What would life be like in a truly cashless society?
Imagine a world where there is no cash. Where every transaction, no matter how small, is carried out electronically. Rapid technological advancement, combined with a move toward a more efficient and sustainable way of living, could see the world of digital-only currencies become a reality. It may even be sooner than you think.
There are strong arguments for abolishing cash altogether. Plastic debit and credit cards have drastically reduced the need for real money. Over the last few decades, we have become increasingly used to swiping our plastic to pay for things. More recently, swiping was replaced with chip and pin, and then contactless.
Nowadays, you do not even need to carry your card with you. With the majority of 18 to 35-year old shoppers regularly using digital wallets and card-less payment, trends are changing again. G-Pay, Samsung and Apple Pay are leading the way in card-less payment technologies.
The use of cash in Sweden has become so uncommon that only 60% of people can remember using it in the last month. Sweden is embracing the cashless revolution and is expected to become the worlds first cashless society by 2023. Nearly eighty per cent of Sweden's retail transactions happen electronically. Sweden has such a low cash use that cash is disappearing from circulation. The amount of real money circulating in Sweden has fallen by an estimated twenty-eight per cent in just four years. Over the same period, the use of cash machines dropped by nearly fifty per cent.
In Britain, the reduction in the use of cash has been so fast that even industry experts are shocked. Britain's shoppers made nearly 12 billion fewer cash transactions in 2018 than they did in 2008.
The Telegraph reported these facts and figures in late 2019
With these kinds of statistics, it is easy to understand why many feel that a cashless society is imminent, and a market-driven necessity. A few thousand people in Sweden have even gone as far as having chips put under their skin, to eliminate the need for using a phone or smart device.
What are the broader benefits of a cashless society?
There are many benefits to a cashless society. The go-to arguments for advocates of this new age are relatively obvious.
Lower crime Rates:
The National Bureau of Economic Research carried out a study back in 2014. By stopping the cashing of benefit cheques, and replacing the system with pre-credited plastic payment cards, they claim to have witnessed a 9.8% reduction in crime. This fall in crime was attributable to cash orientated activity such as mugging, breaking and entry and other non-drug related crimes.
Abolishment of the black market.
There is a common belief that black market activities such as low-level drug trafficking, money laundering and prostitution will disappear in a cashless society. Indeed, many transactions between drug users and their dealers, and sex workers and clients are cash-based. Would the abolition of cash stop these activities though?
Easier International commerce.
If you have used a post office top-up card, Revolut card or similar, then you will already have experienced the ease at which you can spend money abroad. By linking a smartphone top-up app to your bank account, you have instant access to the best rates of exchange. Travelling with a card is convenient and safer than going with large quantities of cash. Cash-free travel is all well and good, but what happens to the less well off members of a foreign travel hotspot? Street food vendors, jewellery makers and market stalls are almost entirely run on cash.
The example of foreign workers, working in cash trades is the perfect model for understanding the dangers of a cashless society.
Is a rapid move to a global cashless society wise?
For every advocate of a cashless society, there is an equally loud voice issuing frank warnings. Imagine for a moment that a tourist destination was to abolish cash altogether. Tourists with electronic payment devices and cards would no longer be able to deal with street traders, and local craft stalls. Many of these small businesses are run by a countries poorest demographic, with some having no access to a bank account.
The only option here would be for the poorest people to work with a proxy partner who has a bank account. This proxy could accept payments and provide them with food or goods in return.
Think about this for a second. That is a very worrying prospect. The poorest people would now be at the mercy of the relatively richer. The system would have to work entirely on trust and honesty. The dynamic of poor people working for more affluent people, in exchange for goods and services spells the end of independence for the weaker group. Honesty and integrity rarely come in to play when one group is controlling another.
There are several fascinating articles on the dangers of a cashless society, including this one from Forbes Magazine, and this one in The Guardian.
What if you were that person whose freedom and income was now entirely monitored and controlled by your new master?
Well, in a cashless society, this dynamic will exist in a broader sense Even if you have a bank account and pay your taxes, the removal of cash from your local economy will have a significant effect. In a purely digital economy, the power is held by those who own the technology.
The dangers of a dystopian economy could easily include:
• Certain goods deemed inappropriate being subject to arbitrary de-valuation.
• The freezing or restriction of your ability to use your money as you please
• Increased power to large corporations and government bodies.
• The removal of an individuals ability to work independently of the system is also a potential reality.
If someone can switch off our ability to eat, drink and spend as we please, they have unprecedented power of us. The many voices that are rallying against a cashless society are concerned about this type of power dynamic coming in too quickly.
Another issue few are considering is the uncomfortable truth that the world economy is propped up on the black markets that a cashless society would undermine. Pulling the dark money out of a countries economy could easily do irreparable damage, or cause mass poverty. The rich-poor divide could reach unmanageable levels, with the most vulnerable now open to extreme exploitation and manipulation.
If you feel that this is not a realistic proposition, you need only look at the problems Zimbabwe is having.
Are we ready for a cashless world?
It is easy to see that a cashless society is inevitable. Even the production and distribution of actual cash has been subject to various economy drives, including the materials used to produce coins and notes.
The march towards smart device payment systems is not slowing down either. Technology is always improving, and the desire-driven need for the latest device plays into this cycle.
The one sticking point is that many influential countries are far too reliant on cash for their everyday needs. A recent study showed that the top ten developed countries where the Black Economy exceeds 20 per cent of Gross Domestic Product, included most of the influential economies in the western world.
It seems that a sudden switch to a cashless model globally could spell disaster. For now, there are as many experts campaigning for caution as there are advocates. WHICH? magazine has even campaigned for cash to remain available in the UK so that 25,000,000 people are not economically displaced.
While the world waits to see how this plays out, you can experiment with a cashless society yourself. As a consumer, you can use G-pay, Samsung Pay, or Apple Pay on your phone. If you are a small business owner, or predominantly cash trader who would like to experiment with card readers, then companies like Sumup are helping to make the adjustment to a cashless society a bit easier.
SumUp is a card reader provider which enables merchants to accept credit card and debit card payments anywhere, at any time, using their SIM card based, cost-efficient devices.
With its simple 5-minute sign up process, SumUp is used by a variety of small business owners. Micro merchants such as food trucks, hairstylists, cafes and street performers are all trying handheld card readers.
At the Edinburgh Festival 2019, the number of artists and performers offering card payment via a small handheldhandheld card reader rocketed. Many of the performers reported much higher returns once they started using a hand held card reader.
The future of cash may be uncertain. Now is a good time for business owners to look carefully at their position, and ascertain just how impactive a cashless society would be.
The future of cash may be uncertain. For now, it is the perfect time to see how the removal of cash from your customers might affect your business.