and Definitions
Cashless policy can be simply explained as a economical policy that allows seamless financial transactions without using physical cash, coins and banknotes but instead, financial transactions are carried out via electronic banking, internet banking, electronic transfers and debit/credit cards.
Cashless policy was introduced by the central bank to reduce money management, too much cash in circulation, inflation, cut down cost of cash activities by banks.
The policy deployed helps to enhance and build an efficient payment system by encouraging Internet banking, Electronic funds transfers, Online banking services and to drive development in the economy.
Why Cashless Policy Was Introduced
Cashless policy was introduced to help in the following areas;
1. To help build a robust payment system, that is vital for economic growth
2. To reduce cost financial cost in banking services
3. To build a good monetary saving economy, which can be used to lend money to others
4. To induce a sound monetary policy for good economic growth
5. To drive electronic banking for seamless financial transactions and services
6. To reduce too much cash in circulation, thereby reducing crime and corruption
7. Attract foreign investors and increase employment
Cashless Policy – Benefits And Importance
Cashless policy has numerous benefits and importance, some of them includes;
1. Provides convenience by encouraging the use of electronic funds transfer, internet banking, online debit/credit card transactions.
2. Encourages financial discipline by reducing cash spendings
3. Increase economical development
4. Reduces cash risk related activities such as theft, corruption and crime
5. Helps in building a sound economy devoid of money laundering, fraudulent practices, and other cash based risks
Cashless Policy – Disadvantages
The disadvantages of cashless policy includes;
1. Cashless policy encourages digitalization, which is a major challenge for senior citizens, elderly people, uneducated citizens and remote/rural communities where there is poor internet connectivity and poor digital exposure.
2. Cashless policy involves heavy technological reliance, which might result to hacking by fraudsters
3. Cashless policy can be greatly affected by Poor Internet connectivity and communications.
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