{"id":74994,"date":"2020-07-21T00:32:31","date_gmt":"2020-07-21T00:32:31","guid":{"rendered":"https:\/\/essays.homeworkacetutors.com\/will-we-become-a-cashless-society\/"},"modified":"2020-07-21T00:32:31","modified_gmt":"2020-07-21T00:32:31","slug":"will-we-become-a-cashless-society","status":"publish","type":"post","link":"https:\/\/www.colapapers.com\/us\/will-we-become-a-cashless-society\/","title":{"rendered":"Will We Become a Cashless Society?"},"content":{"rendered":"
\n
\n

\u201cCash, in the form of notes and coins, will disappear within a decade\u201d.<\/p>\n<\/blockquote>\n

Such
\ndeclarations have been around for the past 60 years since the introduction of
\ncheques and bank cards in the 20th<\/sup> century, however they have become
\nincreasingly numerous from finance experts in recent times due to new
\ninnovative alternate technologies. These verdicts form a part of the war
\ncurrently being waged on cash, by governments and organisations around the
\nworld, in the hope of creating a cashless society. But is this push towards a
\ncashless society something we really want? Is cash really dying? Is it even
\npossible to successfully implement a cashless society worldwide and if so, how
\nlong will it take? These are just some of the queries I aim to answer in this
\nessay.<\/p>\n

With
\nnew alternatives for cash constantly making an appearance in news articles and
\nbusiness journals etc, one cannot be blamed for believing cash is on the way
\nout. However, if you were to sit down and look at the statistics you may begin
\nto think otherwise. They show that there has been a strong growth in the demand
\nfor cash in the past and currently in the present. According to BBC writer Rose
\nEveleth (2017): \u2018cash in circulation grew 42% between 2007 and 2012, and the
\namount of American money floating around in bills and coins is expected to grow
\nby about 5% each year\u2019. Furthermore, \u2018As of 2013, approximately 85 percent of
\nthe world\u2019s transactions involved cash\u2019. (Manor, 2017). Clearly these
\nstatistics show that cash has in the past, and still to this day, remains an
\nimportant part of transactions. In contradiction to some experts views that
\ncash will disappear in the next decade. With all the benefits and advantages of
\nnew cash alternatives, why is the demand for cash continuing?<\/p>\n

Firstly,
\ncash offers strong privacy protection. It can be spent anywhere at any time
\nwithout any third party being involved. There is no digital paper trail left
\nbehind for government, businesses or hackers to exploit. According to Lepecq
\nand Holler (2017): \u2018Digital payment systems, on the other hand, provide the
\ncompanies managing them with information on users\u2019 behaviour, which in turn
\nshapes how they will be treated by not only payment providers but by merchants
\nand third parties who are able to access this information without the
\ncustomer\u2019s knowledge\u2019. <\/p>\n

In
\naddition to this, people tend to feel more secure having cash on them in their
\nwallet or purse, rather in a bank or some other type of financial institution
\nwhich could be prone to hackers. It is estimated that approximately 43% of
\norganisations have had some sort of a security breach, including financial institutions
\nsuch as Banks (Lepecq and Holler, 2017). In terms of privacy and security, cash
\nis a lot more reliable than the newer alternatives. Until this trend begins to
\nchange cash will not be disappearing. Consequently, the demand for cash has
\nremained strong over the last number of years. <\/p>\n

Inclusion
\nis another argument in support for keeping cash. With cash, you do not
\nnecessarily have to own a bank account. You do not have to have access to a
\ncomputer, mobile device or have internet to make transactions. Since it is a
\nphysical object anyone in the world can use it, regardless of their position in
\nsociety. You can be living on the streets with nothing to your name and still
\nuse cash. This is not the case with most of the contrasting options to cash. By
\nactualizing a plan to remove cash, you\u2019re essentially introducing a policy of
\nexclusion. This can be backed up by statistics. According to The World Bank,
\nthere are nearly two billion people in the world who do not have a bank
\naccount. Most of the electronic alternatives to cash require you to have one.
\nThat\u2019s two billion people who would be unable to make transactions in a
\ncashless society. <\/p>\n

