As I wrote recently, China is well on the way to becoming a cashless society. It is not the only country heading in that direction, of course. A cursory examination of the global statistics around the declining use of banknotes and coins make it easy to predict that many countries will soon be effectively cashless within the strategic horizon of corporate planners. But what does this actually? USA Today jut asked what sounded like a pretty dumb question: will there be cash in a cashless society? Well, I don’t think it’s dumb question. And the answer is “yes”. When I talk about a cashless society within a generation, I do not mean that there will be literally no cash at all. That would be stupid. When I say cashless, I mean cashless in the Count Zero sense.
Cash will still be around and it will still be legal tender (although I don’t think people understand what a limited concept this is), but it will disappear from polite society and from the daily lives of most people. We will move from being a debit card society to a mobile society to a biometric society in which cash will still exist. It it just won’t matter. As the brilliant William Gibson wrote in his 1995 classic novel Count Zero, talking about a character adrift in the near future that “he had his cash money, but you couldn’t pay for food with that” going to deliver my favourite line about cash in the whole of modern fiction: “It wasn’t actually illegal to have the stuff, it was just that nobody ever did anything legitimate with it”.
with kind permission of TheOfficeMuse (CC-BY-ND 4.0)
Why am I focusing on this vision? Well, as my friend and top futurist Ross Dawson points out about Gibson, has never claimed to predict the future [but he] has “an unmatched knack for analyzing trends and behaviors inherent to modern life and extrapolating them into vivid themes that reveal a kind of raw truth about humanity”. He has an amazing track record on this, by the way. As the New Yorker highlights, Gibson first used the word “cyberspace” in 1981 and his books, I have to admit, had a huge impact on me and my way of thinking about technology.
Thus by cashless in the Count Zero sense, I mean that cash has ceased to be relevant to monetary policy, become irrelevant to most individuals and vanished from most businesses. As we look to the future, we can begin to ask, quite reasonably, whether developments in digital payment technology and changes in payments and banking regulation will bring us to the point of this kind of cashlessness within, say, a generation. Well, never mind a generation, we’re pretty close to it now as far as I can see. Let’s just say that if you live in Amsterdam, you don’t need cash for the trains and if you live in London you don’t need cash for the coffee shops. No-one is planning or managing this, it’s just happening.
Is this what we want though? This is a form of cashlessness that is too conservative to reap the benefits of a truly cashless economy, too disorganised to reign in the criminal exploitation of cash and too wedded to the symbolism of physical money to switch it off (just as we switched off analogue TV not that long ago). I think that rump cash (and I exclude various categories of post-functional cash from this definition) should be actively managed out of existence.We need to have a strategy toward cashlessness, and not simply a laissez-faire acceptance that cashlessness will happen to the great benefit of the majority but in a way that excludes and marginalises some. Click To Tweet
A recent survey in the UK found that over 75% of low-income households rely on cash, as well as over 80% of elderly households. The shift to cashless society must be planned to help these groups so that they share in the benefits of cashlessness. Having been to China and seen at first hand the operation of a cashless society, I think it obvious that we should learn from their experiences, beginning with the observation that people in China are well aware of what happens to when society switches from anonymous cash to electronic payments. As observed in the Financial Times, the “scale of data accumulation is beyond our imagination”. The Chinese woman making that comment — while at the same time observing that despite her concerns about privacy, mobile payments are too convenient to opt out of — goes on to say, rather poetically, that she cannot tell whether her compatriots are “constructing a futurist society or a cage for ourselves”
Not everyone in China is part of this digital currency revolution, of course. The World Bank Global Findex database, which measures financial inclusion, estimates that as of lat year some some 200 million Chinese rural citizens remain unbanked, or outside of the formal financial system. As in Sweden, the shift toward cashless is raising issues around exclusion and marginalisation. There are, for example, supermarkets with different lanes for cash or cashless payments that act as physical manifestation of social stratification between, as Foreign Policy notes, the young and the old and between the urban middle class and those left behind. I’ve written before that we will see the same in developed economies as cash vanishes from middle class life to become the preserve of the rich and the poor who will use it for tax evasion and budgeting respectively.
The response should not be, as in some American cities, to force people to continue to use cash despite the expense, inefficiency and inconvenience, but to find effective digital alternatives for those trapped in a cash economy. I think we should start to plan for this now. I am in favour of Count Zero cashlessness, but I am in favour of it as a policy decision by society that is implemented to meet society’s goals. I couldn’t disagree more with the Wall Street Journal’s view that the move to cashless society “should be left to technological advancement”. No, it should not! This is a matter of great importance and with significant implications for society. The strategy should therefore be set by society, not by technologists.
Now, clearly, technological advances deliver new possibilities to policymakers and it is good for technologists to explore these possibilities. But, as they say, just because something can be done does not mean it should be done. We need a proper debate and a regulatory envelope set out to move forward so that anyone who needs to pay for anything will be able to do so electronically and that anyone who does not want to pay electronically will be presented with a method for paying in cash, albeit one that someone will have to pay for. It’s time to start thinking about what the requirements for that infrastructure are and consulting consumer organisations, businesses and government departments on their needs. We need to make a cashless Britain, not simply allow a cashless Britain.
[An edited version of this piece first appeared in Forbes, 18th August 2020.]