About

This website (www.lesscash.org) is an attempt to share knowledge to promote cashless usage of money. Do note that "less cash" is not the same as "less money" or "less purchasing power". The idea is to reduce the incidence of physical cash (Dollar bills, Rupee notes etc) in the economy, using electronic or paper forms of payments.

Also it is important to clarify that there is no advocacy for use of alternative "currency", like a bitcoin or something similar. The idea is simply to reduce transactions in physical cash, in whichever currency it may exist.

The website is primarily India focused but most situations will have applicability to other parts of the world as well, especially developing economies.

Advantages of Cash:

1. Cash is accepted by everyone
2. Rs 100 for the customer is equal to Rs 100 for the merchant (at par)
3. Rs 100 paid by customer is received by merchant instantly (real-time)
4. Customer and merchant need not know each other (anonymous). All that matters is that payment has been made and goods/services delivered.
5. Owner of cash can feel it, touch it and be assured of its existence !
6. Many recipients of money do not accept anything other than cash, so some cash is required at any time.
7. Many customs, especially with religious overtones, require physical cash.
8. A thief cannot steal cash that is not present (to rephrase, one cannot lose cash one does not have in the first place)

Disadvantages of Cash:

1. Enormous cost of production, transportation etc.
2. Risk of theft - since possession is same as ownership
3. Cost of cash management - time and cost in depositing and withdrawing cash
4. Risk of counterfeit currency
5. Payer and recipient need to be at the same place physically for the transaction to consummate
6. Lower business growth - Since a small merchant cannot trust someone with their cash, they need to be at or near the cash counter.
7. Less formal credit availability for small business - no verifiable track record for sales and purchases, repayment history etc
8. Loss to government - larger opportunities of tax evasion, 
9. Increased corruption - fuels rent seeking behavior - of law enforcement (police, tax inspectors and the like), political system (political leaders, nexus with businesses etc), judiciary, media and so on.
10. Money laundering and crime - Cash enables money laundering, criminal activities, terrorism.
11. For larger transactions, cash is treated with suspicion as there is no way to verify its source. Burden of proof is on the person possessing the cash to prove that it is not illicit.

As solutions emerge that can solve for the alternate mechanisms that enable near at-par, real-time, and anonymity, and increase acceptance at micro, small and medium enterprises for micro-payments, the percentage of cash in the system will come down slowly but steadily.Security is the biggest concern, specially because cashless systems can allow a theft and fraud to extend even to money that one does not have (simple case of credit card theft).

Below we will list the advantages and disadvantages of cashless systems in general. Most of this will repeat what has been said earlier.

Advantages of Cashless systems:

1. Enormous amounts can be carried in person with little or no burden of proof required.
2. Risk of theft is less, as possession is not the same as ownership
3. Low risk of counterfeit currency
4. Distance can exist between payer and recipient for the transaction to consummate
5. An SME can grow his business, since it can trust people more with a PoS device than with cash
6. Track record of sales and payments. This allows more credit availability for small business
7. Tax compliance is better, as cashflows can be tracked
8. Reduces rent seeking behaviour and crime (if no cash in shop, the thief can only steal goods) 
9. Credit can be extended, allowing one to buy more than the money they own. 

Disadvantages/ risks of Cashless systems:

1. Security risk is high. Enormous amounts can be stolen at one time, affecting a much wider section of society. This requires large investments in technology and processes. 
2. Acceptance is low. In India, one cannot pay for juice to a juice corner shop with a cashless instrument. 
3. Different forms of cashless systems do not talk to one another. e.g. a VISA EDC machine may not accept Amex or Paytm
4. Transaction costs are high. Some transaction costs made sense in an earlier era but continue to be carried on. (not at-par)
5. Typically funds availability to the recipient is not instant. This can extend upto a week and more in some cases. 
6. In a security compromise, there is a risk of theft of available credit as well.