Cashless society push brings ‘bundle of worries’

Cashless shopping will not go mainstream anytime soon, according to FinTech guru Chris Skinner.

“The prospect of a cashless economy is excellent news. Cash is inefficient. In rich countries, minting, sorting, storing and distributing it is estimated to cost about 0.5% of GDP,” he says in a blog post.

“But that does not begin to capture the gains. When payments dematerialise, people and shops are less vulnerable to theft. Governments can keep closer tabs on fraud or tax evasion. Digitalisation vastly expands the playground of small businesses and sole traders by enabling them to sell beyond their borders. It also creates a credit history, helping consumers borrow.”

Yet set against these benefits are a bundle of worries. Electronic payment systems may be vulnerable to technical failures, power blackouts and cyber attacks. In a cashless economy the poor, the elderly and country folk may be left behind. And eradicating cash, an anonymous payment method, for a digital system could let governments snoop on people’s shopping habits and private titans exploit their personal data.

“You cannot have a cashless society if it excludes people from being able to make payments in that society. That is why many governments are introducing statutory laws to ensure that any firms dealing with consumers are forced to accept cash payments, if that is the payment preference offered,” Skinner writes.

“This then gets interesting as, over the next decade, I’m sure that firms will try to find ways around those laws, particularly as more and more payments are taken by mobile.”

New York, New York

New York City Council has voted to ban cashless retail and food stores.

It is passing a bill requiring bricks and mortar outlets in the city to accept US bills and coins or face fines of up to $1,000 and $1,500 for further violations.

Mayor Bill De Blasio is expected to sign it. Businesses would be given nine months to adjust before it took effect.

The aim is to stop discrimination against customers who lack access to credit and debit cards, according to councilman Ritchie Torres, who led the bill.

New York is following in the footsteps of Philadelphia and San Francisco, whist Washington and Chicago also have plans to ban cashless stores.