Should we go towards a cashless society?
A seismic rise in technologic developments in the 21st century has seen a rapid shift away from the traditional use of cash in our society. The monumental evolution of mobile technology and Open Banking has fuelled the formation of this new way of life. A way of life in which digital payment infrastructure has becomes as equally critical to our society as our water supply and the national grid.
However, what is the actual benefits we can attribute to these developments and on the other hand, what are the dangers we expose ourselves to as we advance towards a wholly cashless society?
Let us begin by considering the benefits. Firstly, a cashless society greatly reduces the threat of crime. Crimes such as counterfeiting, bribery, corruption and tax evasion which are all greatly aided by the anonymous and untraceable nature of physical cash. The ability to detect and monitor cashless transactions, however, coupled with the adoption of voice, face-recognition and retina-scanning in common digital payment infrastructure thwarts the opportunity for criminals to conceal, evade and impersonate.
A cashless society also strengthens the personal safety of those fortunate to have accrued large amounts of capital, capital that in the form of physical cash in homes leads to both the threat of material loss and the jeopardy of personal safety.
The upsurge in e-payments are continuously supported by further advancement in smartphone technology and electronic applications with digital payments and digital wallets increasingly becoming the new norm. These developments breed consumer convenience, increased economic activity and large-scale national cost savings with the reduction in money printing, minting, transportation and storage of physical cash.
Despite these clear benefits of a cashless society, there are, however, downsides to a world devoid of physical cash. To begin, not all members of our society are proportionately dependent on cash. The poor and elderly have a greater dependence than most which raises the question; how would these individuals manage?
In addition, the poor and marginalised groups are less likely to have access to a bank account, access to the Internet and be of the required technological literacy, all of which can be classed as prerequisites to surviving in a cashless society.
Privacy concerns also rise with the shift away from cash. The ability to attribute a financial transaction to an individual supports crime prevention but it also supports access to our personal data and the ability for others to profile us based on our consumer habits. Is this trade-off between reduced privacy for greater convenience a favourable one?
Equally, the sheer scale of such a revolutionary change as to remove cash from our society would, according to behavioural theories, generate large scale consumer resistance. Such a change would be met with conservatism particularly as society begins to question how a cashless society would operate should there be a failure or outage across a digital society. What value can we place upon electronic money in times when it is in fact useless?
It is reasonable to expect that a transition to a cashless society will continue, however this requires economic policymakers to consider the impact on global financial stability and the general efficiency of monetary policy. It also necessitates new regulation, an improvement in technology and security and an investment into IT literacy across all demographics within our society.