Illustration courtesy of: Michael Waraksa

Welcome to a World Without Money

Imagine a world without cash. That world is coming — and sooner than you think.


Cash has been a key element in the evolution of civilization for more than 3000 years. However, in the last decade it has been losing predominance in favor of electronic money. As online commerce progressively expands and becomes widely adopted and as prepaid credit cards and electronic services such as PayPal, Pioneer and Google and Amazon Pay are increasingly used for low-value cash transactions, money, as we know it, is on its way to becoming obsolete.

But, as cash dies out, quickly becoming a thing from the past, who will profit and who will lose?

The shift to a cashless society is on the horizon. In countries like Sweden, paying with cash has become a hassle and a hard reality for some citizens who have reluctantly been forced to change their consumption habits. Sweden has banned notes and coins almost everywhere, from shops to public transport — after unions protested over the drivers’ safety — even church and homeless people accept electronic money now. Last year barely 1% of all transactions were made using coins or notes, compared to around 7% in EU and in the US. Sweden predicts that just half a percent of its transactions will be in cash by 2020.

There are many benefits to removing cash from the economy, such as eliminating black markets and tax evasion, making illicit activities harder and allowing easier monetary policies. No cash would mean no need to carry around money, waste time, bother with long paper receipts.

This is just the beginning of an upcoming worldwide trend. Globally, payments with cash have consistently dropped in the last 10 years. The cashless reality is quite evident in countries like Canada, South Korea, China, India and Western Europe where massive rapid digital payment systems have been rolled out to guarantee a cashless future, progressively replacing physical money with biometric currencies.

Furthermore, lots of businesses are going cashless to cut costs associated with cash management, to reduce theft and to simplify accounting procedures. In the US, this trend started in restaurants and has progressively spread to retailers and some major airlines like Delta and United who according to VOX have banned cash for ticket counter sales and in-flight purchases.

Cryptocurrencies have been playing a major role in the transition towards a cashless society. The adoption of blockchain represents the youngest technology for digital payment systems. In fact, some experts say it will be the heart of this new economic paradigm. In the past few years, the number of cryptocurrencies has skyrocketed to a point where there are just too many to choose from.

Eradicating cash completely will make citizens more vulnerable to surveillance and cyber attacks

Preserving the ability to pay with cash is essential for some. Certain members of society are in danger of being left behind, like the elderly, low-income families and immigrants, the majority of whom remain unbanked. As Ginia Bellafante recently wrote in The New York Times, “rejecting physical currency plays out as a bias toward the poor, advancing segregation in retail environments.”

The end of cash brings many unsettling downsides not only to already marginalized populations but also to small businesses. Adopting electronic forms of payment is extremely expensive, also card companies charge up service fees for the simple use of credit cards by consumers. For businesses with a small profit margin, going cashless is a not a worthwhile alternative. Instead of implementing and offering costly cashless payments, they could use these resources to hire labor, pay for energy costs and make equipment upgrades.

From a charitable, generous point of view, a cashless society will slowly stop people giving physical money through spontaneous acts of generosity, a few dollars in a tip jar in a place where one knows workers are being underpaid or the donation of money to a homeless person on a cold night on our way home.

For some, a cashless society represents a new form of control as banks and financial tech companies will have a huge amount of power over people’s transactions.

Despite this, cash is still pretty much alive in many regions in the world, partly due to the fact that it is more reliable. A society without cash is inconceivable to many. As economist and professor Helge Peukert at University of Siegen told me, “We are losing our element of freedom, we are allowing ourselves to be monitored.”

As a provider of payment services, companies like PayPal, are not only interested in charging a commission for their services but also in collecting and selling data to third parties like Google, Oracle or Facebook in order to offer a more personalized user experience.

For some, a cashless society represents a new form of control as banks and financial tech companies will have a huge amount of power over people’s transactions. Do we need to hand them more power and influence? Who’s going to handle our information? And how will it be used?

Eradicating cash completely will make citizens more vulnerable to surveillance and cyber attacks and more prone to serious cybersecurity risks. With the widespread use of big data strategies, privacy concerns around electronic money arise, of which loss of personal privacy in regard to every payment is the most prominent.

“When all our payment transactions are tracked,” says Rainey Reitman, activism director at the Electronic Frontiers Foundation told Fast Company, “it creates a trove of data we have no control over. It’s easy to imagine a daring divorce lawyer or a government agent trying to gain access to our financial history to try to build a story about who we are.”

If we move to a wholly cashless society and something disturbs this digitalized system, what happens? — Bjorn Eriksson

The handling of contactless transactions and biometric money will need the support of a complex technological infrastructure whose operation relies on many factors in order to work properly. Good bandwidth, electricity, secured servers and transaction systems, and the availability of payment devices. All of these components are susceptible to attack or to software or hardware malfunction issues. Other major threats that cashless systems will face are data breaches and account thefts.

With a growing tribe of cashless consumers, does cash stand a chance?

For a cashless society to function properly it would have to be more inclusive and transparent in order to include everybody in the new realm of digital money, from society’s more vulnerable groups, to small and big businesses. The hard truth is that nowadays keeping cash afloat is more expensive than ever before. Transporting, handling and storing cash represents a huge expense for banks and this is threatening the future of cash. 
 
What the future holds for physical money is still not clear, yet a society without any cash at all poses several risks. One of the implications of a world without money is the possible increase of economic repression. By substituting cash for centralized electronic money, governments will have total knowledge about every transaction, this information could be used as a financial surveillance instrument for political repression and discrimination. Some experts state this could pave the way for some authoritative countries to start state-sponsored cyber warfare.

It is evident that our society benefits from technological changes. However, a robust and gradual implementation of digital payment technologies would need to be carried out. Alternative systems also would need to be put in place in order to support and provide for people who might be left out, and for those situations where technology could potentially fail.

We are already living in a world that is quite unequal, especially when it comes to the distribution of wealth. A world with different methods of payment, both analog and digital, is the one policymakers and companies should strive for. Otherwise, a cashless society will only exacerbate existing inequality and could lead to an ever-more stratified society. Cash is freedom, and for governments and big tech companies seeking to control and profit, freedom can be quite inconvenient.