Who wins and who loses in a cashless society?
We are moving relentlessly towards a paperless and cashless society which by its very nature is both incredibly convenient and environmentally sound; but such frictionless spending also has much larger societal and individual, socio-political ramifications, that are not immediately visible.
Transactions are quickly-moving from cash to cards to phones to pay for goods and services. Cashless technologies such as ‘contactless payment’ are intrinsically linked to society; it shifts the age-old paradigm of exchanging goods and services for visible physical value or by using a PIN, to one that is purely mediated through frictionless electronic payment and transactional systems. I believe due it’s size, cause and effect, cashless technologies are worth critiquing from an ethical, political and cultural perspective. Our drift towards becoming a cashless society is coming at a cost and convenience is becoming weaponised.
How is ‘contactless’ contributing?
Contactless payment is a popular way to make purchases at participating retailers. It has been around since the 1990s with only a handful of merchants and retailers using the technology during that period. Since then, it has spread out to include thousands of banks, credit card companies, merchants, and retailers around the world with South Korea having the highest rate of contactless cards in force, at almost 96% of all store transactions in 2016.
Consumers can also connect their credit cards to a device — a smartphone, smartwatch, or fitness tracker — to pay using the contactless system as well. This is done by downloading a payment app such as Apple Pay, allowing consumers to securely store credit and debit card information to make purchases by tapping a smartphone or Smart-watch.
As adoption grows, the service is becoming even more convenient and frictionless. Google, for example, allows users to make payments at participating brick-and-mortar and online retailers through a secure method via an app. Apple Pay and Google Pay now even allow users to send and receive money by simply using an email address or phone number.
How does it work?
To make a contactless payment, one taps their card near a point-of-sale terminal that is equipped with the contactless payment technology. Since contactless payments do not require a signature or a personal identification number (PIN), transaction sizes on cards are limited, though this limit is increasing. Examples of non-credit or debit card contactless payments include Apple Pay, Android Pay, and Google Wallet.
For it to work, the merchant must have an up-to-date card-reader with the latest NFC technology and of course, internet connectivity. For the user, they must actively opt-out of using a contactless card, or they will be sent one by default when they open a bank account.
What is the impact of a cashless society?
The main advantage of contactless payment is that it speeds up transactions by eliminating the need for a customer to take a moment to enter their PIN. Tap customers speed up the line so that both the merchant and customer save time when contactless payment is used. Another benefit — at least for banks and credit card issuers — is that consumers who tap tend to use their cards more frequently. But, as our lives become more hyper-connected and technologically entrenched, via the monopolies facilitating these technologies and infrastructure: Visa, Apple and even Google: what are we risking at the expense of convenience and the avoidance of using physical money?
Physical money is dirty and expensive, take for example the UK spending 3% of GDP on the creation and circulation of physical currency, which is 3 times more than they spent on their armed forces. But swathes of society rely on physical money and are being further marginalised and criminalised by these advancements in technology. Not everyone has the same access to the technologies needed for cashless transactions to operate, such as smartphones and computers. Which by their very nature are required to have the latest hardware technology (physical chips) to operate digitally (ephemeral beeps).
Small, local businesses or individuals who rely on cash for their livelihoods or to do business can no longer make money; such as the homeless, buskers, institutions, lemonade stands, car-boot sales, charities, slot machines, lockers, trollies, tooth fairies, drug dealers and strip clubs. A new study has now found that “17% of the UK population — over 8 million adults — would struggle to cope in a cashless society”. Some of our most vulnerable people are being left behind in this dash from cash. The assumption that everyone is confident with electronic payments is proving crass, elitist and dangerous” Going contactless is gloriously convenient — for all the wrong people’, Peter Ormerod Guardian, 7th March 2019.
Traditionally long-established or mechanical things are being favoured by large, transnational corporations and monopolies. How will they facilitate payments in the future? Will it alter the way they operate? Not only do these examples rely on receiving physical money, but without a bank account, how will one spend physical money? Increasingly I see cafes and even supermarkets no longer accepting cash, only card, and only certain cards at that. This is a particular problem in the Netherlands. These examples are also at mercy of coins and bills being taken out of circulation completely. ‘Barclaycard estimates that more than half of eligible transactions are made using contactless cards. Nine in 10 transactions under £30 in fast food outlets, pubs and bars are made via contactless” Lindsay Cook, Financial Times, January 24th 2018.
