Is a cashless society likely?
Paper money revolutionised the economy when it was introduced (In Europe during the 17th century, though it was around from the end of the first millennium in China) however now it is getting old. We are increasingly moving towards a cashless society. Money will change hands using cards, the internet and mobile phones. Cheques are already a victim of the convenience of electronic money, could cash be next?
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Cheques are a thing of the past, direct debits have taken over
The Payments Council made an announcement to the effect that by 2018 cheques would be dead. Making paper payments is no longer viable in the 21st Century. There are very few shops that accept cheques these days. Compare this dwindling figure to the number of shops which are making provisions so that they can take card behind their tills. Even local corner shops are implementing card technology.
The paying of bills used to be a matter of sending cheques in the post, now people set up direct debits to pay for their bills and they are encourage to do so by being offered discounts on the bill. This form of payment is quicker and more reliable. The same arguments can be made for completely replacing cash with card payments.
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.
Cash is expensive
Steve Perry, executive vice president of Visa Europe makes an astonishing claim that is backed up by a reasonable explanation. He argues that dealing in cash is expensive. It is for this reason that supermarkets operate Cash Back systems. They want to take the electronic payment and offload the cash onto the consumer. That way they have less money to safeguard over night and less money to count up when the store closes. [[http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6968143/Is-a-cashless-society-on-the-cards.html, 11 January 2010]] McKinsey, the consultants, estimated that each person pays £180 a year for the upkeep of cash in our economy[[http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6968143/Is-a-cashless-society-on-the-cards.html]]. Given the recession, surely we will do away with cash and put this money to better use than keeping an old tradition.
We have become more acclimatised to card payments
The internet has been a major factor in us moving away from cash riddled society. We now shop online and are very much used to the process. From furniture, to holidays, to cloths to electrical goods, we have seen first hand how easy it is to buy online. This has drawn us in to this form of cashless shopping. Then in 2004, the Government rolled out national chip and pin. This was the process of taking your card to a check out and using your pin number to make a payment as opposed to signing a receipt. This once again made us more partial to paying by card. With our attitude towards card payments becoming increasingly more amicable, eventually it is inevitable that we will do away with the time consuming cash and start using card for every form of payment.
Do away with cash and you do away with crime
If we did not have cash, then the black market would suffer. People would not be able to make sly cash payments in back alleys for drugs and other illegal products. They would also not want to use the card payment system as this is traceable. It is the intractability of cash that makes the authorities want to get rid of it.
Drug payments could be followed on card. The tax man can follow payments on card. With no cash, there would be no cash in hand jobs. Therefore, every penny earned in the UK would be counted in our tax system. The fact that these two effects of abandoning cash are beneficial to both society and the authorities, it is more than likely that such development would go ahead.
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.
Some schools and businesses already take plastic or RFID chip implants only to transact
College campuses and businesses have been used to test the RFID environment for the last twenty years. It's all about conditioning the youth. Once conditioned, there is no complaining or rejection because the person hasn't known anything else.
I am not in support for a cashless society but it is very clear that we are going the way of the RFID chip. Everyone will eventually have a global database assigned to them for all facets of life that will also contain an inventory. Anything found on a person that is not in their inventory will be fined or imprisoned. Underground trading will also force one to remain underground and apart from life as we know it now. Some assume that they will be able to reject the chip and still be able to have a job, home, car, school, and etc., but that can't happen. Hence, every home in the U.S. will have to be license and subjected to inspections and they are already marking the GPS location of every front door to every home.
Children’s pocket money
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.
The recession has made us more wary of card payments
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.
Quite to the contrary a card payment system would actually help our economy. Card payments are estimated to be 50% quicker than cash payments. Therefore queue sizes would be halved and this would encourage people to go shopping on their high street. It is this convenient and fast method of payment that would entice customers to use their cards to pay. Whilst stores would have to pay to implement the appropriate card reading equipment, they would also see the benefits. Statistics show that people spend 20% more when paying by card than they would pay by cash[[http://www.moneyweek.com/news-and-charts/economics/is-this-the-end-of-cash-as-we-know-it.aspx, 27 June 2007]]. It is easier for us to hand over a plastic card than it is to hand over notes and coins. Therefore this would help the recession. More money would be pummelled into retailers’ pockets, therefore they would hire more people and have the ability to raise wages to increase output. Far from being disastrous, this is desirable.
Charity collections would suffer to greatly
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.
If we move to a cashless society it will be the biggest mistake central planners ever made.
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
It gives the government another avenue for privacy invasion
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?
What do you think?