Should We Be Worried About the Rise of a Cashless Society?

Favoured by mobsters and the tooth fairy, cash is meant to be king. These days, though, in major cities from Oslo to Hong Kong to Toronto, it feels as though you’re more likely to come across a business that doesn’t accept cash than one that does. It’s a complete role reversal from a few years ago, when corner shops often whacked a 50p charge on any of your late-night rizla and salt-and-vinegar crisp purchases below a certain amount – if they even accepted card at all.

You’ve likely seen businesses switching from ‘cash only’ to ‘card only’. Perhaps it’s your local coffee joint, proudly proclaiming themselves a “cashless shop” to their clientele of tech bros and health-goth ad execs. Maybe it’s a public transport service, where, as with London’s buses, you can only pay for rides with a smartcard like the city’s Oyster, or contactless bank cards. Or it’s a national chain, like grab-and-go food spot Itsu, who announced a limited cash-free, card-only trialin July. But does that leave us better off? And what happens to people who may find themselves on the margins, if they're not willing to leave behind a digital breadcrumb trail behind every payment they ever make?

Businesses certainly feel there’s a benefit to going cash-free. In 2019 Tesco trialled "shop and go" technology via an app in a staff store at their Hertfordshire headquarters. It took the idea of cashless buying to another level. The customer would download the app, scan the barcodes of items they picked up in the shop, as they went through the aisles, then be able to leave the store with those items in hand. Basically, they've binned off tills and queuing for checkout, and claim the move cut queuing time down to 45 seconds. It's a similar technology to the Amazon grocery store in Seattle, called Amazon Go, where there are no checkouts and customers are billed on account for items via their credit card. And sure, it sounds seamless, but there are dangers to this switch.

Yes, contactless and debit/credit card payments are on the rise: we paid in cash about one-third of the time in 2017, while in 1997 we'd used cash three-quarters of the time. But many people still prefer to pay with physical money – and they’re not simply older folk who’ve let the online banking train pass them by. Jessica Tuer, who works in a restaurant, says she hasn’t used her bank card in a “very, very long time”, citing money problems and saving as the main incentives to keep cash in her wallet. The 23-year-old tells me: “I really hate that companies are moving to card-only; I won’t even shop online ‘cos I hate using my card. I use my card when I have to – paying tuition for school, for example.” Similarly Anya, an 18-year-old waitress in a pub, earns her wages in cash. She says she finds it easier to save when she can stash her money away in a place where it can’t be spent – away from the temptation of contactless payments.

Like Jessica and Anya, I love a pound coin, or a crisp £10 note. Even if I’m broke, the feeling of having money rustling or clinking in my pocket, however nominal the value may be, creates a certain kind of affirming comfort. But if we go entirely cashless, we’re handing even more control of those monies to the banks. And not only that, but they’ll have our data too, based on a blow-by-blow account of every penny we spend. Considering what happened with Cambridge Analytica, in the age of data as human rights, should we be worried?

Dr Francesc Rodriguez Tous essentially says, yes – or at the least, we should be careful. He’s a lecturer in banking at Cass business school, received his PhD in Economics from the Universitat Pompeu Fabra, in Barcelona, and has worked at the Bank of England, Deutsche Bundesbank, and Banco de España. He tells me that since we can’t really imagine how our data might be used in the future, withdrawing consent for data use is important. “If some likes on Facebook were enough to target the right audience to nudge some political views, I cannot imagine what can be done with data on our purchasing habits,” he says.

That said, there’s also a positive flip-side to banks monitoring data. Take new upstart British banks like Monzo and Sterling, who update you instantly on a mobile app each time you make a purchase, tracking where it took place and what category it falls into, such as eating out, groceries and bills. By monitoring these consumption habits, they can suggest savings plans. Dr Francesc Rodriguez Tous also says financial services can improve significantly by using these vast amounts of data, like setting up verifications to prevent excessive expenses and the like (Monzo already block certain transactions, such as gambling). Though he does note “There is a balance that might take a while to achieve between improvements in financial services and data protection concerns.”

There’s also the problem of what happens when we stop using cash. An independent report by Access to Cash, this year, said the UK’s cash system is on the “verge of collapse” and 8 million adults would “struggle to cope” if they were cut off from accessing money. This poses another set of problems, namely for those who are paid in cash, often off-the-books. Homeless people could suffer in a cashless society too. Though some people experiencing homelessness have figured out ways to accept card payments while busking or working as registered Big Issue sellers, that's not a one-size-fits-all model. Even so, card payments are increasing (a 2019 report by industry body UK Finance estimated that 9 percent of all payments by 2028 would be made with cash), we’re a long way off from a completely cash-free society. It’s complicated.

For a start, Dr Francesc Rodgriguez Tous says completely eradicating cash from society would need participation from all businesses, banks and the government. Plus, he says, there will likely always be a market for cash, whether that’s criminal activity, or the simple fact that different services work in different ways.

Dr Francesc Rodriguez Tous likens it to changes in music consumption. “There’s still a market for vinyl, even though it came before the CD, the same with MP3s – there’s still a market and they’re needed by certain people and particular audience. It might be similar with cash, for certain goods.” So we’re not going to be forced to pay with card everywhere, for everything, before the sun melts down all the ice caps? Nah, not likely. “Not for 20 years,” anyway, says Rodriguez Tous. “Not now.”

@ryanbassil