Cashless society threatens freedom of choice and privacy

Banks, financial institutions, and payment service providers are trying to convince the world that digital spending is the currency of the future. The way they view it, cash is dead. There are many individuals, however, who see the clear value in handling their own wealth directly and do not wish to relinquish further control to big finance.

Advocates for the death of cash, companies such as Visa, Mastercard, iZettle, and those with technological investment, such as Apple and Samsung, argue that the world would be better off without it. If instead of spending notes and coins, people made payments only with digital wallets and debit or credit cards, the economy would be richer and smoother. And, from the space these entities occupy, they are right.

The result would see profits for financial services and those in the payment ecosystem rise, dependency on their solutions maximise, and the decline of their customers' capacities to resist or make choices.

"For decades, anti-cash campaigns, largely led by dominant card brands, have been waged in the mass media with the objective of discrediting cash", the ATM Industry Association said recently. Financial institutions are in favour of bringing the total economy under their control, as this would bring the full potential yield of rates and charges. And some countries are following the call, with Scandinavian countries ahead in cashless reform. Sweden currently sits at 85% of all transaction being non-cash, and Norway is much the same. They, China, and India lead the trail of countries heading towards truly cashless states, with many countries in South-East Asia, Thailand and Vietnam for example, taking efforts to transform and push their citizens in the same direction.

In a cautionary article on the potential for problems in a world without cash, cyber security specialist Dr Rakesh Goyal writes: "Apart from known risks such as high cost, digital security, slow Internet connectivity and low tech-literacy, there exists another dimension of risk. It is the Risk of Denial of Service (DoS) or Risk of Exclusion (RoE). And this can affect the life and liberty of citizens."

Companies and banks have been pushing their narrative for many years and they are reaping the rewards, as well as becoming increasingly brazen with their efforts to influence public opinion. Visa advanced its agenda last year with a vocal incentives scheme, dubbed the "Cashless Challenge", aimed at rewarding small US companies $10,000 each for going cashless. 50 such winners were selected for "envisioning less-cash solutions as a means to more convenient, secure and easy transactions." Of course, with every transaction made through Visa's services it makes interchange fee revenue, charging the card user's financial institution. Ease and convenience are attractive, but the added costs of paying with cards and apps is difficult to quantify. And, reliance on a third party to make payments is something that some people are not willing to accept.

Not only are there charges and fees associated with participation in these types of services, but it has been widely recorded that we spend more impulsively when we lack the anchorage of physical cash. Without a cash option, consumers are robbed of the choice to take more conscious control over their spending, and transactions are tilted in favour of retailers.

G4S's The Global Cash Report observes that 79% of point-of-sales in Europe are in cash, and that only 45% of people living in South America actually have a bank account. While having the option to pay through a third-party service has benefits, the value of being able to choose to pay how you like cannot be over-stated. Jesus Rosano, CEO of G4S, points to this and other figures. "The evidence shows that contrary to popular opinion, demand for cash is growing in absolute terms and relative to GDP [...] wherever people are in the world, they use and value a range of payment options."

Cash is dependable in a way that digital never can be. We only have to look to Visa's periodic service disruptions or online banking calamities to see how precarious a world completely without cash would be. And this is saying nothing regarding the increased relevance of state-funded cybercrime and its potential for economic destruction. For these and many other reasons, it is important that people have a way to pay directly with currency that they trust.

During the global financial crisis in 2007, when certain banks began to show signs of risk, many people chose to withdraw their funds. In their 2014 paper examining deposit withdrawals in the wake of the crisis, Brown, Guin & Morkoetter observed this trend: "We document a strong propensity of households to withdraw deposits from distressed banks, especially when a bank receives a public bailout." And this is every individual's right, to handle their assets as they choose.

In an economy without cash, we would live in a world with less control. Not only does withdrawing funds in cash give consumers free agency, to spend it without the ratification of a company, it gives them the choice to protect their own assets from financial mismanagement and disaster.

While there is potential for any number of dystopian outcomes, there is one concrete problem at the heart of the issue: choice. Should a private individual be restricted in spending their wealth other than with the permission and cooperation of a commercial entity? The move towards a cashless society is yet another attack on the individual's sovereign right to choose.