Cashless Economy: The effect on small and medium businesses

A cashless economy refers to an economic system that uses digital payment methods like debit/credit cards, digital wallets, and cryptocurrencies instead of cash. As economies advance, they tend to become more digital, affecting how SMEs operate and perform.

Using cash as a payment method can be inconvenient and cumbersome, especially for those who do not like carrying around large sums of money. However, digital payments can eliminate such problems and make in-store shopping more efficient and easy. They are also much more secure than physical cash, reducing the risks of theft and fraud. Receiving counterfeit money is a constant fear for small businesses, but companies no longer have to worry about this with digital currency. Cash can also be damaged by fire, water, and other unforeseen events or objects, while digital financial records can be stored in secure data centers.

Moreover, cash is a physical asset that requires space and multiple administrative employees to manage, but digital money offers the advantage of automation, which requires less supervision and costs. Digital transactions can thus easily take place from any location. Not only does this improve the customer experience, but it also opens the business to new opportunities. Digital payments are essential for online transactions and ordering apps as well, which increase the business's sales channels.

Lastly, data collecting is easier, faster, and cheaper with digital payments. A small business can generate reports and gain insights at nearly zero costs. On the other hand, cash transactions require receipts and surveys, which take both time and resources.

While a cashless society poses both opportunities and challenges, it is not an exaggeration to say that a majority of businesses and customers are now preferring e-payments over cash payments. Thus, companies must prepare for this change and adapt in order to survive.

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