A Cashless Economy: Advantages, Disadvantages and Current State In Nigeria

In recent years, there have been numerous developments surrounding payment systems and consequently, the rise of cashless payments has come to play. A lot of questions have been asked about a “Cashless Economy” and all of the answers to those questions will be highlighted here.

WHAT IS A CASHLESS ECONOMY?

A cashless economy is one where financial transactions are not entirely dependent on cash notes, coins or any physical form of money for payment. Individuals and businesses in this economy simply turn to digital methods of payment to engage in financial transactions.

BRIEF HISTORY OF THE CASHLESS ECONOMY IN NIGERIA

There have been many speculations as to when and where the cashless policy began to generally take effect, but sure enough, there is no guaranteed origin that the cashless policy can be traced back to. However, in Nigeria The cashless policy was first introduced in Lagos in January 2012, and later rolled out to Rivers, Anambra, Abia, Kano, Ogun, and the Federal Capital on July 1, 2013. It was eventually implemented nationwide in July 2014, following a service charge that took effect in March 2012. 

During this period, individuals were given the opportunity to migrate to electronic channels and become familiar with the infrastructure that had been established. Banks were encouraged to use this grace period to persuade their customers to transition to available electronic channels and to illustrate the costs that would be incurred by those who continued to conduct high volumes of cash transactions in Lagos from March 2012.

ADVANTAGES OF A CASHLESS ECONOMY 

There are several benefits that can be attributed to practicing cashless policies in an economy. Some of them are:

•Convenience and ease of use

•Reduced risk of theft and fraud

•Increased transparency and accountability 

•Improved financial inclusion 

DISADVANTAGES OF A CASHLESS ECONOMY 

The cashless economy is not without its own flaws. There are certain dangers that should be watched out for when dealing with cashless policies.

•Risk of cyber attacks and security breaches

•Loss of privacy and increased surveillance

•Dependence on technology and potential for technical glitches

•Exclusion of those without access to digital payments

Every policy adopted in an economy is almost always two sided. It is therefore extremely relevant for individuals and businesses to be vigilant, watchful and knowledgeable when employing the use of a cashless policy.

WHAT IS THE CURRENT STATE OF THE CASHLESS POLICIES IN NIGERIA?

Since the announcement of the redesign of new Naira notes that led to the unfortunate scarcity of Naira notes, Many have adopted the use of digital payments and mobile banks have seen an exponentially increased number of users. Although there have been negative implications for local businesses who have refused to employ the use of cashless policies in running their business, the full effects of the Naira notes scarcity remains to be seen as many still depend heavily on the use of cash notes as a method for payments.

Overall, this trend presents several benefits, including convenience, safety, and improved financial inclusion, there are also potential drawbacks such as increased cybercrime and exclusion of those who lack access to technology. Therefore, it is imperative that the government and financial institutions continue to invest in infrastructure and education to ensure that the benefits of a cashless economy are enjoyed by all Nigerians, regardless of their socioeconomic status.