Poor people and small and medium-sized companies rely on money. A contactless system will likely entrench poverty and pave the way for scaring levels of surveillance
The health food chain Flung has just opened the UKs first cashless cafe. Its another step towards the death of cash.
This is nothing new. Money is tech. The casting of coins stimulated shells, whales teeth and other such primitive different forms of fund redundant. The printing press did the same for precious metals: we started utilizing newspaper notes instead. Electronic banking put paid to the cheque. Contactless payment is now doing the same to cash, which is becoming less and less convenient. In the marketplace convenience usually wins.
Thats fine as long as people are making this selection freely. What concerns me is the unofficial war on money that is going on, from the suspicion with which you are treated if you ever use large sums of cash to the campaign in Europe to decommission the 500 note. Im not sure the consequences have been properly considered.
We already live in a world that is, as far as the distribution of wealth is concerned, about as unequal as it gets. It may even be as unequal as its ever been. My worry is that a cashless society may worsen inequality even further.
It will hand yet more power to the financial sector in that banks and related fintech companies will oversee all transactions. The crash of 2008 showed that, when pushing comes to jostle, banks have already been exempted from the very effective regulation that is bankruptcy one by which the rest of us must all operate. Do we want this sector to have yet more power and influence?
In a world without money, every pay you attain is likely to be traceable. Do you want governments( which are not always benevolent ), banks or pay processors to have potential access to that datum? The power this would hand them is enormous and the health risks scope for Orwellian levels of surveillance is terrifying.
Cash, on the other hand, empowers its users. It enables them to buy and sell, and store their wealth, without being dependent on anyone else. They can stay outside the financial system, if so desired.
There are many reasons, both moral and practical, to want this. In 2008 many rushed to take their fund out of the banks. If the financial system actually was as close to breaking point as we are told it was, then such actions are quite justified. When Cypruss banks teetered on the cliff of financial tragedy in 2011, we assured bail-ins. Ordinary peoples fund in deposit accounts was sequestered to bail out the system. If your life savings were threatened with confiscation to bail out a corporation you deemed profligate, I imagine you too would rush to withdraw them.
We have ensure similar panics in Greece and, to a lesser extent, across southern Europe. Mervyn King, the former governor of the Bank of England, lately declared that banking was not fixed and that we would consider fiscal anxiety again. In Japan, the central bank has imposed negative rates and you are charged by banks to store money. This is to try and goad people into spending, rather than saving. So much cash has been withdrawn from banks that there are now reports that the country has sold out of safes .
These are all quite legitimate reasons to want to exit the system. Im not saying we should all take our fund out of the bank, but that we should all have the option to. Cash gives you that alternative. Why remove it? Its our fund. Not the banks.
The telephone teaches us a useful lesson. At its peak in 2008, there were 1.3 bn landlines for a global population close to 7 billion. Today more than 6 billion people have a mobile phone more than have access to a toilet, according to a UN study. Many assume that the mobile succeeded where the landline failed, because the superior technology made widespread coverage more possible. There is something to that.
But the main reason, simply, is that, to get a landline, you need a bank account and credit. About half of the worlds population is unbanked, without access to the basic financial services you need. Telecoms companies find no potential custom, the infrastructure was never built and many were left with fewer potentials to communicate. But a mobile phone and its airtime you can buy with cash. You dont required to banked. Almost anyone can get a mobile and they have. The financial system was actually a barrier to progress for the worlds poor, while cash was a facilitator for them.
Six billion people around the world will have a smartphone by 2020. They will have pretty much everything they need to participate in e-commerce internet access, basically except the financial inclusion. Which is why there will be a huge role to play in the future for new forms of digital cash from Kenyas M-Pesa to bitcoin fund you can use even if you are not financially included.
Cash has its employs for small transactions a chocolate bar, a newspaper, a pint of milk which, in the UK, are still uneconomic to process by other means. It will always be the fastest and most direct sort of pay there is. I like to tip waiters, for example, in money, knowing they will receive that fund, without it being siphoned off by some unscrupulous employer. I also like to shop in markets, where I can buy immediately from individual producers knowing they will receive the money, without middle men shaving off their percentages.
It also has its employs for private transactions, for which there are many possible reasons, and by no means all of them illegal. Small industries starting out need the cash economy. Poor people need the cash economy. The war on cash is a war on them.
If you listen to the scaremongering, youd start to think that all money users are either criminals, taxation evaders or terrorists. Sure, some use money to evade taxation, but its paltry compared to the tax avoidance schemes Google and Facebook have utilized. Google doesnt use cash to avoid tax. Its all done via legislative means.
Cash means total fiscal inclusion, a luxury the better-off take for granted. Without financial inclusion and there will always be some who, for whatever reason, wont have it you are trapped in poverty. So beware the war on cash.
Read more: www.theguardian.com