We all have our own expectations for life in the future. Whether you dream of flying cars, holidays to the moon, or your own robot, the possibilities are endless. But when we imagine what life would be like in the coming decades, aren’t we forgetting something? Something which everyone does, every day, everywhere… When the time comes, how would you expect pay? I’m sure you wouldn’t imagine yourself counting out some cash and handing it over for your morning coffee. Fitting with this expectation, recently, there has been a global movement away from cash. Now it is quicker to skip the paper and pay with a tap, resulting in a 73% increase in card transactions worldwide since 2012. Some are professing that these trends suggest it is inevitable that there will come a time when all transactions are made digitally. However, there are crucial consequences to such dramatic change and a large opposition who believe we are not ready to leave paper money in the past. Nevertheless, the future of payment remains uncertain.
For many, the driving force for electronic evolution is convenience. Clearly, it is advantageous not having to haul a bulky wallet everywhere. Furthermore, purchasing digitally streamlines the payment process for customers and shops. Not only is it effortless paying by card, but a cashless future would relieve shops of having to maintain tills. The problem with paper money is that it must be managed; storage, transportation, and protection are a necessity, resulting in unexpected costs for many businesses. Likewise, for the public, there is an inconspicuous cost for using cash. In the United States, those who are unbanked pay four times more to access their cash than people with bank accounts through which they can store and access money, and the average American wastes 5.6 hours a year traveling to retrieve cash.
In addition, those who support the cashless movement assert that the less paper currency in circulation, the less criminal activity: less terrorism, less tax evasion, less illegal immigration, and less illegal drug supply. Criminals adopt cash because of its anonymity, whereas digital payments can straightforwardly be traced and monitored. This means that without paper money it would be extremely difficult - almost impossible - for anyone going against the law to make payments, as fraudulent activity would instantly raise suspicion in the digital system. Hopes are that going cashless would therefore annihilate illegal trade and the black market. With no cash sitting in tills, bank vaults or home safes robberies would also plummet. Similarly, a lot of dubious businesses prefer paper money because it gives them the ability to obscure transactions and avoid taxes. It is estimated in the United Kingdom that about 2.7 billion pounds are lost in tax avoidance each year. If all payments were digital, it would be a hopeless endeavor to try to hide money from the law.
Out of all the countries moving towards a cashless society, Sweden has become a world leader. In 2016, barely 1% of the values of the country's transactions were made using cash. The change has been spurred on by banks who have encouraged digital payments due to their increased revenue from transaction fees on cards. This has been the most successful attempt to get rid of paper money so far with some analysts predicting that by the year 2030, the country could be completely cashless. The transformation which Sweden has undergone is loved by many for the simplicity and security it brings to everyday life, underlining how successful moving away from cash can be. Yet, despite this success, many people remain skeptical of the move.
Although moving away from physical money seems inevitable, there are many concerns with a completely cashless society. If our entire system is completely reliant on electronics, what will happen in a power cut? The complete reliance of society on such a system creates a need for reliability, which cannot currently be guaranteed. On top of that, there are serious security concerns with digital wallets. Cyber-attacks are becoming increasingly common, and by putting complete faith in digital banking, we would leave ourselves extremely vulnerable to hacking or a potential system malfunction. However, there are more deep-rooted problems faced by a theoretical cashless society. Privacy is a huge concern as every penny you spend in a digital system can be tracked and traced. This data would be extremely valuable to hackers, media companies, and businesses. And more frighteningly, government influence over the banks and credit card companies that process digital transactions could be used to halt payments for certain products or services. For example, if the government disagreed with a certain business for ethical, financial, or political reasons, they could freeze any transactions they make inevitably destroying such a business, because without an alternative such as cash, they would be forced out of trade. Imagine this control in the hands of a dictator, let alone a democratic government. Also, studies have shown that people tend to spend more freely when paying digitally because they are disconnected from the money they would typically be handing over. This means that going cashless has the potential to exacerbate debt.
Furthermore, it is those who are most vulnerable - such as the poor and the elderly - who tend to rely on paper money the most. Debit cards and digital wallets aren’t accessible to everyone, meaning that without cash many people will be left isolated. In 2016, India decided to phase out their two most popular banknotes. This made 86% of the country’s cash worthless overnight. But the prime minister claimed (as those in favor of a cashless future do) that it would destroy India’s tax corruption and the black market. However, in India, almost 90% of transactions are made with cash. Therefore, it was the poorest who are primarily paid in paper money, who had little access to banks, and who stored their life savings in high-value notes that were crushed. Stores shut down, people couldn’t get paid, and hospitals were forced to refuse patients. People died waiting in line to deposit money. It was a catastrophe.
But even though India has struggled with their attempt to minimize cash payments, it does not detract from the potential of a cashless future. Rather it highlights the importance of context. Cash was engrained in the Indian economy, yet for countries like the UK, where card payments account for more than half of the total transactions and 96% of the population own a debit card, there is much more potential for a smooth transition. However, in my opinion, it is hard to say if the UK is ready for such a change. With a growing elderly population who rely on paper money, prefer using it, and struggle with new technology, such a change is bound to divide our country. This leads me to believe going cashless will not be a naturally occurring evolution, especially for a country that greatly values tradition. Nevertheless, the benefits are evident, and with the right planning, the risks could be diminished. Personally, I don’t want to have to deal with the clumsiness of cash. The school dinner ladies already hate me enough for paying for a 63p cookie with a £20 note. So I think we've waited long enough for a cashless future, and yes, we should get rid of paper money after all.