The chief executive of one of Europe’s biggest banks (John Cryan, Deutsche Bank), predicted cash will not be around in a decade. It is “inefficient and expensive”.
While the free market is demanding more and more convenience of purely electronic transactions, it does not hurt to pause to review the implications of a true cashless society.
1) Careless spending
Because it is easier to spend electronically, it is easy to not equate digital spending with spending actual cash spending. This is, not surprisingly a problem among 18 to 24 year olds who only grew up in the internet age (Source: Matt Sanders, Gocompare.com’s credit cards spokesperson).
2) Hurts poor people
Around 8% of the US population is unbanked says a 2013 FDIC survey. In 2014, Gallop stated that 29% of Americans did not have a credit card. This group of people cannot receive lines of credit for a range of reasons. They already are forced into alternative financial services (AFS) outside of the banking system.
The main alternative is prepaid cards with high fees.
3) Lack Of Privacy
If all transactions are electronic, they would leave behind trackable records. This would appeal to two groups’ business marketers and government.
Anytime you buy anything in the private sector, you might be forced to agreeing to have your information sold.
Electronic records would become targets such government agencies as police and intelligence services and tax collectors. For example, it would be very easy to implement a “transaction tax” to fund government spending.
With an election coming up here in the United States, safeguards for the cashless society should be discussed.
John Kasperek helps people with the business and tax side of his/her lives. He like to share related financial topics.