Disadvantages of Cashless Payments

In continuation of last article, here are the disadvantages of Cashless Payments:-

Higher Risk of Identity Theft – Since we are culturally not attuned to digital transactions, even well educated people run the risk of falling into phishing traps. With the rising incidence of online fraud, the risk of hacking will only grow as more people hop on to the digital platform. Besides, the latest move by the government to remove the two-factor authentication process for online transactions up to 2,000 will not help.

Losing Phone – Since one will be dependent on phone for all transactions on the move, losing it can prove to be a double whammy. It can not only make susceptible to identify theft, but one could also be rendered helpless in the absence of physical cash or any other payment option. This can be especially problematic if you are travelling abroad or in smaller towns or villages with lack of banking infrastructure or other payment options.

Another drawback is that you need to keep your phone constantly charged. If the phone dies on you, you will be stranded, particularly if you are in the middle of an important purchase or dealing with an emergency.

Difficult for Tech Unsavvy – India has a low Internet penetration of 34.8%, and only 26.3% of all mobile phone users have a smartphone. The digital medium may prove a challenge for the tech unfriendly people, who will need more time to adapt or the availability of other options to conduct transactions.

Overspending – While there is no denying the convenience of card or mobile wallet transactions, it could open a spending trap for an unsuspecting population. Using cash instead of cards or mobile wallets acts as a natural bulwark for people who find it difficult to control their spending.

Besides, a high penetration of the digital payment system is contingent on the fact that the same amount of cash does not come back into circulation. If it does, people are more likely to switch back to the former ease of using cash as it is a habit that they may find difficult to break.