Steps to Support Cash as a Public Good
A new white paper published by the International Currency Association (ICA) offers practical steps policymakers worldwide can take to protect the availability and acceptance of cash, supporting it as a pillar of economies and a public good.
Cash plays a unique role in the payments landscape, being a way of exchanging value that can be used by absolutely anyone. It strengthens equality—guaranteeing personal freedom, financial control and privacy—and serves as the backbone of national economies. In the event of an emergency that disrupts electricity, internet access or financial systems, banknotes and coins can still be used as an exchange of value, enabling people to buy essentials such as food, medicine and shelter.
Cash has been developed for over 5,000 years, underpinning global trade and economies down the millennia and evolving into the familiar, modern and secure format used today. While there have been other positive developments in payments—adding numerous cashless options—in recent times, people’s right to choose how they pay has come under threat due to ‘the war on cash’ waged by companies that profit from non-cash transactions.
Up front, the white paper presents eight recommendations to support cash and reverse the erosion of payment choice currently under way in many societies.
- Ensure retailers accept cash
- Ensure that everyone can access cash easily
- Provide easy to use cash deposit and touchpoints
- Give consumers transparency on costs of all forms of payment
- Promote a sustainable cash cycle
- Embrace diversity in the development of payments landscapes
- Remove restrictions on high-denomination banknotes and caps on the use of cash
- Educate the next generation, redesign cash and communicate about its value
Addressing the first point, the ICA recommends government-mandated acceptance of cash, ensuring people can always pay for goods and services using banknotes and coins (in addition to other, cashless options a given business can offer).
On points two and three, the ICA advocates for the provision of sustainable cash access and deposit touchpoints—i.e., places that provide local communities access to cash withdrawal and deposit facilities. Ensuring these are places regularly enough that no individual or business has to travel too far to access them can help keep wealth within local communities.
Regarding transparency of the costs associated with different payment types, the ICA observes cashless payments come at a price—directly, in the form of transaction fees, and also indirectly, in the form of personal data that can be monetised by the payment provider. While there is rising awareness of these oft-hidden costs, many people are not fully aware of them, and thus may not be fully informed when choosing a payment option.
On embracing diversity within payments landscapes, the ICA cautions against taking a simplistic, one-size-fits-all approach to financial policy. For example, it is currently assumed in some countries that society is migrating from being cash-heavy to using electronic payments, and while this may be true for a majority of people, it risks ignoring the rights of many people who—for a wide variety of reasons—intend to continue using cash in daily life.
As cash plays a key role in integrating people worldwide into economic systems, the social empowerment it offers must naturally come with equal social responsibility. The white paper notes the cash industry is progressing towards a net-zero cash cycle, with innovations including more durable banknotes and coins, and more efficient collection and delivery systems.
The white paper also calls for a removal of restrictions on high-denomination banknotes and caps on cash usage. The benefits of larger banknotes include convenience—not having to carry so many when making larger purchases—and making it easier to use them as a store of value (an especially popular use of cash in uncertain times). The ICA points out there is currently no evidence that public policy around restricting cash use reduces crime or other undesirable activity.
Finally, the ICA encourages educating the next generation on how cash can benefit them and their economy. Physical money has long been used to provide an early introduction to finances and personal financial responsibility (for example, giving children pocket money and allowing them to either save or spend it as they choose). It has also seen renewed popularity among younger generations thanks to the ‘cash stuffing’ trend on social media, driven by difficult economic conditions worldwide.
Click here to view the full paper.