An
\nexample of a country that would be severely affected by a move towards a
\ncashless society would be India. According to policy analyst Anupam <\/a>Manur (2017): \u2018In India, the number of people
\nwithout a bank account is about quarter of a billion\u2019. That is almost 20% of
\nthe population. Furthermore \u201843 percent of the accounts in India are, in fact,
\ndormant accounts\u2019 and \u2018as of April 2015, only 15% of adults in India reported
\nusing a bank account to make or receive payments (World Bank estimates)\u2019
\n(Manur, 2017). These figures show that in contrast to what experts believe,
\ncash is not dying, and it remains an essential method of transaction for people
\nat present. Abolishing cash would alienate entire sections of Indian society.
\nThere are people who do not have access to financial services. Furthermore,
\nthere are people who would not be able to gain access to a bank account. The
\nillegal immigrant who fled their country due to war or violence, in the hope of
\nhaving a better life; homeless people who are constantly traveling and do not
\nhave a permanent address, contact number or email; people with a history of
\nfailed payments or a bad credit rating. <\/p>\n

Furthermore,
\nnegative interest rates are also preventing a move towards a cashless society.
\nMost people would like to be able to withdraw cash from their bank accounts and
\nstore it at home in case interest rates were to fall below zero. In this
\nscenario customers of banks would essentially be paying the bank a tax to save
\ntheir money instead of spending it. In a cashless society banks would have full
\ncontrol and the customers would be helpless and would have to accept the losses
\nthey would be making. <\/p>\n

Moreover, at various times throughout
\nthe course of history, countries have used cash as a means of reducing national
\ndebt. \u2018In a cashless society, this important macroeconomic tool would no longer
\nbe available to governments. With a digital economy, this would become harder,
\nif not impossible. The only possible tool that the government will have to
\nincrease the money supply in the economy would be to issue bonds and bills,
\nwhich will increase its debt obligations\u2019 (Manur, 2017).<\/p>\n

The threat of censorship is also
\nslowing the movement towards a cashless society. If all payments were to be
\nmade electronically, governments in countries around the world would have an
\noverwhelming amount of power. Banks would be able to see what your spending
\nyour money on, then if they wished, they could ban a certain good or product
\nvia a totalitarian regime. Undesirably, this has already happened in Uganda in
\n2016. Banks shut down the usage of mobile money during elections. According to Anupam
\nManur (2017): \u2018The fear was that the opposition could use the mobile money
\nnetworks to pay voters. However, certain analysts insist that the real reason
\nwas to block donations to the opposition party.\u2019 A similar event happened when
\n\u2018Bank of America, VISA, MasterCard, PayPal and Western Union made an arbitrary
\nand seemingly unlawful blockade on donations to the Wikileaks page, which has
\nseen its revenue dip by over 95%\u2019 (Manur, 2017). With very little regulation on
\ncash alternatives currently, banks could run riot with their new-found power. <\/p>\n

The demand for cash has grown up to now, however, this may not continue. It relies upon many factors. Firstly, there are various nations across the world that have effectively implemented an alternative to cash in the form of mobile payments. An example of such a country would be Sweden. \u2018Sweden is the most cashless society on the planet, with barely 1% of the value of all payments made using coins or notes last year\u2019 (Savage, 2017). Furthermore, cash only accounts for less than 20% of the transactions carried out in stores in Sweden, which was previously at 40% five years ago. If there is any country worldwide that is likely to become a cashless society of the next decade, it is Sweden. So why has Sweden been so successful in eliminating cash? This is largely due to mobile apps such as \u2018Swish\u2019. This mobile payment app allows you to spend and transfer money using your phone number. It is used by over 5 million people in Sweden which is close to half of the population and is backed by major banks. Bus companies, some bars and shops in Sweden no longer accept cash, due to the fear that they might be robbed. Sweden is not the only country to adopt new payment technologies. <\/p>\n

Cash is also on the way out in China.
\nAccording to CNBC writer Evelyn Cheng, the lack of regulation in China regarding
\nelectronic payments has allowed mobile payment technology to become widespread
\nacross the country. Last year, mobile payment technology volume doubled to 5
\ntrillion US dollars.\u00a0 There are two
\nmobile payment companies that together, hold over 90% of the market share in
\nChina. These are \u2018Wechat pay\u2019 and \u2018Alipay\u2019. Furthermore, in the article Cheng
\nstates: \u2018WeChat messaging app from Chinese technology giant Tencent reached 963
\nmillion monthly active users in the second quarter\u2019 and \u2018Alipay, which is owned
\nby Alibaba affiliate Ant Financial Services, has 520 million users\u2019. That is an
\nenormous amount of China\u2019s population that are using alternatives to cash when
\nmaking transactions. Taxi company Didi and various bike rental companies are
\nalso taking advantage of the rise in mobile payments in China. Didi took over
\nUbers operations in China last year after acquiring it for 35 million US
\ndollars. They are operating in conjunction with Wechat pay and it is impossible
\nto pay for one of their taxis with cash. QR codes are also being placed on
\nrental bikes in China, which allow customers to pay for them using mobile
\npayment technology. <\/p>\n

