Credit Matters Blog

The Cashless Society - Be Careful Of What You Wish For!

Kim Radok 30 July 2017


The idea of a cashless society being of value to all people, is an ideal that will never be achieved. We understand why the advocates of a cashless society find the benefits of a cashless society attractive. Time will show these advocates however, another reality where they have lost their privacy, financial freedom and the increased costs to access THEIR cash. 

The anticipated benefits of the cashless society will not be achieved for the following reasons. 

(i) People are going to lose their privacy. "Big brother" marketers will get to know your every move and bombard you with advertising targeted to your needs. In the digital and on-line world, there is no escape.

(ii) People will lose access to THEIR money and the costs to access it will increase. The fact is; access and costs will be dependent on the financial institutions' goodwill, operational capabilities and desire to achieve a commercial return.

Already we have seen financial institutions hold their customer's funds on a whim under the disguise of "fraud" and an increase of costs so you can access YOUR money.

(iii) Business operators will need to provide the appropriate facilities to enable their customers to buy with their preferred payment methodology. Anybody currently in business, already knows the cost of providing different payment methodologies can be hideously expensive. To think at some stage, costs will not have to raise their prices to cover these extra costs, is naive at best.

(iv) Money is root of evil and changes peoples' behaviour is not just a cliché. Nothing motivates good people to become bad people more than money. If any government believes it is smarter than people than it is doomed to repeat the mistakes of the past. In the past, people have bartered for goods and services instead of using cash, sold goods online or traded by the roadside. 

Irrespective of the methods of exchange or location, tax departments soon taxed these alternate sales and exchange methods or any increased wealth or lifestyle exposed.

(v) In Japan, poor pensioners deliberately commit crime to go to jail for a better lifestyle. In almost every country, poor people are walking in to supermarkets and eating food within the store or stealing it to survive.

(vi) Governments under the guise of reducing crime and tax evasion make all sorts of statements to try and force people in to a cashless world. Unfortunately, most of their statements are based on falsehoods and a belief this behaviour can be managed. The truth is, crime and tax evasion has been with us since people came on to the earth and will be with us until we depart.

(vii) Criminals are smarter than any politician or bureaucrat or "do-gooder" and can adept in a moment's notice.

(viii) The main losers out of government attempts to control crime and tax evasion are the poor and the ordinary citizen. There are already two clear examples of the catastrophic results on the poor and ordinary citizens when, (i) the Cyprus government took control over their citizens savings, and (ii) the Indian government took action against high value Rupee notes.

Governments, bureaucrats and other cashflow advocates don't care what happens to ordinary people. What happens to these people is just collateral damage in the war against crime and tax evasion.

History will show that governments are also going to be the big losers. When criminals are caught now, cash is almost always seized. If there is no cash, the replacement of cash will be a digital currency. This then begs the question; "How will governments use this currency legally and ethically if it has already been outlawed because it is used by criminals?"  After all, notes of large denominations were also eliminated under the guise of controlling crime and tax evasion.

Irrespective of the country which becomes completely cashless first, it may be beneficial to wait and see how it all works out. Not that I expect anybody will have the sense to wait.

Does the cashless have benefits as the advocates suggest or will there be negatives?  Many people seem to hate the thought of the cashless society but have given up hope that it can be prevented. Therefore, they have given up talking about the negatives. It is only once they start to live in a real cashless society and find it is not so wonderful, will they start expressing their concerns. By then of course, it will be too late.