In a cashless society, what if administration knew everything about your way of life?


Do you like credit cards? Even if you are one the most ardent Luddites, opposed to any innovation, you can’t deny their convenience. This piece of plastic carries many benefits that were previously inaccessible to us. But at what price?

Do you like credit cards? Even if you are one the most ardent Luddites, opposed to any innovation, you can’t deny their convenience. To buy a pair of jeans online, pay utility bills or help a friend with instant money transfer is now as easy as pie. This piece of plastic carries many benefits that were previously inaccessible to us.

Small cards, big problems

Nowadays you can use a credit card for small purchases in vending machines, pay with a wrist watch at the cashier, or open an app on your mobile phone to fill your car with fuel. Yet, you cannot use cash when you make a purchase in an online store.

Bankers and all those related to the cashless payments are seemingly happy with this state of affairs. “Keeping cash in circulation is expensive because governments and banks must pay to produce and store cash, and consumers sometimes lose dollar bills or have them stolen”, said Mark Ranta (1), the head of digital payments at ACI Worldwide ACIW, a payment systems company. And Visa’s Chief Executive Al Kelly (2) doesn’t even hide the goal of his company: “We’re focused on putting cash out of business.”

At first glance, the impossibility of remote cash-based transactions does not cause any inconvenience. After all, each of us has a bank card or an account in any of numerous online payment systems. However, a few really know that there are big problems hiding behind these tiny pieces of plastic - and here's why.

Imagine that you need a loan. You have no choice but to contact the bank - but the bank has many tools when it comes to deciding on your creditworthiness, and it’s not only about the convenient data stored in electronic databases.

A striking example recently appeared in India. Rubique (3), an online financial services marketplace, claims that the company uses unconventional data to assess a consumer's loan eligibility. Simply put, this means that your recent photo from Starbucks posted on Facebook, your LinkedIn profile and, of course, the history of your purchases will become a determining factor in the bank’s decision. How do you like that your bank knows what you bought in that adult section on Amazon?

This is just one example. Digital economy amasses huge arrays of information about people and their actions - what is called big data. Whoever controls this data will have a tool to influence the entire population.

Bernard Marr, founder and CEO of Advanced Performance Institute (4), says: “Since everything about us can be tracked, it can also be used for nefarious purposes. There are already accounts of data-driven discrimination happening; car insurance companies, for example, tend to penalise people who drive late at night, but that can impact otherwise safe drivers who happen to work a swing shift, and who tend to be lower-income to start with.” Megan McArdle (5), a columnist at Bloomberg, adds: “Unmonitored resources like cash create opportunities for criminals. But they also create a sort of cushion between ordinary people and a government with extraordinary powers. Removing that cushion leaves people who aren’t criminals vulnerable to intrusion into every remote corner of their lives”.

Everything’s on track towards cashless society, and this trend seems to be gaining momentum. One day, it may reach the point where you will be asked to show your passport when buying Big Mac. A bite at McDonald's, and now you are already in the list of "bad" people who do not care about their own health, contrary to the advice of healthy living advocates. Directly or not, this information can be used against you. It’s unbelievably easy to do – only there should be a suitable law at hand. For example, the price of a life insurance policy for you could be raised under the pretext of your unhealthy lifestyle, or your insurance claim would be denied.

Cash vs. electronic payments

It seems that a person could simply use cash and slip under the radar. It may be possible now, but not tomorrow, as mankind goes further along the path of non-cash society. MasterCard’s research shows that 80% of consumer transactions in the US are already made in electronic form, and this number reaches terrific 97% in Sweden. Word on the street is that cash will soon become irrelevant (6) in the UK, too (for some reason, a third of Britons (7) is dissatisfied with these changes).

The most optimal solution in this case would be a combination of cash and non-cash payments. Ron Delnevo, executive director for Europe at the ATM Industry Association notes (8): “The public and businesses [should] decide what payment method suits them in particular circumstances,” he said. “I think it’s great that there’s innovation – I’ve got Apple Pay on my phone, I use cards, I use internet banking, but I also still use cash. And that’s the way most people are. This isn’t swapping one payment method for another, it’s actually being given more choice.”

Can we cloak in Bitcoin?

Widely advertised Bitcoin is another obvious way to go. Most users are confident that this payment tool is anonymous and allows people to make purchases without revealing their identity. However, only few realize that, although real names are hidden under letters and numbers, they cannot be completely anonymous on the Internet.

Many stock exchanges that sell bitcoins, such as Coinbase, oblige their users to download the first and last page of the identity document, accompanied by a selfie, to confirm that it is indeed the same person. The rules of Coinbase state that they will keep your name, address and phone number for more than 5 years. Once the authorities request the files, they will receive the data in no time. The FBI made it clear that they are monitoring (9) the progress of Bitcoin and that they can track and detect anyone who uses the crypto currency.

Cashless society: comfortable and... conspiratorial?

Financial journalist Peter Guy does not deny that non-cash payments are very convenient. However, he reckons (10) that a cashless society would destroy our privacy and freedom. In his opinion, the digital economy allows authorities to fully control savings of citizens and to charge or withdraw money at any time without having a judicial authorization to do so.

The “go cashless” idea looks glossy and polished, but hides a depth that is yet to discover. The whole essence of such a society can be illustrated with a story that happened (11) in the church of Filadelfia in Stockholm a couple of years ago. Huge digits appeared on a big screen at the end of the service. It was bank account number of this church. The parishioners took out their smartphones and tithed via a special app called Swish. Another part of the public lined up before a terminal - Kollektomat, intended to collect donations. Scandinavians hate to stand out in the crowd.



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