Moving towards a cashless society Essay Example for Free

Moving towards a silver slight society EssayIn history there was no money but people use to evaluate commodities in monetary terms. People used to make trade of goods for goods that could be estimated to puddle same monetary value as waved. The person who cute to buy some commodity could make estimates of the commodity the seller has and compargon its value in terms of worthiness to the commodity of exchange. Money was later invented as a tangible form that includes paper and coin. Transactions were all handled in monetary value and dissimilar currencies were in any case put in place for different nations. Different rates were also set up to be able trade efficiently on different currencies.Cash became the day to day slipway 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 t he mode of payment is easier and simple because no so over much(prenominal) movements be made. Counterfeit money is also easy to detect and systemic risks are hardly a problem. There is no paper booster cable 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 access of cheques where people no longer pick out cash but writes cheques that authorizes repossessals and payments in terms of cash. (Thorndal, 1994) Traditionally deposits have been used for payments at a distance. Deposits bottomland be transferred in a number of ways payer initiated transfer, direct debit, standing order, check, credit bankers bill. With distance to distance payments or mode of trade the demand 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 cas h but could make shootals through these tease. The electronic cash system came into place where people can buy things over the internet using tease as a form of electronic commerce. This electronic cash system involves use of cards 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 specially designed software where customer buys electronic cash for digital wallet then sends as payment to merchant.Examples are DigiCash and CyberCash. Smart cards include contact 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. fee cards offer consumers numerous benefits, including rectify management of ones expenses, improved recordkeeping, greater shopping convenience, reduction of the risk of the ft, float for those who do not revolve balances, rewards from use of cards that are available for additional bribes, and, especially for debit cards, convenience in graveling cash.I first discuss these benefits and then consider the benefits of payment cards when used to obtain credit. (Wallace, 1983) Payment cards part with 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 savourless out unexpected expenditures such as car repairs or family emergencies . Payment cards also reduce the costs of record keeping and retaining individual 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 processing card transactions which are now substantially 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 too 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 disadva ntage of using payment cards. One of this disadvantage in that they are risky for customers because they cay be meet fraud easily. People can use your card and pin number once known to withdraw or use your money. Credit cards are also expensive to acquire because they are costly. Payment cards are only acceptable by registered merchants and hence are not applicable everywhere.Card users also incur high transpose fee and cost while transacting using this payment cards. (Prinz, 1999) detail regulations need to make a cashless society of cards work smoothly. Regulation in the payment card need to be set due to the call 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 adopted a fixed interchange fee which was not linked to the merchant discount charged by individual acquirers.A uniform fee reduced the transaction costs of negotiating separate interchange fee s between acquirers and issuers and eliminated the difficulties that issuers faced in monitoring in the merchant discount set by the acquirers. Visa and MasterCard reduced 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 sensual theft of money. Even though there are fraudsters, the users are not exposed to so much risk of theft. Card users can effectively 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 services because the have to incur all the expenses of setting up this technology and infrastr ucture.Lastly they 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 check into 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