Would a cashless society be a better one?

I love not having to go to a cash point machine, but a cashless society would exclude too many people if you were to implement it now. That includes some elderly who may be averse to or struggle with digital technology, and also rural communities who suffer from poor internet and cellular service. A surprising number of people are also unbanked—they do not use traditional financial services—because of a variety of reasons such as having no fixed address, not trusting the banking system or not having sufficient funds to meet minimum requirements. So, they need access to physical cash instead. 

Only in the future, when essentially everyone is digitally literate and there are no internet blackspots, do I think we should even consider a cashless society.  

But I fear it still creates greater privacy and security challenges. One reason people favor a cashless society is because transactions can be tracked and recorded. People don’t want anyone, including the government, being able to monitor their transaction data, and the institutions entrusted to guard this data are vulnerable to being hacked. Plus, cash isn’t vulnerable to mass IT failures, which in theory can take down digital payments systems. 

 On a more personal level, think about the person who is the victim of an abusive relationship. Without cash, they might not be able to buy anything without their partner knowing. Cash also helps people to keep track of spending, which is vital for some low-income households; it’s too easy to overspend when you’re not looking at a finite, physical sum of money.  

Still, I would be surprised if we didn’t have a cashless society in the next 50 years. If that becomes the case, then it’s crucial that we ensure that the necessary safeguards are in place.

The beauty of cashless payments is that they are convenient and becoming ubiquitous.  

You don’t have to carry lots of coins or notes if you want to buy something expensive. And while cash is easily misplaced, you’re usually protected if your bank card is lost or stolen. 

 There’s also an electronic record of every transaction. This is useful for consumers, because they can easily monitor their spending, and for businesses it brings traceability and transparency, as they can track all incomings and outgoings, and minimize the risk of not being paid on time or at all. On a macro scale, it can help governments in their efforts on financial inclusion and the fight against poverty. Each year, trillions of dollars are in effect stolen from developing nations through corruption and tax evasion, but if you could follow the money, as you could do with a cashless environment, it would enable money to be more efficiently recouped and reinvested into these countries. 

 My long-term vision of a cashless society is one that leverages a digital currency issued by a central bank like a state-backed utility, rather than a private provider. At the same time, we need that government to establish safeguards and provisions to protect the vulnerable and help them participate in this system in a way that meets their needs. The priority should not be to eliminate cash entirely, but to instead promote cashless transactions and to develop a robust and scalable infrastructure to support it.  

 And I think we must embrace this reality now. There’s a growing appetite for a cashless society. If a digital currency organically becomes adopted at scale, driven by a rogue agenda and without due checks and balances in place, that leaves us vulnerable. Let’s get ahead of this and do it right.

BY WIRED

SOURCES: WWW.JPMORGAN.COM/PAYMENTS-UNBOUND/SOURCES

ILLUSTRATION: ADI GILBERT