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The Demise of Cash is almost upon us.

There is no stopping the evolution to a cashless society. It will be a convergence of the internet, credit and debit cards that have Visa ‘payWave’, MasterCard ‘PayPass’, & American Express cards that have ‘ExpressPay’, and the use of smart phones.  Smart phones can be used in much the same way as a physical wallet is used, only with virtual examples of credit or debit cards.  

With the Danish chamber of commerce lobbying their Parliament to give retailers the choice to legally exclude cash payments from 2016; I am absolutely confident that we are on the verge of a tipping point regarding the eventual elimination of cash from our economy. These developments and many others will eventually consign cash to history fairly soon as a guess.  

Our smart phones will eventually contain every debit and credit card we own, as well as our entire discount vouchers and purchase receipts in digital form. As a result, there will not be any need to carry any more bits of paper in our wallets, as well as notes and coins. Google will produce a wallet called Android Pay, Apple will offer Apple Pay, Samsung will give us Samsung Pay, Visa will have their own e-wallet, MasterCard, Square, and PayPal will all offer a similar product as well. These products are called virtual wallets.  

When a power blackout or some other inevitable technical issue occurs, plastic cards can be imprinted mechanically with paper, or some other technology will be developed to record the transaction perfectly. Placing bar-codes on all plastic cards that are read by a bar-code reader that is powered by some other means that back-up a power failure could possibly perform this service. Plastic cards will eventually be eliminated in future with the advent of Apple Pay and other technologies.

As long as there is a national regime of privacy legislation and the security and integrity of the internet is assured, powerful institutions such as state and federal governments will seek and obtain taxes in full in future. This will help to fund our treasury and to pay for community infrastructure, the operation of federal and state departments, all government projects, and future policy developments. In addition, governments will not have to bear the cost of printing, manufacturing, storing, and transporting cash.

We will have a de facto cashless society first where a majority of transactions will be done without cash, both in numbers of transactions and in the quantity of money used. We will probably have a de facto cashless society in about 5 to 10 years’ time. After a period of a further 30 to 50 years, or somewhere thereabouts cash will be eliminated from our economy after the nation has had a plethora of free and wide-ranging debate about this issue.  However, I am not hung-up on predicting when this will happen because it may happen in 100 or more years, although I think that a century will be highly unlikely.    

You need to ask yourself how powerful and efficient will Visa’s, MasterCard’s, Apple’s, Google’s, and PayPal’s virtual wallets be once they become commonplace? Can the banking system adapt to this technological revolution in payments? That is a rhetorical question because a cashless society is in every bank’s financial interest to develop. As a result, the banking sector will be totally transformed from its current configuration to one that is mostly or wholly based on cashless mobile banking with a drastically reduced number of suburban branches.      

Police and intelligence agencies will advocate a cashless society in order to limit or prevent crimes associated with cash. Cash, including virtual currencies such as bitcoin, provides criminal anonymity as in the drug trade, terrorism, burglaries, organised crime, gun trafficking, and let’s not forget the theft of cash. The crime of counterfeiting money will be completely eliminated. The black-market is based on the criminal anonymity that cash allows. This will dissipate completely when physical cash is removed from society. David Warwick wrote ‘The Abolition of Cash’, (2015) and believes that the black-market in the United States has an annual cost of at least $660 Billion to their economy.  

An important part of the elimination of criminal anonymity in future will be making digital currencies such as Bitcoin fall under the regulation of governments and made manifestly transparent to everyone using them. The technological basis of the ‘block-chain’ and the ‘distributive ledger’ serendipitously lend themselves to banks, governments, businesses and stock markets as a greater means of transparency and accountability, both within and between these entities and this can easily operate across international jurisdictions.   

The technological basis of digital currencies can be used as the basis of a future national digital currency by any country. This has not only been discussed by members of the Reserve Bank of Australia but has also been suggested by one economic Professor at the ANU, as the basis of a future Australian digital currency that he has dubbed ‘AusBit’. Professor Rabee Tourky, who is the Director of the Research School of Economics, has publically stated that something like AusBit  will be available in Australia in about ten years’ time.

Greenhouse gasses are kept to a minimum in a cashless society because a society with cash is embedded within manufacturing processes. Making cash requires the transportation and use of raw materials in manufacturing processes with the final product transported to financial institutions. Apart from the obvious risk to society from criminals the transport of cash in security vans currently leads to greater air pollution in our communities. This is not counting people who desire to make either a deposit or withdrawal from their accounts on a daily basis using private transport.  

A cashless society does not have to be the policy of any political party or government instrumentality. It does not have to be something that is forced on any nation that is not broadly accepting and ready for it. It should only be achieved after a plethora of wide-ranging national debate. It will broadly come of its own accord through technological evolution and greater safety and convenience for all consumers. The public will increasingly demand its security, integrity and its many advantages such as reduced queuing time for payments using payWave or PayPass, with a plastic card or a smart phone. 

