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A cashless society - be careful what you wish for

RBS customers suffered a systems meltdown on Monday evening as millions of customers of RBS, NatWest and Ulster Bank were left unable to make payments with their credit & debit cards

Of course, this is not the first such instance of fundamental technical failures for card systems. In June 2012, a similar technical fault at NatWest meant that many customers were unable to withdraw cash from their bank account for five days. It also echoes the stories from the cashless-trial at the London Olympics, which failed on its first day.

Who’s in a position to lobby consumers?

It’s a favourite pastime of all those involved in the card payments system to campaign for a cashless society. But why is there such an appetite to get rid of cash and replace it with card payments? Cash is defenceless because the stakeholders of the industry are scattered far & wide, meaning an inherent difficulty in a co-ordinated approach to lobbying consumers and organising pro-cash campaigns .

Meanwhile, electronic payments have corporate sponsors, namely Visa & MasterCard, whose co-ordination and determination for such anti-cash campaigns culminates in the greater visibility of the so-called idealistic cashless society.

A Brave New World

Therefore, consumers who believe that a cashless society is ‘the future’ have most likely just swallowed a relentless, biased and agenda-driven publicity campaign from the very organisations that stand to profit (generously) from a move away from cash. I hope that those calling for a cashless society are RBS customers who have just seen for themselves what their brave new world means. Cash means freedom and should hold an important place in payment means for a long time to come. It cannot be declined by a third party system and if you have it, you can spend it – which is a pretty essential feature of money.

At a time when concerns are rising about increasing surveillance by Governments & corporations,  the ability to spend via cash remains an essential civil liberty that should not be underestimated.

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Comments: (4)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 05 December, 2013, 09:08Be the first to give this comment the thumbs up 0 likes

Ever since I wrote The Death Of Cash Is At Least 190 Years Away, I've seen the "Zero Cash Day" getting pushed out farther and farther. Although I kicked off a lively debate with this post, I got a bit bored with this subject myself and have stopped writing / commenting about it of late. However, I must acknowledge that your article makes a fundamental and valid point about cash and civil liberty that is completely ignored by the digerati that's pushing for a cashless society. I remember myself mentioning somewhere during this debate that, of all the payment methods in the world today, cash is the only truly legal tender. With every other MOP, each party involved in the transaction flow can shift the blame to someone else when something goes wrong, leaving the consumer / payer in the lurch.

A Finextra member
A Finextra member 10 December, 2013, 10:40Be the first to give this comment the thumbs up 0 likes

I am a strong believer in going cashless, personally and because I am one of those stakeholders who wants to move people to a cashless environment. That being said, cash is here to stay for a very long time, and thats for a various number of reasons. After all, right or wrong, we all know of busiensses that do a "cash" deal ;)

Going cashless though using card schemes is not what I advocate. Card schemes are based on an old technology and an older way of looking at cashless. Its also older technologies that are used by the banks to complete transactions (and its not just the issueing bank thats involved in a card transaction, there are at least 2 other steps all using that same old techn).

For me, the move to cashless is less about actual tender and the payment and more about the added value I can bring to a transaction. Added value can come in many forms, services, data, rewards, experience etc. But to move to a cashless environment we need to have solutions that reduce the number of moving parts in the process and build their solution in an environment that has in excess of 99% uptime. This is what I'm working on and delivering...(but cash is here to stay) 

A Finextra member
A Finextra member 13 December, 2013, 12:06Be the first to give this comment the thumbs up 0 likes

I’m also a great believer in payments innovation but I maintain that there is a role for both cash and efficient, innovation-based value added solutions in the future payments system. This is because any new technology that can add value and enhance the payment experience for merchants, customers and financial institutions alike, such as you have outlined, still does not truly have the invaluable property of anonymity, which only cash can provide. 

Also, a cashless solution with uptime in excess of 99% isn’t good enough. If we are to eliminate cash, 99.9999% isn’t good enough. Cash has a 100% uptime and any replacement for it needs to be at 100% too or else, as we have seen with the NatWest debacles, consumers can be left without any means of payment. 

For these reasons, I believe a cashless society is a very dangerous concept. 

 

Anish  Kanayi
Anish Kanayi - IT Industry - Bangalore 26 December, 2013, 07:37Be the first to give this comment the thumbs up 0 likes

I think there is a consensus evolving in the debate that the point is not about the absolute termination of cash from existence but increasing and evident trend of substitution of it. To my mind, it is matter of time that we have an innovative payment method in place, which could take care of the short coming of any technical glitch associated with a cashless mode of payment. Even though we are witnessing RBS like incidents (02nd Dec, 2013) once in a while, that should not deter from the journey towards an "increasingly" cashless world.

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