The Future Is Cash and Cashless Coexisting
Cash remains an indispensable pillar of economies worldwide, even as cashless alternatives gain popularity. Financial technology journalist Joanna England explores the reasons for its ongoing role and looks to the future in an article for FinTech magazine.
Approaching leading experts in the field of digital payments, England discovered they do not foresee societies becoming truly cashless any time soon, with the security of cash and its support of financial inclusivity being cited as key reasons.
The current reality is that we are not and may never be ready for a truly cashless society. If cash were to disappear tomorrow, it would only worsen the hardship faced by the most vulnerable members of society, and the levels of financial exclusion would be damaging to the economy.
Udo Mueller of Paysafe—a multinational online payments company—points to Sweden, which has comparatively high levels of equality, yet has still introduced measures to support continued access to and usability of cash to ensure its vulnerable and rural populations are not left behind.
Expert Market advisor Zara Chechi additionally points out that even individuals who regularly choose cashless payments ultimately want cash to remain an option for the additional security offered by its physical nature.
Whilst most people rely on cashless forms of payments… they can still access their cash by popping into a cash machine. In a cashless society, this won’t be an option anymore and there is a sense that people will struggle without the security of knowing they can physically access their money again.
Being a physical product, cash is also insulated from the risks associated with the digital world, which can be rendered unusable by power cuts or loss of internet connection.
Many are concerned that cashless payment methods are dependent on technology, which comes with its own set of risks. For example, if there was a disaster causing large-scale power outages or broadband failure, the economy would be paralysed with no one able to make payments.
England observes that people have good reason to distrust the robustness and security of current technologies, given the prevalence of cyberattacks and fraud, which are likely to continue growing as criminals learn to exploit modern behaviours. There are also questions around the intrusive nature of data collection, which already includes personal details such as name, address and spending habits, and is increasingly extending to biometric data like fingerprints, voice intonations and eye markers.
For [some people], using cash is simply a preference, a choice that enables consumers control over their finances even when making online payments. Furthermore, cash also gives a sense of control over personal data, with many people becoming increasingly concerned over how their data is collected and shared by corporations – cash payments are a way to limit their data trail.
Ultimately, Mueller says, ‘choice is critical, and access to cash—as well as the rights of consumers to continue paying in cash—should be protected’. He suggests just one in ten consumers plan to be completely cashless in the next couple of years, with the vast majority planning to continue using cash for at least a quarter of their transactions for the foreseeable future.
It’s not just about whether or not a cashless world can be achieved, it’s also about listening to what customers want.