\"\"<\/figure>\n

Another country that has successfully
\nimplemented alternative payment technologies is Kenya. In 2007 the country
\nadopted the first mobile payment system to be used in Africa, called M-PESA.
\nSince its introduction it has been making saving and spending money easier for
\nhouseholds across the country. \u2018When it was launched the average distance to
\nthe nearest bank was 9.2 kilometres. Eight years later in 2015 the average
\ndistance to the nearest M-PESA agent was a mere 1.4 kilometres\u2019 (Logan, 2017).
\nThe introduction of M-PESA has also reduced transaction costs, poverty, crime
\nand corruption. Since all financial transactions are online, and a password can
\nbe placed on mobile devices and accounts, people are less likely to be victims
\nof crime such as robbing as stealing. Similarly, corruption can be easily
\nspotted in electronic payments as banks have access to people\u2019s transaction
\nhistory. According to a recently published study by sicencemag.org, Almost 2%
\nof households in Kenya (approximately 194,000) have escaped extreme poverty due
\nto the introduction of electronic payment technology. There are other factors
\naffecting the future rate of growth in demand for cash as well.<\/p>\n

For instance, Cryptocurrencies are
\nbasically cash in a digital format. If cryptocurrencies such as Bitcoin,
\nethereum and ripple, start to be adopted and accepted as legitimate methods of
\npayment. It is possible we will see a reduction in the demand for cash, and
\npotentially a completely cashless society later down the line. While there are
\nbenefits to replacing cash with cryptocurrencies such as removing
\nintermediaries and thus reducing costs, there are also some worries preventing
\na fast transition during the next decade. For example, governments across the
\nworld could lose control of their economies, not being able to print money or
\nregulate currencies. Furthermore, if cryptocurrencies were to replace cash entirely,
\nthe value of cash would decrease dramatically and the transition from a
\ncash-based society to a crypto-based society would be difficult. It would also
\nresult in many people losing money previously invested in cash-related assets. <\/p>\n

Another factor determining the future
\nof cash would be government intervention in relation to cash alternatives such
\nas cryptocurrencies and mobile payments. At present, governments have done
\nlittle or nothing in terms of regulating these new technologies, however it is
\npossible that they will begin to intervene more once there is a serious
\npossibility of cash being replaced. \u00a0For
\nexample, they may decide to ban or impose taxes on certain cryptocurrencies and
\nthere is a chance that they could replace cash. This is because cryptocurrencies
\nlike bitcoin are bought and sold via the blockchain. The blockchain is the
\ninfrastructure that stores information across a network of computers, making
\nthe blockchain de-centralised. This means that nobody owns it, not even the
\ngovernment, however everyone can still use it. Due to this loss of control, it
\nis highly unlikely that the government will ever support cryptocurrencies and
\nallow them to replace fiat cash. In fact, countries such as Bangladesh,
\nBolivia, Ecuador, Kyrgyzstan, and Nepal have banned cryptocurrencies.<\/p>\n

Then if cash is replaced by mobile payment applications, governments might start cracking down on corruption and the black-market. As all transactions will be online and thus it will be easier for governments to collect information on your spending habits. Unlike cryptocurrencies, governments might be in favour of mobile payments replacing cash. This leads us onto the next factor that will determine the future of cash \u2013 retailer and financial institution preferences.<\/p>\n

