A clarification: less cash is tolerable─ cashless isn't
One of the goals of any fintech company is to attract new customers via apps or the web. The idea of having mobile financial control rather than going through a brick and mortar company is the nirvana of any company looking to cut the highest financial burden of the industry: employees. On the customer side, we are promised lower fees, better rates, everything at our fingertips via our mobile devices and the ability to pay via QR Codes or NFC technology using devices like the watch, phone or smart keychain.
All of this sounds cool and very "21st century," but what about access to cash, the legal tender for all debts, public or private? Unfortunately, the use of cash is disappearing (some speculate a handful of countries could be cash-free as soon as 2020), and this movement is supported by banks, credit card, and technology companies. In some countries, even the government is pushing towards a cashless society.
There are political, social, and even economic reasons for which moving to a completely cashless society is the wrong direction, but I want to focus on two that are, from my point of view, the most important, and that are facilitated by technology.
1. Privacy
I just returned from a vacation in China, where almost everyone uses their phone to pay and get paid using Alipay or WeChat; the majority of the population claims it’s “more convenient.” I tried to install Alipay on my phone and link it with my bank account in China, but to do this, it also requested my passport information along with a Chinese mobile number.
Call me paranoid, but sharing my updated personal information with a company that is almost the right hand of the Chinese government so they can track my spending habits while I was on vacation was not in my comfort zone, just for the “convenience”.
In the US, something similar happens: credit card companies sell customer transaction logs to marketing agencies who use big data to detect trends in consumer behavior. But the big difference is that all those transactions are anonymized, and a warrant is required if a government agency needs to access your specific data. Bitcoin addresses this situation by providing an almost anonymous form or payment, but all the transactions could be traced back to the source, and we are way too early on a massive adoption for it to be a viable option.
2. Access
In today’s world, we find it almost impossible to imagine somebody without access to the internet, but based on 2015 information from the US Census Bureau, around 15% of the population didn’t have access to the internet, and the number is 50% higher in rural communities than in metropolitan areas. Unfortunately, these groups are often the most vulnerable, either because of age (25% of 65+ adults do not use the internet), income or even legal status.
Even Amazon is now planning on accepting cash at their Amazon Go stores, the ones that I discussed in a previous post on the cashless store, citing they want to reach more customers and regulation from some states requiring businesses to accept cash as a form of payment.
Transacting with cash is something that we need to keep alive, regardless of the “convenience” the cashless experience provides. It's the only way to remain anonymous and it's accessible to everyone regardless of age, race, socioeconomic situation or legal status. Is losing privacy and accessibility worth the price of a cashless society?
Have a perspective on the topic of electronic payments, data privacy, or our cashless culture? Would love to hear from you; send me your comment below!
Rodrigo Garcia
