Cashless Society: How to Preserve Your Privacy in Digital Transactions?

February 21, 2024 By admin No Comments 7 minutes

Imagine a world where you never have to carry cash or coins. You can pay for anything with just a tap of your phone or a swipe of your card. Sounds convenient, right? Well, that’s the vision of a cashless society, and it’s already happening in many places around the world.

Cashless Society

But while going cashless has some benefits, like convenience, security, and inclusion, it also has a dark side: personal privacy exploitation.

When you pay digitally, you leave a trail of data behind. Who can access that data, and what can they do with it? That’s what you need to know if you want to protect your privacy in a cashless society. Keep reading to find out how.

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What is meant by a Cashless Society?

A cashless society is the idea of a financial system where cash no longer exists as a mode of payment. Alternatively, digital payment systems like mobile banking applications, and credit and debit cards are used. It refers to the shift from physical money to digital alternatives, enabling convenience and effortlessness in all financial proceedings.

This change is already visible in countries like India, Sweden, Nigeria, and China, reflecting a significant transition in their daily economic activities. The Reserve Bank of Australia is also conducting research on digital currencies, potentially positioning Australia as the next country to embrace non-cash financial transactions.

The primary purpose of this transition is to enhance convenience, prevent crime and promote hygiene. For example during the COVID-19 pandemic, digital payment systems played a vital role in facilitating social distancing.

How Does Going Cashless Affect Your Privacy?

Digital payment applications and mobile wallets are making cash obsolete in many parts of the world. This global trend is transforming the way we handle money. While this shift offers many benefits, it also poses serious threats to our privacy.

When we pay digitally, we leave traces of our personal and financial data that can be exploited by third parties. Therefore, we need to be aware of the risks and take steps to protect our privacy in a cashless society.

1. Financial Monitoring:

Cashless payments hold digital records of every transaction, which can be accessed and analyzed by banks, governments and other entities. This means that our financial behavior is constantly exposed, just like our online activity, raising questions about how this data can be used or abused.

Private sectors can use this data to target you with personalized ads. Governments may use this data for other purposes without your consent, such as to spy on your private spendings. This creates a power imbalance between governments or the private sector and individuals. This is what we call a surveillance economy.

A perfect case point of this is China’s social credit system, which monitors individuals spendings and penalizes them for certain purchases. For those who value their privacy, cash is a more attractive payment option as it is the only way to pay anonymously.

2. Personal Data Collection:

Every time you pay digitally, you sacrifice your data. Each transaction in a digital world paints a detailed picture of your spending patterns and likings. Your morning coffee runs, shopping sprees from favorite brands, hospital bills, gym memberships, hotel reservations, every little transaction gets recorded.

These digital footprints at large reveal so much about your lifestyle. Banks, shops and payment apps collect and store this data, making your purchasing history a valuable asset that can be exploited.

3. Cyberattacks:

One of the most crucial issues concerning the players in the digital payment ecosystem is cyber security. Like any other online platform, digital payment systems become the prime target of cybercriminals, as these platforms are rich in consumer financial data.

While the shift from physical to digital money brings a lot of ease, it also increases the vulnerability to cyberattacks and cyber criminals. Even a slight software breach can result in major financial losses and exposure of sensitive user information.

4. Identity Thefts:

With the plethora of personal information circulating in the digital world, the risk factor of individuals being victims of online fraud, identity theft, viruses and spyware increases. It can be due to a number of factors, for example, the lack of tech knowledge in elderly groups or simply poor security in the digital payment infrastructure.

Hackers can exploit these gaps to their advantage and carry out illegal activities, which can result in unauthorized bank loans or direct financial theft under your name.

How to Stay Safe During Digital Transactions?

The increasing surge in digital payments and online transactions indicates that many countries in the world are progressing towards a cashless society. This calls for an urgent need to safeguard our personal data and confidential information, as cybercriminals constantly lurk and are ready to capitalize on any lapse in our vigilance.

Here are some proactive measures that you can implement to enhance the security of your transactions and privacy preservation.

1. Opting for Reliable Financial Services/Applications:

Before selecting a digital payment platform for financial services, make sure to research their terms of services thoroughly. Always select those who prioritize user safety and privacy, and are well known for providing a secure environment for digital transactions.

2. Review your Financial Statements on a Regular Basis:

Make a habit of checking your financial statements from time to time. Review all your transactions, bank credit and debit card statements regularly.

If you find anything unusual or see an unauthorized transaction, even for a small amount of money, report it immediately. Do not take it casually and contact your bank to resolve the dispute.

3. Use Strong Passwords:

Always use strong, hard-to-crack passcodes for each of your digital payment accounts. It goes without saying, but never use personal details like name, phone numbers, date of birth or any other private information as your password.

Instead, you should go for complex and unique combinations that are not easily associated with your personal identity.

Cross Checking QR Codes:

Don’t forget to double check the beneficiary while scanning QR-codes. Hackers can replace a valid QR code with a similar looking malicious one.

5. Multi-factor Authentications (MFA):

To add an extra layer of protection to your digital transactions you can set up multifactor authentications. It is a type of digital verification system that requires you to submit two or more pieces of evidence to authenticate access. These two or more pieces can be mobile number OTPs, passwords, and fingerprints.

Enabling MFA reduces the risk of cybercrimes as cyberattackers wont have the access to your mobile device and will not get the code required to proceed.

Avoid Using Public Wi-Fi:

When shopping online avoid using public Wi-Fi networks, as these connections are more vulnerable to cyber attacks, theft and other fraudulent activities. Additionally, when entering sensitive information utilize verified websites only, as they have better security systems.

Using a VPN:

The final preventive measure is utilizing a VPN for all your digital payments. Employing a reputable VPN, ensures the safety of your sensitive information like credit card details or account passwords when making online purchases.

This is achieved by concealing the websites visited and personal data from both your internet service provider and third parties. As a result, your online data becomes inaccessible to hackers and cybercriminals, providing an impenetrable layer of security.

Note: Remember these precautions religiously to stay safe and protect your financial information while navigating through the digital landscape.

Conclusion:

In order to strike a balance between the benefits of going cashless and its potential risks, attentive monitoring and making well-informed decisions are primary.

Only through vigilance and preemptive measures can we enjoy the advancements of the modern world while protecting our privacy.