The Costs of Cashless Convenience

calendar iconOct 3, 2022


The convenience of cashless transactions comes at the cost of privacy and autonomy. An article from Intelligencer magazine explores the good, the bad and the ugly of cash versus cashless, and makes the case for preserving payment choice.

Writing for Intelligencer, editor and journalist Malcolm Harris notes that while cash continues to be used for one in five transactions across America, other payment methods—typically enjoying robust promotion from the big businesses that provide them—are becoming increasingly popular. Digital payments offer convenience, he notes, but this ‘rarely comes without a cost, and here there are a few.’

Every day, we inch closer to the mythical cashless society, a transition that is great for the companies that manage the digital money system but not necessarily wonderful for the rest of us.
"Malcolm Harris, Intelligencer

Citing the newly published book Cloudmoney: Cash, Cards, Crypto, and the War for Our Wallets by Brett Scott, Harris observes we all have something at stake in the war on cash, though ‘it is better for the banking and payment-processing cabal if we do not understand’ precisely how the monetary system works, or how cash benefits individuals.

Scott’s book explains the two different kinds of money: the notes and coins, backed by government guarantees, known as ‘base money’ and that which we access when swiping a card or otherwise paying digitally, called ‘bank money’. The latter is not issued by the state, but rather—as the name implies—by a bank. Scott’s metaphor is a casino, where cash is converted into chips on entry. The numbers in a bank account refer to these ‘chips’, and while they can be changed back into cash, Harris points out, ‘banks would rather you not do that.’ While the money is with them, they can control it internally, sell related data and charge fees. Once it is converted into physical ‘base money’, they lose all control and ability to profit from it.

Anyone can hold base money—you can literally just hold it—whereas bank money is subject to bank conditions. Electronic purchases generate data linked to your personal identity, which can be used for all sorts of purposes ranging from innocuous to nefarious.
"Malcolm Harris, Intelligencer

Not only can banks monetise personal financial data, they can also exert control in other ways. Americans under 18, for example, require an adult to co-sign on a savings account. A fixed address is required to open and use an account. Banks can also enforce minimum deposit requirements and charge numerous fees. All these factors not only lock many people out of the banking system, they also help lock existing users in.

Harris is ultimately not optimistic regarding the future of payment choice, pointing to ‘powerful anti-cash interests’ that pour money and political influence into ensuring pro-cash legislation is stalled or blocked. He gives an example of leaked emails between Amazon and Philadelphia officials that revealed efforts to have an exception for Amazon’s cashierless stores written into legislature ensuring businesses must accept cash.

However, the war on cash is not yet won. In late June, county commissioners for Miami-Dade approved legislation requiring retail businesses to accept cash for goods and services. In February, Tennessee became the latest state to likewise require the acceptance of cash alongside other payment methods. Pro-cash legislation has existed even longer in places including Arizona, Colorado, Connecticut, Delaware, District of Columbia, Idaho, Maine, Massachusetts, Michigan, Mississippi, New York, North Dakota, Oklahoma and Pennsylvania. Whether people choose cash for its resilience, immediacy, privacy, inclusivity, or any number of other reasons, payment choice will continue to be a hotly-contested issue that many will fight for.

Last Updated: Oct 2, 2022