In the context of a cashless society, how is individual privacy most likely affected?

• A. Cashless transactions eliminate the need for any personal identification.
• B. Individuals gain complete anonymity in their purchases.
• C. Privacy is unaffected because digital payments are always encrypted.
• D. Personal financial transactions become more easily tracked by third parties.

Answer: (D)

Verified step by step guidance

1. Understand the nature of cashless transactions: In a cashless society, payments are made through digital means such as credit cards, mobile payments, or online banking, which typically require some form of personal identification or account linkage.
2. Recognize that unlike cash, which is anonymous and untraceable, digital transactions generate electronic records that can be stored and accessed by financial institutions, payment processors, and potentially other third parties.
3. Analyze the implications for privacy: Since each transaction leaves a digital footprint, it becomes easier for third parties to track and analyze individual spending patterns, locations, and behaviors.
4. Consider the role of encryption: While digital payments are often encrypted to protect data during transmission, encryption does not prevent the collection or storage of transaction data by authorized entities.
5. Conclude that in a cashless society, individual privacy is most likely reduced because personal financial transactions become more easily tracked by third parties, contrasting with the anonymity provided by cash.