The danger of going cashless

Recently I read in that in the United States there are cities that are starting to push back against going cashless. In a backlash that some have called backwards, cities such as  Philadelphia have moved to reject cashless stores.

It is possible to see why some people think cashless is great. It means less dead weight in ones wallet for starters and time is saved handling the financial transaction of a purchase more quickly if it is done using a card. Security concerns about carrying cash around, properly counting the till at the end of each night and being sure no money has been taken by employees is a justifiable second.

But I can see why there are concerns about going cashless. They range quite extensively from privacy concerns, to socio-economic status, but also vulnerability despite intensive and extensive security measures to cyber attacks/hacking. Specifically:

  • Every financial transaction using a card leaves a digital footprint. In a world where privacy concerns are becoming an increasingly potent issue, the ability of a few tech companies operating under a different set of laws to your country to mine the data stream from your card raise serious questions
  • The same digital footprint also raises significant cyber security concerns that were underlined a few years ago when a single hacking strike caused disruption across the world. With digital data theft on the rise and an apparent inertia among governments to work out how to reach a common agreement, these issues are only going to grow.
  • In America millions of people do not have the means to get a credit card or even have a bank account. Due to many possibly working jobs where payment is cash only, or having issues with credit or not having the education to know how to obtain such things, there is a risk that going cashless will create an under class of citizen.

In New Zealand, going cashless would promote similar issues. Whilst there are certainly people who do not use cash at all and managed to get by on credit, debit and EFTPOS cards, the lower echelons of society have similar problems as those in the United States. Yet, it is a distinct possibility, if you believe M.Y.O.B.

The problems in New Zealand primarily concern rural communities where banking services are often at a minimum and cash is a significant part of their financial system. A little town like Fairlie in south Canterbury might not have a bank and thus people would have to travel to Geraldine or Timaru to conduct banking business. Whilst all businesses now offer EFTPOS and most offer credit card services, despite the urgings of M.Y.O.B., I cannot see New Zealand disposing of cash as a form of money in the immediate future.

Also cash is the likely method of financial transactions among community groups. A group fundraising is not likely to have anything other than cash and what a lot of people consider to be a financial dinosaur now: the cheque book. As the treasurer of such a group in Christchurch the cheque book is often the preferred way of handing over significant money to a donee. We donate the hard cash in our account for safe keeping and then write the equivalent cheque and hand it over.

So, what do you want?

To have a completely cashless nation, at the risk of a financial under class like the United States or a country with a balanced system that is also a bit more secure against attacks on the digital system?

1 thought on “The danger of going cashless

  1. You are right anout privacy. Cash transactions are private.
    Maybe too many transactions are too private and as such the Government is unable to tax them – ah ha that is the essence of the problem!


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