Cashless Society Steps Closer?

Cash is disappearing as contactless payments – cards, mobile devices, etc – become more popular with consumers. What are the implications for businesses?

“Think of those leisure days, perhaps out strolling across Prague’s Charles Bridge and waiting for the busker to …”

Cash has been under attack since American Express introduced the US to general purpose card payments in the 1950s. The ‘plastic’ revolution escalated when Barclaycard was introduced to Britain in 1966. The rest is history.

Approximately 80 per cent of transactions in Germany are still made using cash. However, this figure falls across EU member states.

cashless-society-steps-closer

But over in the US, four out of every five people use non-cash payments for their everyday purchases today, This figure leaps to 100% in the 18-24 age group.

The European Central Bank announced last year that it’s killing off the €500 note by the end of 2018, despite conceding “The 500 [euro] note alone accounts for over 30% of the value of all banknotes in circulation, despite it not being a common means of payment,” The reasons given included terrorism and other criminal activities.

Some believe that eliminating cash altogether would make it impossible for there to be a run on the banks (depositors withdrawing cash) in the event of severe economic downturn. It also defeats resistance to bank bail-ins where depositors’ and investors’ money is used to bail troubled banks out of crisis – an increasing threat across the currently troubled Eurozone.

Transitioning to a cashless society starts with notes of larger denomination being withdrawn from circulation. India has already started the process and Prime Minister Narendra Modi talked up the benefits to consumers of using digital currency, coincidentally at a time when his country’s economy is experiencing deep problems.

Many countries have started to withdraw higher denomination notes and Sweden is pretty much on its way to getting rid of coins and notes altogether.

But for the everyday, some of us, perhaps of maturer years, prefer to maintain enjoyment of the last vestige of privacy that cash affords us. Lord knows the cookies on our web browsers pay more attention to our life habits than we do ourselves.

What would be interesting is whether or not there would be any change in citizens’ general demeanour or disposition should their personal and household finances revolve around computerised currency. Would their spending habits change entirely?

And think of those leisure days, perhaps out strolling across Prague’s Charles Bridge and waiting for the busker to pause in order to operate her card reader. Or maybe that Paris beggar – one not rioting and committing arson – will muster strength to whip out his PDQ machine …