It was just another day of running errands when I popped into a store to grab a few items. As I headed to the checkout, I noticed a sign that took me by surprise: “We no longer accept cash payments. Cards only.” The lady at the checkout refused my money just because it wasn’t digital.
I was a bit shocked. I had never encountered a business that refused to accept cash before. As someone who often prefers to use cash for small transactions, I felt frustrated and excluded.
This experience got me thinking about the implications of cashless businesses for young people who may not yet have established credit histories or bank accounts. For many young people, cash is still the primary form of payment. However, as more businesses choose to go cashless, young people may find themselves excluded from certain services or products. This can lead to a lack of financial independence and dependence on others, which can have long-term effects on their financial stability.
To make matters worse, many young people lack basic financial literacy skills. According to a 2019 survey, only 24% of American young adults aged 18-24 have basic financial literacy skills. Moreover, according to recent research conducted by Junior Achievement and Citizens, over half (54%) of teenagers feel ill-equipped to manage their finances in the future. The study also found that a substantial proportion of respondents (41%) reported not having received any financial literacy education in school. This means that many young people may not fully understand how to manage their money or use credit cards responsibly. While credit cards can provide access to digital payment methods, they also come with risks. Young people who obtain credit cards without proper financial education may find themselves struggling to pay off their debts, which can lead to long-term financial problems. In addition, obtaining credit cards isn’t always easy for young people, as those without established credit histories may find it difficult to obtain approval.
Here are five risks associated with relying solely on digital money:
1. Cybersecurity vulnerability
One of the most significant dangers of digital money is cybersecurity risks. Digital currencies are stored electronically and transmitted over online systems, making them vulnerable to hacking and cyber-attacks. If a cybercriminal gains access to a student’s digital wallet, they could potentially steal their funds, compromise their financial information and engage in identity theft. This could be devastating for students who may be relying on these funds to pay tuition, rent or other expenses.
2. No Internet, no money
Another risk of digital money is technical failures. Digital currencies rely on technology, and any glitches or malfunctions in the system could prevent students from accessing their funds or making transactions. If there is a power outage or network disruption, for example, students may be unable to use their digital money until the issue is resolved. This could be particularly challenging for college students who may be living on a tight budget and relying on their funds to cover basic needs.
3. Financial exclusion
Limited accessibility is another challenge associated with relying solely on digital money. Not all students have access to the technology required to use digital money, such as a smartphone or internet connection. This could create a financial divide between those who can use digital money and those who cannot, particularly in areas where access to technology is limited. This could also exacerbate existing socioeconomic disparities among college students.
4. Loss of privacy
Privacy concerns are also a risk associated with digital money. Digital transactions can be traced and recorded, potentially compromising students’ privacy and leaving a digital trail of their financial activities. This could be particularly concerning for students who value their privacy and may not want their financial activities to be tracked or monitored.
5. Difficulty managing finances
The lack of physical currency associated with digital money could be a challenge for some students. Without physical cash, there is no tangible representation of value, which could make it harder for some students to understand and manage their finances. Additionally, in the event of a technological failure or power outage, physical cash would be the only means of conducting transactions. This could be particularly challenging for students who have not had to rely on physical currency in the past.
So, what can be done to address these challenges? For one, it’s important for young people to receive proper financial education to understand how to manage their money and use credit cards responsibly. This can help them navigate the digital age and participate in the economy on their own terms. Moreover, businesses should consider ways to accommodate those who prefer to use cash or don’t have access to digital payment methods. This can include accepting cash payments, offering digital payment options in addition to cash or providing financial education resources for customers. By doing so, businesses can ensure that everyone has access to the economy and can participate fully in the digital age.