Essay on Plastic Money

Since the time immemorial, in all the ages, money has always been regarded as an important medium of exchange and a tool of payment. When we did not have monetary system, we had barter system which was used as the mode of payment. Over the years, money has transformed from coins to paper cash. With the rapid expansion and exponential growth in the technology field, the use of plastic money has evolved to a great extent. Clumsy and expensive to handle coins and notes are replaced by efficient electronic payments initiated by various types of plastic cards with a tantalising prospect for the twenty first century. Plastic money was introduced in 1950’s. It is an alternative to cash. This term is used more precisely to indicate Credit cards, Debit cards and other such money cards.

Plastic money is one of those inventions that have completely changed our lifestyle. Thanks to it, that we can transact money more safely. Now, when you are to travel to a far off land, there is no need to carry hard cash with you and likewise, there is no fear of it getting stolen. Due to the technological revolution in financial sector, the payments in banking system have undergone a tremendous change. The number of innovative products for making payment has developed after the privatisation and globalisation. Before the advent of Credit cards and Debit cards a major portion of the business transactions were carried on through cash. Since the cash is replaced by plastic cards it is called plastic money. Through the use of plastic money, banks and many other businesses approach the maximum customers inspite of having less physical branches. The use of plastic money has become such familiar feature of the lifestyle in the world that now it is difficult to imagine an economy functioning without it.

Spending through plastic money has increased tremendously in India. It is now becoming a much preferred mode of payment for retail products. Over the years, Indians have been averse to plastic money. This is primarily because they believed that spending through credit is a sure shot way of getting into a debt trap or fraud. But with recent security upgradations, its usage is increasing especially among women, students and small business owners. In fact it is gaining acceptance in rural India too. HDFC Bank, the second largest private lender in the country exclaims that 25% of its Credit cards are now sourced from rural and semi-urban market.

The plastic money brings with it a huge advantage of availing a credit facility from almost everywhere without actually exchanging money or visiting the bank. Travellers are saved from the plight of carrying and securing huge cash wherever they go. With a debit or credit card they pay easily and also get the best exchange rate for currencies. Plastic money is accepted everywhere, anytime. One can even get instant cash from the nearest ATM even at the wee hours of night. Life has been made simple wherein one can buy everything online from the comfort of home. It saves a lot of travelling and searching time. One can avoid the long queues to book movie tickets/ shows well in advance using plastic money. Reservation and booking of flights, railway, hotels is just a click away. It is convenient for both the buyer as well as the seller. Infact, people are getting discounts with use of online payments. The use of plastic cards has been increased because banking industries have provided the 24 x 7 customer service for their customers.

Security of these cards is also not a big issue these days as the banks or financial institutions have managed that too. So it is 100% safe and without any tension. Today, people even transfer the amount of EMI or loans through cards only.

However, extensive use of plastic money has posed problems for both the business community as well as for the individuals. There are numerous shops/sites which accept particular cards of a specific company only. In such a situation cash is the only way of payment for those who otherwise use cards only. The magnetic strip of a card can get worn out due to massive use.

If such a condition occurs while travelling and this is the only way of cash the consumer has, then he or she has to wait till the time a new card is received. Credit card companies charge high interest rate which has to be paid within the set time. Even with usage of Debit cards, banks levy service charges which sometimes consumers are unaware of. Theft of these cards means theft of huge amount of money altogether. In today’s technical intelligence it is also possible to get a clone of any credit or debit card, which works like original and can result in heavy financial loss.

Latest studies regarding the use of plastic money shows that demographics, age, income level play a vital role in the selection of type of card. Another latest development is that banks in India are looking at deploying biometric ATMs targeted to reach the rural India. Voice guidance and thumbprints reduces literacy requirements while using cards. Banks are coming up with money cards for kids too. Infact, some school use personal money cards with which they formulate the expenses of stationery, food etc of the students. It would not be wrong to say that use of plastic money has become latest fashion today or a thing to boast in front of others. But its usage along with the delivery channels like net banking, mobile banking etc have created a win-win situation by extending great convenience and multiple options for customers.

However, it is said that many people fall into a debt trap. But if we are careful with our expenses, plastic money can be a handy thing to have around. Hence, we need to consider the term ‘responsible usage’ and understand the actual significance of living on credit. If we use the cards carelessly, we will really fall into a debt trap. Now it is upto us how we use them. We must not forget that plastic money is a boon if we handle it with care but a bane in absence of our sensibility.

Try aiPDF, our new AI assistant for students and researchers