The retailers have arguments for and
\nagainst the implementation of a cashless society. They would benefit from no
\nlonger accepting cash as it would greatly reduce the possibility of stores
\nbeing robbed. Burglars can\u2019t take cash out of a till if there is no cash in the
\ntill in the first place. Furthermore, employees would not be able to steal from
\ntheir employers by taking money out of the till.\u00a0 Both scenarios are real-life problems that
\nretailers around the world face on a daily basis. However, retailers will not
\ninvest in the technology required to accept mobile payments and other cash
\nalternatives unless there is enough customers willing to make transactions
\nwithout cash. It\u2019s like a chicken and an egg- One of them must come first
\nbefore the other can happen. Be it customers becoming more open to a world
\nwithout cash, or retailers taking a risk and investing in alternative payment
\ntechnologies. At the moment, we are in a deadlock, with neither willing to
\nbudge. However, if in the future one of them decides to make the first move, it
\ncould lead towards a chain effect with others following suit. Ultimately,
\nresulting in society taking one more step towards the abolition of cash.\u00a0 <\/p>\n

But what about the preferences of financial institutions? It turns out they are in a similar situation to retailers. They also have arguments in favour, and against a cashless society. Take for example, the cost of cash. According to a study carried out by Prof Bhaskar Chakravorti and Dr.Benjamin D. Mazzotta, Cash costs the US government around 200 billion every year. This is illustrated in the diagram, taken from their study, shown below:<\/p>\n

\"\"<\/figure>\n

For the government, most of their losses in cash are related to tax evasion. For businesses, most losses come from retail theft, and for individuals most losses come from the time spent getting cash. In the study, Prof Bhaskar Chakravorti and Dr.Benjamin D. Mazzotta also discovered that the average American spends around 28 minutes a month traveling to banks and ATM\u2019s to get cash, which adds up to around 5.6 hours per year. Furthermore, it is very expensive to print cash, store it, and to then distribute it safely and securely. In addition to those costs you also must factor in the costs of setting up an ATM and running it. In a cashless economy, none of these expenses would exist. The main problem financial institutions have with alternatives to cash is regulation. If regulation that allows financial institutions, such as central banks, to remain in control of these new alternatives to cash, is introduced, then financial institutions shall certainly support and try to implement a cashless society. <\/p>\n

Furthermore, socio-Economic developments have in the past, and will in the future have an influence on demand for cash. The V\u00e4stberga heist is a perfect example. In this heist 7 men planned and executed a robbery of cash, the equivalent of 6.5 million US dollars. All seven men were later found and arrested however the 6.5 million in cash was never found. This planted doubt in the minds of people around the world, in relation to the security of cash. Events like this encourage a movement towards a cashless society. If cash never existed bank robberies like the V\u00e4stberga heist would never be able to occur. Another event would have been the great recession in 2007-2009. After this event people began to lose faith in banks and no longer felt like their money was secure. As a result, banking regulation became stricter. It has left a scar with people around the world and a distrust with banks that has slowed a possible transition away from cash. People don\u2019t like the thought of a society where all money was electronic, and where you would be unable to withdraw your money from a bank account and save it in cash \u2018under the mattress\u2019 at home. <\/p>\n

Security will probably be the
\ndeciding factor in the war for cash. Presently, people are unsure about how
\nsecure their money would be in a cashless society, where everything is
\nelectronic. Most organisations have been hacked at some stage throughout their
\nlifetime and people fear that a society that is based around electronic money,
\ncould end up having disastrous implications if hackers were successful. To
\nfurther this uncertainty, since most alternatives to cash are electronic, such
\nas mobile payments and cryptocurrencies, there would be catastrophic
\nimplications in power outage situations. Since there are multiple natural
\ndisasters, wars and sometimes solar flares, around the world every year. Power
\noutages are inevitable. In an economy or society that relied only on electronic
\nmoney, a power outage would be calamitous. People would not be able to pay for
\ngoods and services. If back up files were lost you would have no way of proving
\nyou had 20000 euro in your bank account. The affected areas would come to a
\nstandstill with potential riots and break-ins to stores by people to get what
\nthey need to survive. In a situation where a power outage lasts a couple of
\nweeks or months, with no payments coming through, who\u2019s to say police would
\ncontinue to work and enforce order? The affected areas could turn into a war
\nzone where its survival of the fittest. <\/p>\n

The final factor that will determine
\nthe future of cash is the people\u2019s opinion. At the end of the day, if the
\npublic doesn\u2019t believe that implementing a cashless will be beneficial, then it
\nwon\u2019t happen. Governments cannot demonetise fiat money without the public\u2019s
\nsupport. Alternatives to cash cannot be successful without customers. It is up
\nto these institutions and organisations to find solutions to societies worries,
\nabout living in a society where cash is worthless. <\/p>\n