Physical money does have its benefits: you can personally keep track of your spending quite easily. You are free to spend your money on whatever you wish without the ability to be tracked by banks or governments, as your ‘cashflow’ is yours and yours alone. You can barter rates and you can get an immediate refund in the same way that you paid. Once in possession, money does not rely on technology to function. It is not susceptible to failure and works completely ‘offline’; if technology were ever to fail or even run out of battery.
At its most basic, cash requires no opaque software. It involves no computer systems. Payments by any other method are subject to an ever more elaborate, sophisticated and intrusive apparatus of financial surveillance. When money loses its physicality, it’s just a set of numbers, it becomes abstract; there becomes a technological estrangement between us and it, that no longer even requires the usage of a ‘PIN’ to spend. So, the ability for people to be able to monitor their own spending is worth investigating in more detail. It is now entirely possible to receive a lump-sum of money (e.g. a salary) and spend this entire amount without ever seeing physical value (money/tokens) being exchanged. This advancement in technology questions whether one can monitor their spending with ‘contactless’ technology as well as monitoring a physical currency because these technologies can make it difficult for users to understand their own debt.
Tracking our own spending is not the only issue. Through observing our behaviour and spending: what example are we setting for our children? Do they fully understand the value of money anymore? Recently I attended a speculative design workshop titled ‘Planet Cashless 2029’ which hypothetically explored how we could organise activities, that could teach children about money, in a society where physical money no longer exists. Of course, this hypothetical scenario is increasingly likely to become a reality, as society progresses to remove more ‘paper’ money out of circulation. The workshop called into question how would an alternative cashless system work? Would there be new tokens? New exchange systems?
As we are moving into a more autonomous, automated society, are we losing our sense of money? Cashless interactions can be much quicker and more impersonal and might lead us to forget the values of our interactions. Will paying by cash now be treated as an outdated transgression?
You don’t have to be a paranoid Luddite to find alternatives to cash at least a little concerning. One lady remarked that her 3-year-old daughter has a plastic fisher-price till. When they would play ‘shop’ and her daughter would play the ‘customer’, instead of giving the coins to the shop keeper, she would tap her card and say “beep” repeatedly but would openly refuse to give over the plastic tokens (monetary value). There was no link.
Now I’m not suggesting that a 3-year-old should have a nuanced understanding of the mechanics of card processing, bank accounts or maintaining a household: but I think it is worth identifying that potentially younger people, do not have the same concept of money as the previous generation. As it is now much easier to spend and subsequently harder to manage one’s money.
What next and what can be the implications for design?
As previously mentioned, cashless is becoming even more frictionless in the fact that one can now pay with a phone number and this could in the future be facilitated by an ever-increasing number of tax dodging, unregulated technological behemoths like Wechat or Facebook through social media, eliminating the need for a bank at all.
It is difficult to argue in rational terms against convenience; I am as prone as anyone to wafting a bit of plastic in front of a beeping device to save the hassle of getting out some cash. But even the apparent freedom of a cashless world is questionable: it is freedom within a system few of us really understand, a system which incidentally is susceptible to failure.
Cash is dirty, old-fashioned, sometimes awkward, unsexy and often not there when we want it to be. But it also feels increasingly like a physical resistance in an increasingly digital world controlled by a system few of us will ever dictate or understand. Depending on your position, the use of contactless is convenient for (most) of us, but also corporations and governments: it pays to be aware.
The transition into a cashless society benefits monetary systems and the majority of society, but for those that struggle to manage their finances, there are current products that can help such as Monzo or Bunq. These services offer much greater account transparency where one can better monitor their spending, see exactly where their money is going, set limits and set saving targets. I think this should standard practice for banks, enshrined in law.
Rather than the onus being on users switching banks, there needs to be an overhaul of user experience for banking institutions. Small improvements such as notifying users about outgoing bills in notifications could make a huge difference to some peoples spending. When making contactless payments, users could be given a quick overview of their account and outgoing debits or observe their balance. Debits should be instantaneous (like Monzo) and not take a few days to clear like most high-street banks. These seemingly simple, logical benefits are currently overly reliant on the more technologically savvy of us or informed in society, which is an injustice.
In terms of physical solutions, contactless machines could beep a different tone if someone is close to their determined daily or monthly limit. Or more subtly, could use different coloured LEDs. Another way is that your phone could vibrate, mimicking the tactility of physical cash. For existing users, still using cash machines, people should be able to tap to check their balance.
I believe as designers we have a moral obligation to adhere to ethical considerations in all our design processes and decisions. We have to be aware of the social-political cause and effect of our design decisions by involving and looking at things from different stakeholder perspectives. Only this way then can we find a common ground that works for different people in a coherent-balanced society.
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Elliott
Diagraam Design
