Ask anyone who works in a bank and they’ll tell you, a major part of their day is spent counting money, coins and checks. As time consuming as it is, this is an important task since banks need to keep track of money they have at the beginning and at the end of the day.
There are some banks, which use machines for this task however, they are expensive, and there is a margin of error with them as well.
This is why banks have started moving towards cashless payment systems:
The biggest advantage of cashless payments is that all the records are maintained digitally. Therefore, banks don’t have to worry about running out of physical storage space.
Since all the data is available digitally therefore, you don’t have to worry about calculation errors either.
Cashless payments are also less risky since they are transferred digitally therefore, you do not need to spend a large amount of money on purchasing armored vehicles for cash transfer. Some additional benefits of cashless payments include:
No Risk of Theft
How do you steal something that physically doesn’t exist? This in a nutshell explains why cashless payments are considered to be more secure.
Increased Control Means Higher Profits
In order to understand this point you first need to know how banks make money. This is a cyclical process in which banks take money from you, which they invest in another financial institution (central bank).
The central bank keeps the money in rotation. Of course, banks need to exert certain degree of control in order to make sure they don’t lose their money. They can only float a certain amount of money.
However, this is not the case with cashless payments. Since there’s no physical money therefore, banks do not have to worry about retaining a specific amount. This means they can keep a larger amount in circulation and in this way generate higher revenues.
Complete Information of Customers
With digital payments, banks can keep track of consumer spending. They retain all the information like products purchased as well as the place from where it was purchased.
Banks can use this information in order to generate revenue. They can do so by charging a small processing fee for all transactions.
It also eliminates the threat of default since no one will be able to deceive the bank about their credit history.
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