To conclude, there are many problems
\nto be addressed before any sort of a transition is made away from cash. While
\nit is quite possible that one day electronic money will become the dominant
\nform of payment in the world, it is highly unlikely that society will be
\ncompletely cashless. Certainly, the cashless revolution has been overhyped.
\nCash will still be around in a decade from now, perhaps with even stronger
\ndemand than there is currently, considering the continuous growth there has
\nbeen in the demand for cash over the last number of years. And when the day
\ncomes that technology such as mobile payments or cryptocurrencies overlaps cash
\nas the dominate form of payment, cash will still have a role to play in in our
\neconomies in some shape or form. <\/p>\n

References: <\/h2>\n
    \n
  • Cheng, E. (2017). Cash is already pretty much dead in China as the country lives the future with mobile pay. [online]<\/li>\n
  • CNBC. Available at: https:\/\/www.cnbc.com\/2017\/10\/08\/china-is-living-the-future-of-mobile-pay-right-now.html [Accessed 8 Nov. 2017]. <\/li>\n
  • Chakravorti, B. and D. Mazzotta, B. (2017). Cost of Cash. [online] Fletcher.tufts.edu. Available at: http:\/\/fletcher.tufts.edu\/CostofCash\/~\/media\/Fletcher\/Microsites\/Cost%20of%20Cash\/CostofCashStudyFinal.pdf [Accessed 8 Nov. 2017].<\/li>\n
  • Data.worldbank.org. (2017). Losses due to theft, robbery, vandalism, and arson (% sales) | Data. [online] Available at: https:\/\/data.worldbank.org\/indicator\/IC.FRM.CRIM.ZS [Accessed 8 Nov. 2017].<\/li>\n
  • Eveleth, R. (2017). The truth about the death of cash. [online] Bbc.com. Available at: http:\/\/www.bbc.com\/future\/story\/20150724-the-truth-about-the-death-of-cash [Accessed 8 Nov. 2017].<\/li>\n
  • Lant, K. (2017). Mobile Payments Are Completely Replacing Cash in One of the World\u2019s Largest Nations. [online] futurism.com. Available at: https:\/\/futurism.com\/mobile-payments-are-completely-replacing-cash-in-one-of-the-worlds-largest-nations\/ [Accessed 8 Nov. 2017].<\/li>\n
  • Lepecq, G. and Holler, J. (2017). Cash Payments: Freedom, Privacy and Security. [online] Atmia.com. Available at: https:\/\/www.atmia.com\/files\/Position%20Papers\/eu-cash-limits-16-may-2017.pdf [Accessed 8 Nov. 2017].<\/li>\n
  • Manur, A. (2017). We are trying to become a cashless society \u2014 but is that a great idea?. [online] CashEssential. Available at: http:\/\/cashessentials.org\/news\/news-details\/2016\/09\/29\/we-are-trying-to-become-a-cashless-society-but-is-that-a-great-idea?gclid=EAIaIQobChMIsYCtuIWw1wIVS7XtCh0AfwC_EAAYASAAEgIfnfD_BwE [Accessed 8 Nov. 2017].<\/li>\n
  • Suri, T. and Jack, W. (2017). The long-run poverty and gender impacts of mobile money. [online] sciencemag.org. Available at: http:\/\/science.sciencemag.org\/content\/354\/6317\/1288.full [Accessed 8 Nov. 2017].<\/li>\n<\/ul>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    \u201cCash, in the form of notes and coins, will disappear within a decade\u201d. Such declarations have been around for the past 60 years since the introduction of cheques and bank cards in the 20th century, however they have become increasingly numerous from finance experts in recent times due to new innovative alternate technologies. These verdicts […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7086],"tags":[9845,5294,9887,9867,9888,9889,9890,9886,9885],"class_list":["post-74994","post","type-post","status-publish","format-standard","hentry","category-assignments","tag-1-dissertation-writing-service-in-uk","tag-bishops-writing-bureau","tag-cn","tag-create-a-paper-using-the-following-criteria","tag-homework-help-assignment-answers","tag-in-1050-word-essay","tag-in-a-4-to-6-page-essay","tag-in-a-page-paper-assignment","tag-write-an-essay-in-words"],"_links":{"self":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/74994","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/comments?post=74994"}],"version-history":[{"count":0,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/74994\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/media?parent=74994"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/categories?post=74994"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/tags?post=74994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}