In today’s world, we have reached a point whereby it is possible to live almost entirely without using cash, such has been the advancement of digital payments. What shocks me is how quickly this has become the case, without me having really noticed any change.
Reading an article by David Mitchell (You can’t spend a penny without being snooped on, The Guardian, 9 April), reminded me of something I had long known, but chosen to bury in my mind for the sake of convenience (and sanity): cash will soon be completely obsolete, or even non-existent.
Full disclosure: I do indeed have a debit card, and I use it for the vast majority of payments I make. The accountant in me also appreciates that performing bank reconciliations today is massively more simple than a decade or two ago. But I do also always carry cash on me, and would not feel comfortable were that not the case.
There is no doubt that a cashless economy would benefit the Bank of England, as the setters of monetary policy in the UK. Since the downturn of 2008, interest rates have been falling in a vain attempt to turn savers into consumers, and thereby boost the economy. With the base rate now practically at zero, there is little leverage left: should the Bank set a negative base rate (essentially charging people for having savings), we would see a stampede of savers withdrawing their funds, and most likely a crisis that would make the Northern Rock fiasco pale into insignificance – this of course being an issue itself caused by banks holding such a small proportion of their funds in tangible cash. Were the option of converting savings into tangible cash no longer available, the Bank could do whatever it willed with monetary policy, and savers would have the unenviable choice of consuming or losing value on their funds. HMRC would also appreciate, I am sure, the elimination of the “cash in hand” payment option for certain tradesmen…
That is not, however, my biggest concern about a cashless economy – perhaps due to the paltry trainee salary I receive or the years of receiving 0.1% on what savings I do have.
A much larger alarm is ringing regarding the security of such a system. I remember a minor scandal when I was at university regarding a local takeaway defrauding students who had used their cards there (https://theboar.org/2013/03/leamington-takeaway-investigated-fraud/), and have been in the situation on more than one occasion where I haven’t felt comfortable using my card in a certain shop. Fortunately, in such situations, I have had the option of paying in cash.
It might be easy to think in that situation, “well, you shouldn’t be going into such shops if you don’t feel safe using your card there”. This is to deny the occasional necessity of these trips, and also to deny custom to shops that are usually entirely legitimate, but just give off a certain vibe. And if that makes me seem paranoid, then so be it. I’d rather be paranoid than defrauded.
At this point I would include points about Big Data and how digital payments make it easy for The Man to surveil and pigeonhole the nation, but I don’t have the will to enter into a debate on the concept of a Surveillance State or the specious cliché “if you have nothing to hide, you have nothing to fear”. So we shall move on.
A final thought, one that struck me as I was walking through town the other day, was how the homeless would fit into this particular equation. Granted, nice utopian thinking would render this part moot insofar as we would solve the homeless problem separately. Until that day comes, however, I feel it bears consideration. The situation here is thus: during the day, the town’s homeless population, as well as street musicians and other performers, ask for a portion of your spare change in order to help them get by. If we got rid of coinage, how exactly would the concerned citizen be able to offer some minor financial support to these people? Would each be equipped with a card reader? If so, see above concerns about security.
To finish, a more light-hearted consideration: without cash, would we have had the wonderful picture of Mario Balotelli dressed up as a Santa Claus giving out heaps of money to random people in Manchester City Centre? I don’t think so…
@AH_Michael As someone who doesn't own a car therefore never needs valet/parking bunce, I haven't touched cash in months.
— Gavin Free (@GavinFree) 12 April 2017
Cashless life is already a possibility…