When promoting cashless payments, authorities often justify their actions by benefits of cashless transactions, such as convenience for consumers and transparency. However, some issues, such as inequality and poverty, are often overlooked.
Social injustice, stagnation after the financial crisis, inadequate responses to climate change, and the COVID-19 pandemic: shortcomings of the contemporary world are not difficult to see. On top of this, there is a growth in inequality, which is going up for more than 70% of the world’s population, raising the risk of division and impeding the development of societies and economies. There are several – obvious and implicit – reasons for this, and non-cash payments are also contributing to it.
It may appear paradoxical: after all, we are told at every corner that a world without cash will be easier to navigate, taxes will be paid, and the money saved will be reinvested in the development of society and shared prosperity.
In reality, this is not the case since there is an immense problem of access to technologies. Obviously, people need devices and a stable internet connection in order to effectively manage a cashless wallet. At that, public Wi-Fi hotspots and Internet cafes are not a good choice: they tend to have a low security, and access may be restricted at certain times (take, for example, an eatery with free Wi-Fi, open from 8 am to 10 pm).
The Inclusive Internet Index 2021 shows that Internet access is growing, but not for everyone. There are groups of people for whom access to the Internet is restricted because of the remoteness of the areas in which they live, as well as the cost of Internet services. In addition, there is also a gender gap – in some countries, the role of women is very different from that of a democratic society. Accordingly, a full transition to cashless would deprive these categories of their opportunities to manage their finances and potentially worsen their financial situation.
In cash we trust
In addition, there is also the issue of trust in electronic banking services themselves. When you have cash, you can manage your finances with little to no access to your online bank. In the event of an economic crisis or economic turbulence, it is possible to stockpile cash at home, as many people around the world did in the midst of the COVID-related downturn. Being able to have open and free access to cash gives them peace of mind. In turn, depriving them of this opportunity reveals many problems. Practice shows that some people are not ready to engage actively with banks: for instance, a case study exemplified by Ethiopia revealed that the usage of online banking services has been significantly affected by perceived risk; another research showed that many people refuse online banking due to the same risk perceptions, lack of knowledge or simple IT fatigue.
Of course, there may be talks about the reluctance to embrace new things and neo-Luddism. However, the fact remains that people should not be forced to use things that they don’t trust and don’t like. The full transition to a cashless society will create so-called membership inequality: people who are fully digital will be separated from those who are unwilling to enjoy the new age. At that, the first category will have an edge and will potentially be able to influence the decisions and behavior of the second one.
Safety island in the cashless ocean
Speaking of those who have difficulties in adapting to the new electronic world, we cannot but mention those who are already experiencing difficulties: those who are underbanked people and the elderly. For them, the issue is to access the banking services. They are already experiencing problems such as overdraft fees from their savings accounts or the inconvenience of using public services, as the experience of Singapore, one of the most cashless-advanced areas, shows: “There are some elderly who rely on cash as their sole mode of payment. Some of the elderly whom I’ve spoken with either don’t trust or don’t use simple card functions like ATM cards or credit cards. Some of them might not even have credit cards because they don’t have that many savings to begin with,” says Singapore Member of Parliament Tin Pei Ling. Such exclusion creates substantial problems: imagine being unable to move freely and manage your finances just because you can’t figure things out, or don’t have the resources to do so.
The Singapore MP is not the only politician who admits the necessity of cash. Some cities and states in the US have already passed amendments in the legislation in order to shield bills and coins and protect vulnerable members of society. Others, such as the UK, hold polls and openly admit that their citizens still need diverse payment opportunities, or even state in courts that acceptance of banknotes and coins is not a matter of choice for business, but rather an obligation: “The concept of legal tender as regards banknotes and coins must be understood as entailing an obligation in principle for the creditor of a payment obligation to accept banknotes and coins,” states an advisory opinion from Giovanni Pitruzzella, Advocate General of the European Court of Justice.
Overall, global inequality and poverty pose many problems, from reduced purchasing power to the impact on people’s health and life expectancy. There is much debate on this topic, and many proposals to combat it are being made. At the same time, some of the true causes remain overlooked, and the rising cashless wave is already one of them. Loud calls to protect cash, and, therefore, those less fortunate, are heard everywhere, and this once again emphasizes the importance of this means of payment. Fortunately, we have not yet fully entered the digital age, and until we do, it is worth reflecting not only on its positive side but also on its disadvantages.