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Should We Embrace A Cashless Society?

Written by Kris Wrenn

There are many among us that believe a cashless society is an inevitability. This assumption couldn’t be considered unfounded given the reality that Australians, and almost every country continue to use cash (especially coins) less and less each year. Some countries are on their way to phasing out cash transactions completely; only around 4% of transactions in Norway for example are made using Cash. The use of cash also became significantly less popular since the covid era, largely due to the hygienic aspect. But can a completely cashless society actually exist and what would be the implications?

Pros

Reduction in crime would be a given, in multiple ways. E.g. People could no longer be robbed of their cash – cards can be stolen of course but these days they can be cancelled with the bank within minutes. Furthermore, there would be a significant reduction in money laundering. Many people also use Cash as a means to commit tax evasion.

Those of us who like to travel would benefit from a cashless world. In such a world presumably digital transactions abroad would be cheaper/easier and there’d be no need to exchange currencies and we’d avoid the inherent risks of walking a foreign land with spending money in our wallet or handbag.

Advantages for business – There is an inherent cost to businesses of receiving cash as it becomes a liability and needs to be safely transferred to the bank. This is why shops like Coles and Woolies have always been keen to offer cash out. It’s less cash that a security company has to come pick up. Furthermore small transaction costs for the use of digital payments are often applied.

Money managing. There is a huge psychological difference between handing over cash versus swiping a debit card. With the former, you physically hand something over and you have “lost” it and traded one thing for another. People have been doing this for thousands of years. Suddenly, we have a generation of kids growing up seeing their parents paying for everything by swiping a magic piece of plastic.

Cons

What if the system goes down? Technical issues, either with a bank, or with payment systems in general can go down for minutes or even hours and this could cause some serious inconvenience. How many times have you gone to pay for something and the teller says to you that their EFTPOS has gone down? This could be a particular problem in rural areas.

The requirement to use digital payments opens you up to digital fraud and most of us have had the unfortunate experience of discovering a debit or credit card expense they know they didn’t make. In my view banks tend to be fairly forgiving and you can usually be compensated for these, but it’s hassle and it generally takes weeks to fix up. With the increased use of mobile phones to make purchases, how long before criminals discover a way to walk past someone and grab the card details from your phone?

Big brother. Digital payments can be tracked, and tracked they are, with banks and large corporations loving the ability to analyse expenditure patterns. Anyone who has taken out a home loan, especially in the last decade, will know that it’s not just their bank balances the bank want to know, they want full transaction histories so that they can look for high levels of spending on alcohol or gambling.

Other cons:

  • Older generations may not be comfortable with digital payment methods.
  • Tipping for lower wage jobs like waiters becomes more difficult.
  • No more garage and car boot sales.
  • No cash donations to the homeless, nor cash gifts in birthday cards to the grandkids.
  • And perhaps most sadly of all … what will the tooth fairy do?

In my view it will be a very long time before we can realistically see a cashless society. It may become increasing less used, or, on the other hand it could enjoy a resurgence as a result of the various cons listed above. Having the ability to use it for those that prefer and also having the various digital methods available seems the fairest and most likely future scenario to me.

 

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