Question

highlight 4 reasons why cash payment is preferred to cheques

Answer 1

The government wants to make all transactions through accounts using debit cards, credit cards and various online transfer facilities using mobile banking and internet banking.

All transactions are accounted since they are routed through banking channels

Once accounted, the individuals or firms have the responsibility to calculate their income and pay tax accordingly

When it comes to cash:

The liquidity is exactly 100 percent

You want to buy a product for Rupees 1000 and you pay the seller Rs. 1000 in cash and everything is settled on transfer of currencies from your side and receipt of product from the seller

There is no mediator. No need of point of sale terminal, your debit card, your bank account, his bank account etc.,

However, even if the government abolishes all currencies through which the transactions take place, people will find out other avenues like product vs product as was practiced more than 200 years back before introduction of coins and currencies.

It is the tendency of the people to look forward time effective methods; leave alone tax and other issues

However, in case you do not have cash with you and you have to necessarily draw cash from the account either though debit card or through cheque, the time effective measure is to hand over the cheque to the other person and now it is his responsibility to encash the cheque and get payment. You save your time and he has to spend some time for sending the cheque for collection.

However, during certain business situations, these issues cannot be avoided