Cashless society has major benefits but we can't ignore concerns about the power it hands to financial institutions – Steve Cardownie
The UK’s move towards being a cashless society gathered pace during the current pandemic, which has intensified the need for cashless payment tools which are safer and a lot more hygienic because it limits contact between the cashier and the customer.
A cashless society would be more efficient, cleaner, faster and more secure, we are told.
Cash can be easily lost, misplaced or counterfeited and recovering funds can prove to be extremely problematic.
Vinay Prabhakar, vice president of Volante Technologies, a global financial technology company, said: “Despite the many valid concerns about the security of digital payments, they are intrinsically more secure than cash. Most digital transactions offer various levels of security and repudiability, such as the ability to dispute a credit card charge, which cash cannot compete with.”
Paying by smartphone, for example, also allows the user to track their payments by means of an electronic receipt which provides proof of purchase in case a return of goods is required.
That the UK is currently treading this path towards a cashless society is not in dispute. The trade body UK Finance has forecast that by 2028, just nine per cent of transactions will be made using cash.
In addition, an independent review carried out for the Bank of England said that the UK may only be between four to six years behind Sweden where, during the last decade, cash transactions have fallen by 80 per cent.
A data privacy expert at ProPrivacy, Ray Walsh, stated that “although the potential law enforcement benefits of a cashless environment are real, it is also important to understand how the constant tracking of transactions gives financial institutions and banks surveillance capabilities that have far-reaching consequences”.
He explained that the flow and liquidity of capital, as well as the decisions that people make, is information that institutions can use to judge individuals. “Ultimately, this gives institutions massively invasive powers that can lead to prejudice and discrimination.”
Other day-to-day pitfalls lie in wait. For example, in Sweden, the movement towards a cashless society has been so rapid that there are concerns that it has lead to financial exclusion, with buses no longer accepting cash and some other providers of basic essential services such as chemists, now frequently declining to accept cash.
A Swedish company Biohax has even repurposed old technology to enable its customers to purchase products using a micro chip that can be inserted into their hands under the skin. Since the company’s launch in 2014, roughly 5,000 Swedes have bought the chips enabling them to pay for travel, snacks and other products with a wave of the hand.
However there are still many people who don’t have a bank account, credit card, debit card or smartphone. Known as the “unbanked”, they do not have access to affordable banking products and must resort to cheque cashing or payday loans.
The withdrawal of cash from ATMs is much more widespread in poorer communities than affluent ones and the refusal to accept cash payments will obviously have a disproportionate, discriminatory effect on them.
Yes, a cashless society undoubtedly has its benefits – but it is not without serious concerns!