A cashless Nigeria will always be a double-edged sword you might be wondering how?
But first, what is a cashless economy?
This is an economy where financial transactions are carried out using digital information rather than actual banknotes or coins.
Historically cashless transactions are not new, since the dawn of human society, cashless cultures based on “trade by barter” have been there.
But when we talk about a cashless society we are talking about a move to reduce banknotes/coins in use, so that cash is replaced by its digital equivalent.
As the Governor of the Central Bank of Nigeria Mr. Godwin Emefiele said “We think, Nigeria as a big country, the biggest economy in Africa, needs to leapfrog into the cashless economy.
“We cannot continue to allow a situation where over 85 percent of the cash that is in circulation is outside the bank. More and more countries that are embracing digitalization have gone cashless.
A big part of this move was the reprinting of the three highest banknotes of the Nigerian Legal tender, N200, N500 and N1000.
If Nigeria Was To Become a Cashless Society How Would This Work?
In a cashless Nigeria, financial transactions would be conducted primarily through electronic means, such as debit and credit cards, mobile payments, and online banking. This means that people would not need to carry large amounts of cash with them and would be able to make purchases and pay bills without physically exchanging money.
Advantages of a cashless society include increased security and convenience, as electronic transactions are generally safer and more efficient than cash transactions. It can also reduce the cost of handling cash and make it easier for the government to track and regulate financial activity.
- Increased efficiency: Cashless transactions are typically faster and more convenient than those made with cash, which can save your time and improve overall efficiency.
- Reduced crime: A cashless society could potentially reduce certain types of crime, such as robberies and money laundering, because there would be no physical cash to steal.
- Improved record-keeping: With a cashless society, all transactions would be recorded digitally, which could make it easier to track and manage financial records.
- Increased financial inclusion: In some cases, a move to a cashless society could make it easier for people who are unbanked or underbanked to access financial services, as you may not need to have a bank account to participate in the financial system.
- Environmental benefits: A cashless society could potentially reduce the environmental impact of producing and transporting physical cash.
Now lets us list the challenges of adopting a cashless society
- Dependence on technology: A cashless society would rely heavily on technology to function, which could make it vulnerable to technical problems or outages.
- Financial exclusion: Some people, such as the elderly or those living in rural areas, may not have access to electronic payment methods, which could exclude them from participating in the financial system.
- Loss of privacy: In a cashless society, all transactions would be recorded digitally, which could potentially allow for greater surveillance and a loss of privacy.
- Security risks: Digital payment systems can be vulnerable to hacking and other types of cyber attacks, which could compromise financial security.
- Lack of flexibility: In a cashless society, it may not be possible to make small, casual transactions or to make payments when electronic systems are not available.
- Cultural and sentimental value: For some people, there may be a sentimental value to using physical cash, and a shift to a cashless society could result in the loss of this cultural tradition.
As I stated at the beginning of this write-up, a cashless society will always be a double edged sword – that is the ugly truth.
One of the biggest problems that will arise from a cashless society is “financial exclusion”. This could occur if certain segments of the population, such as the elderly or those living in rural areas, do not have access to electronic payment methods or do not feel comfortable using them. These individuals may be unable to participate in the financial system, which could leave them unable to make purchases or access financial services.
The ugly truth is eventually people will adopt it, forcing technology into inner cities and ensuring there are no safe havens for those engaging in fraudulent activity.
Another potential problem is the increased reliance on technology to facilitate transactions. If the technology fails or is disrupted, it could cause widespread problems and disrupt the ability to make financial transactions.
But as online payment is already on the rise, our technology will merely have to keep up. For our own safety, we can move toward a cashless world gradually.
There is also the issue of security risks associated with digital payment systems. These systems are vulnerable to hacking and other types of cyber-attacks, which could compromise financial security and cause problems for individuals and businesses.
Finally, a shift to a cashless society could also result in a loss of privacy, as all transactions would be recorded digitally and could potentially be monitored by governments or financial institutions.
Cashless Society and Privacy
In a cashless society, all transactions would be recorded digitally and could potentially be monitored by governments or financial institutions.
This could raise privacy concerns, as individuals’ financial activities would be more easily trackable and could potentially be used to build a detailed profile of their behavior.
There are also concerns that a shift to a cashless society could lead to increased surveillance, as financial institutions and governments would have access to more data about individuals’ financial activities.
This could potentially be used to monitor and track people’s movements and behaviors.
There are ways that these privacy concerns could be addressed, such as through the implementation of strong privacy laws and regulations, and the use of privacy-enhancing technologies.
However, it is important that these issues be carefully considered as societies move towards a cashless model.