Is a cashless society likely?

There is a natural, very human tendency to feel reassured by the presence of the physical. You own a car—you can see it, sit in it and drive it. You can also own a star—or at least register your name for a star on the star registry– but chances are you won’t be able to see it or touch it and someone else may own it too. Most people would prefer to use the former as collateral rather than the latter.

Cashlessness requires that all of society’s stakeholders—organizations, financial institutions, governments and individuals—agree on and trust in digital currency. With the global meltdown and continuing fallout in the financial services industry, people are more comforted by the physical and less likely to put all of their confidence in banks and other financial institutions.

In a February 2010 Wall Street Journal Opinion editorial, Harvard Law Professor and Head of the Congressional Oversight Panel Elizabeth Warren posited that “Banking is based on trust. The banks get our paychecks and hold our savings; they know where we spend our money and they keep it private. If we don’t trust them, the whole system breaks down”. While according to a survey by Forrester Research, consumer trust in financial institutions is returning, banks have a long way to go.

Payment processes are the first frontier of a cashless society and will also provide the spark for innovation. Because currently the infrastructure and technology required to support new payment technologies remains largely disconnected. As the world increasingly relies on digital currency, all banks—big and small—will have to evaluate and in some cases enhance their existing technology to reduce errors, increase efficiencies and add transparency. In many cases, the greatest push will be for systems that can deliver end-to-end visibility of the transaction process since accountability will be a major factor in any wide-spread cashless initiatives.

Given the glacial pace of financial institutions and other key stakeholders to invest in the technology and infrastructure required to provide true transparency and end-to-end transaction visibility, it is highly unlikely that the world will rush to make a wholesale switch to digital currency any time soon.

Other crimes such as card fraud, hacking, identity theft online and through fake cash machines will increase. On a base level, people can still steal your card and find out your PIN. Large drugs and arms deals are transacted using non-cash physical goods such as diamonds anyway.

With risk of being over-cynical. the fact that it will make underhand dealings much more difficult is one reason why it is unlikely to happen – it will not be approved by large corporations and politicians who want to make the occasional underhand deal.

There are a great many traditions in our society that we would lose out on if we had a cashless society; children’s pocket money being the one closest to the heart. Every adult remembers receiving their pocket money.. No matter how little the amount, to hold the cash in our hands at a young age was something of a joy. For the parents it was a bit of loose change in their pocket, but to the child it meant so much more. It made them feel independent. However, if we introduced a plastic society and did away with cash, what form of pocket money would we give our children? Surely we would not be as cold as to get them a plastic card and place money on their card for them. If we did, it would make the child not value money. They would begin to see it as numbers as opposed to something that has intrinsic value. For this very reason, cash will never become redundant in our society.

We have all seen the devastating effect that the recession has had on people’s lives. The media insist on talking about the recession time and time again. We all know the root cause of the recession and we are all very wary of it; debt. We are wary of mortgages, the prime cause of the recession, as it is a vast amount of debt owed to banks. We are wary now of credit cards as we have seen how the interest on those cards and keep accumulating until you owe more in debt than what you originally spent on the card. We are now also wary of our current accounts and their overdraft charges. With so many concerns revolving around, debt and plastic cards, Briton’s would be unlikely to warm to the idea of paying by card for everything. There is an element of unease. It would be all to easy to go into your overdraft if this were the main form of payment. At least with cash we can hold and see the money we have. We need people in Britain to start spending what they have and get out the idea of spending that which they do not have. Implementing a card system before this lesson is learnt would be disastrous.

If we had no cash how would we be able to donate small amounts to charity. People often see it as too much money to sign up to direct debits. People do not want the commitment of having their cash being retracted out of their accounts every month on a set date. Instead, people prefer to make small regular donations when they pass a bucket in the street, or when they see a collection tin at a shopping counter. These charities do valuable work for our society and they will cease to work effectively if we do not use cash. This is not something that Britain would like to see happen. Therefore, it is very unlikely that Britain will abandon cash in favour of cards.

The absence of cash will encourage the barter system, and as every well educated human being knows the natural evolution of a barter system results in a commodity based currency which eventually will be gold and/or silver! Once people will get used to using gold and silver as mediums of exchange the demand for the precious metals will skyrocket and their price will go through the roof, and that is before people will start to look at them as a store of value. A cashless society will kill the fiat paper system

http://israelfinancialexpert.blogspot.com/2010/01/if-we-move-to-cashless-society-it-will.html

After the cards are in place they’ll think of a way to do away with them & then everyone will get the govt. chip implant. Haven’t the government & banking intitutions already stolen enough from us? Do you really trust them?