The big idea: should we embrace a cashless society? | Money

How do you like to pay? Do you prefer to tap, wave, insert, click or double-click – or are you a cash lover? If it’s the latter, you quickly become the exception.

Between our growing enthusiasm for online shopping, the ease and speed with which we can now make electronic bank transfers, the inexorable rise of cards and the advent of digital wallets, more and more of us are avoiding the physical money. This is still a relatively recent trend. Cards only overtook cash as the preferred method of payment for consumers in the UK in 2017, with contactless accounting for 40% of transactions. The change has been dizzyingly rapid.

The big advantages of non-cash payments are that they are transparent, efficient and convenient. This clearly means a lot to us. But was he our decision to adopt these new habits, or have we sleepwalked into them, with a little help from those who benefit?

The truth is, it’s a bit of both. Merchants are keen to reduce costs and increase expenses: the less friction we encounter at checkout, the less likely there is to have doubts. Payment providers sell their equipment and services to merchants, so merchant appetite is their primary consideration. On the other hand, it is we who have chosen to use the cards and to launch ourselves into e-commerce. If you remember struggling with eBay’s limits back in the “Cash on Collection” era, you’ll know that what you really wanted was PayPal. If you’re old enough to remember queuing at the bank or the check guarantee card, you’ll know you’d have killed for instant bank transfers, debit cards and online banking.

But are there any downsides to this level of comfort? What if our choice to ditch cash chased it over a cliff, and what would that mean? The Bank of England has pledged to make physical silver available “as long as there is demand”. Presumably, if the demand stops, the bank will stop. Cash management has high fixed costs; It doesn’t matter if you’re delivering £500 in £20 notes at an ATM or £50,000, the driver, security and fuel costs are the same. Similarly, if a store only takes £5 in cash a day, the owner still has to run a till, maintain a float, book cash payments and deposit that money in a bank. The less cash we use, the higher the cost of handling it, meaning fewer merchants will accept it and fewer ATMs will dispense it. Before you know it, the demand the Bank is monitoring may have simply evaporated.

Should we care? Well, canceling money has more than a few ramifications. Many of our young people learn about money by handling it, many of our old people feel comfortable using it, while those on a tight budget find it helps manage their spending. Having to pat pockets or rummage through purses makes us more aware of what we’re spending than swiping or clicking.

Then there is inclusion. Certainly, money is not safe; cash holders lose interest and are unable to build financial histories, which are essential for accessing a wider range of financial services. This is why “financial inclusion” generally means moving people out of a cash-based existence and into the formal sector. But cash alone provides a universally accessible way to pay and get paid. For those who can’t or don’t want to be banked or go digital, what happens in a cashless future? There are an estimated 1.3 million ‘unbanked’ adults in the UK and many more who lack confidence or access to digital. Not everyone is happy or able to wave a card, let alone buy now and pay later. Cash can be dirty, expensive and dangerous. It can aid and abet criminals and the corrupt, but it is also freely available to everyone.

This accessibility is the advantage and the disadvantage of money. It is available for the bad guys as well as the good guys. Physical money may play a diminishing role in the legitimate economy, but it still plays an important role in the underground economy; while the number of legal transactions involving cash is decreasing, the volume and value of banknotes in circulation are actually increasing. So, alongside merchants and payment providers hoping for lower costs, increased spending, and rich sources of customer data, law enforcement and tax collectors could also be forgiven. encourage the cashless revolution.

The economic and enforcement arguments against cash may well stack up, but a payment is not just an economic or administrative act; it is a social that depends on the common acceptance by both parties of a currency and mode of delivery. With cash, this social act is limited to two parties – the payer and the beneficiary – and it is private between them. Conversely, digital payments leave a myriad of trails – trails that accumulate into vast stores of information about us.

Depending on how you pay, this registry may be more or less extensive and may be visible to a few or many organizations. This can be information about who you are, where you were, how much you spent, what you bought and from whom. Your smartphone can reveal just as much information, if not more, but it’s still possible to leave your device at home, or even go without. The equivalent choice will not be available if the money disappears.

Giving up the freedoms of money might not be much of a concern if you are as pure as packed snow and not too worried about being tracked and targeted by advertising, but are you ready to settle for a world in which all transaction is recorded and, by definition, auditable? Think about that the next time you choose how to pay, because every time you don’t pay, your decision helps shape our collective future. There may come a time when we all have, to paraphrase Lord Byron, reason to lament: “Alas! how public all payments are!”

Natasha de Terán and Gottfried Leibbrandt are the authors of The Pay Off.

Further reading

Betrayal: the true story of my brush with death in the world of narcos and launderers by Robert Mazur (Icon Books, £14.99)

Paid: Tales of Dongles, Checks, and Other Money Stuff edited by Bill Maurer and Lana Swartz (MIT, £17.99)

That’s how they tell me the end of the world by Nicole Perlroth (Bloomsbury, £14.99)

Money by Felix Martin (Vintage, £10.99)

Leave a Comment