As we discussed in a recent blog post, the UK is cutting back on its use of cash. Digital payments, predominantly debit and credit cards, are taking over, perhaps not surprisingly considering the relentless pace of technological progress. Consumers need to adjust accordingly- after all, some form of currency has been in circulation for thousands of years. But would the end of cash be positive or negative for society?
- Less crime A cashless society could reduce crime. Digital payments are easy to trace, so they can’t be used as a medium of exchange for illegal transactions like drug deals. They’re also harder to hide, helping governments keep track of how much we owe in taxes. We might even see a fall in petty crime, as there would be less incentive for pickpockets to steal someone’s wallet.
- Lower costs Digital payments also cut operating costs for small businesses. At the moment, they need to keep cash on their premises to complete transactions with customers. However, in a cashless society they wouldn’t have to invest in secure storage facilities.
- International payments International payments would also become easier in a cashless society. Instead of having to buy local currency when you visit a foreign country, you could pay with a debit or credit card or using your mobile device.
- Technical glitches A cashless society would be vulnerable to technical glitches. Any problems with the global payment system could halt trade and cause panic among consumers. If you rely on your mobile to make payments, then you could be stuck if your battery dies. And the increase in cybersecurity threats makes digital money more susceptible to hackers.
- Getting left behind Certain groups in society risk getting left behind. The older generation isn’t necessarily tech savvy and may not feel comfortable relying on digital platforms to handle their finances, especially day to day payments. Equally, the unbanked would have no way to complete transactions, while those without smartphones would have fewer payment options.
- Fees Every time you pay by card, intermediaries charge a transaction fee. These fees would become unavoidable in a cashless society. On the other hand, most ATMs don’t charge you to withdraw cash, and you don’t pay any fees when you buy something with it. There’s no imminent danger of cash completely disappearing from circulation. However, both governments and consumers need to be aware of the potential pitfalls of a cashless society, as advances in technology mean we’re increasingly relying on digital forms of payment.