Imagine a world without physical wallets. Where lending a friend a few bucks or buying groceries can only be done with a mobile device. Whether this future is alarming or exciting to you, the wheels are already in motion.
In countries like Sweden and China, cash is quickly becoming a thing of the past. In many Chinese stores, customers simply scan a QR code, show the clerk that the item was paid for, and go on their way. Although many of these stores still accept cash as payment, this may change soon. In Sweden, it is now common to see retail shops with signs hanging in the window that say “No Cash Accepted.”
The cashless revolution has both critics and supporters. Dynamic forces in the form of money-service agencies, governments, and everyday shoppers are driving an increasingly digital society. These changes, however, may have dire consequences that need to be addressed.
Perks of Going Cashless
Besides the ease of mobile payments, there are many reasons to support doing away with coins and bills.
First, using money costs money. Ironically, the fibers used to print money, their inks, metals for coins, and the machines required to produce physical currency are expensive. Once money is moved into the economy, businesses must pay people to manage it every step of the way. Holding money in inventory, receiving, and depositing it all adds expense to the industry, which is passed on to consumers.
Second, going cashless means the plots of most crime shows will become a thing of the past. Weapons, drugs, and narcotics are often paid for in cash due to its untraceability. Digital currencies can be tracked which means there’s a paper trail. Crime in a cashless world is significantly harder. Mugging someone for the bills in their pocket will become a nonexistent occurrence.
Third, as society becomes increasingly global, international currency has become a stress point. Costs and difficulty incurred by changing currency from one form of bill to another are unnecessary in a cashless society. Instead of trying to figure out how much 6500 Thai Baht costs in your local currency, your mobile device will seamlessly convert all rates for you during payment.
Dangers of Going Cashless
Before we can simply go cashless, important social structures and challenges need to be considered.
First, along with the benefits of having a paper trail, are the losses of privacy. Any discreet purchases that you would prefer to be handled in private are recorded. Hiding an erectile dysfunction problem, for example, would be signifigantly tougher with a digital record. Costs for purchasing goods or services might also become more expensive when financial services have control over payment. In addition to having the medication recorded, a fee might be tacked on by the payment service for using their
product to purchase the pills
Second, technological problems could deprive you of your livelihood. If the system is hacked, or if glitches occur, you could wind up in a tricky situation. The best case scenario is that you are stuck wherever you are waiting for the system to restore functionality—a long line at the coffee shop. The worst case scenario is that all of your funds could be depleted in a second. You can’t hide bitcoin under your mattress or in a shoebox.
Third, the infrastructure doesn’t currently exist to support all types of people using digital currencies. In low income countries, where power or internet aren’t guaranteed, digital solutions are not necessarily viable. Natural disasters could also wipe out electricity and networks of affected areas. Finally, the poor, elderly, and those who live off of the mainstream may not have access or knowhow to use the technologies necessary to carry out these financial transactions.
Cryptocurrencies and Mobile Payment
As we move towards a cashless society, it is not yet clear how payment will take place. In the United States, peer-to-peer (P2P) services like Venmo and Paypal dominate electronic payment for informal goods and services. Products like Apple Pay in the US or AliPay in China have shaped the current landscape of common market transactions. These companies, however, have no guarantee to be the future of mobile payment. Companies like Unionpay, Zelle, and others are increasingly popping up and taking market share. Only time will tell which services we use to pay for goods in 5-10 years.
Proponents of a cashless future often point to Bitcoin, Ethereum, and other blockchain-based currencies as the future of payment. While these cryptocurrencies offer great promise by keeping money transfer costs low, they offer new challenges. A lack of regulation, massive market fluctuations, and ease of use are among the problems that face the ‘crypto revolution’.
Putting It All Together
The reality of our cashless future is that it’s more a question of when, not if. Before we eliminate the bill and coin completely, it is paramount to establish infrastructure and consider societal improvements. As countries such as India, Sweden, China, and the United States experiment with what this future might look like, it’s our duty to learn from our lessons and mistakes. The history books of the future will be the judge of how we handled integrating those with fewer means into the digital future.