Not only will a cashless society make paying at any retail point a quicker process, it will also make payment cues either shorter in length or non-existent. ‘RFID’, which stands for ‘Radio Frequency Identification’, will eliminate cues altogether. RFID will definitely be adopted by all major supermarkets in future. All that a customer has to do is register for an account, load up their trolley with what they want to buy and simply walk out to their car without going through any checkout process involving a cue of people in front of you and staff processing your groceries. RFID will accurately note what has been taken out of a store by a specific customer, tally each item, charge the goods to the customer, and email a receipt to the customer’s mobile phone or computer.  Brilliant! 

The experience of Denmark and Sweden is relevant to our financial system. Banks and most businesses will want a cashless society because it will substantially lower their costs simply by not dealing with cash on a daily basis. Cashless environments will engender banks and businesses to operate more safely and enjoy lower cost overheads.

Mobile banking will have a profound impact on traditional bank branches scattered throughout towns and cities. In a cashless society there will not be any need to count, store, or transport cash as it will be electronic and instantaneous. Disputes over a customer’s change will no longer be a common occurrence when cash is finally eliminated.    

If banks were to drag their feet regarding the development of cashless technology and the infrastructure supporting it, cashed up businesses such as Google, Facebook, Microsoft, Apple, etc., can quickly move to develop themselves into alternative banks. They not only have the financial clout to do this they are also at the cutting edge of technology that plays a central role in a cashless society. They are an enormous future threat to the financial position of the banking sector unless banks keep up with technology and support cashless payment methods. The rise of PayPal is a case in point.  

The Australian Payments Clearing Association (APCA), the Reserve Bank of Australia (RBA), the four major banks as well as 12 other foreign and domestic banks operating in Australia, a global payments provider called ‘SWIFT’ and the accounting firm KPMG, are working together to implement real time, instantaneous, mobile transactions throughout Australia by the end of 2017. What this will mean is that banks can close their businesses at the end of the day but instantaneous, real-time, mobile payments can continue to be executed between individuals, businesses or governments of one sort or another, 24 hours a day 7 days a week. This financial infrastructure is called the ‘New Payments Platform’ or ‘NPP’, and it is of enormous consequence for a future banking system and an economy that will run without cash in Australia.

Look no further than Denmark and Sweden as guides to where it might happen first although a number of African countries may beat them to it. The Danish chamber of commerce has lobbied their Parliament to allow certain sectors of their economy to legally have the right to refuse cash, as a voluntary option for their business. This is legislation that if passed will apply in 2016. The Danish chamber of commerce represents the nation’s businesses and as such cannot possibly be considered a radical organisation. This is the harbinger of the end of physical money as we know it and any other country that follows Denmark’s example will not have far to travel to eliminate their cash as well.  

A cashless society is unstoppable. A mobile cashless society will be safer, more convenient, cheaper than using cash, and facilitate instantaneous payments between individual people, businesses and governments. All of these factors will prove irresistible for most if not all economies, both modern and less developed. They will prove fatal for the continued existence of cash the more we move towards the future. A cashless society will provide a plethora of social and economic advantages relative to a society that maintains cash in their economy. 


Comments: (3)

Melvin Haskins
Melvin Haskins - Haston International Limited - 04 August, 2015, 09:38Be the first to give this comment the thumbs up 0 likes

Eliminating cash will not stop the theft of money. Electronic theft of funds will just get more sophisticated. Eliminating cash will not stop criminal activity. Establishing bank accounts in countries with less rules about ownership will enable criminals to move funds with impunity. This is an interesting article, but rather naiive. Cash is still used in more than 50% of transactions by individuals in the world. Australia has less than one-third of one per cent of the world's population. So eliminating cash there will hardly cause a ripple.

Astrid Mitchell
Astrid Mitchell - Currency Publications Ltd - sunbury 04 August, 2015, 13:43Be the first to give this comment the thumbs up 0 likes

I agree with the above comments. Cash will reduce as a proportion of payment, but it won't' disappear. In most countries, it is still increasing - both in value and in volume terms. For how long who knows, but people have been predicting the death of cash for at least 30 years, and so far they have all been proved wrong. Until such time as the banks and payment providers can get their act together, implement interoperatibility and - above all - protect their systems and our data, then people will never fully trust wholly cashless alternatives. Added to which, moving from cash to cashless simply shifts the costs and the benefits. Cash, at the moment, benefits governments because of seigniorage, which in turn can be viewed as a public benefit. Putting all the means of payments in the hands of the banks and payment providers results in them accruing the benefits, with the potential of ripping us off. I am not so keen on government, but even less keen on being at the mercy of the banking community.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 August, 2015, 16:33Be the first to give this comment the thumbs up 0 likes

According to this BBC article from BBC, cash is growing, not dying: 

  1. In the seven countries ... — Australia, Austria, Canada, France, Germany, the Netherlands and the United States, 46-82% of all transactions in 2012 were conducted using cash.
  2. In the United States, cash in circulation grew 42% between 2007 and 2012, and the amount of American money floating around in bills and coins is expected to grow by about 5% each year. The average growth globally is 7% per year.
  3. ...card payments in the Netherlands have been growing by about 8% annually over the past few years. And yet, cash is still king. In 2012, there were 2.7 billion card payments, but an estimated 3.5 to four billion payments were made with cash. 

So much for the death of cash - it's not only not dying but it's actually growing. All over the world. Even in Sweden and Denmark - "leaders of cashless crusade" as BBC calls them.

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