In William Gibson’s seminal 1984 cyberpunk novel Neuromancer, the sci-fi author credited with coining the term “cyberspace” imagines a future in which paper money is exclusively used for illegal transactions; only criminals use cash. Could legal tender actually become illegal at some point?
There’s really nothing new about the concept of a cashless society; the barter economies humans used centuries ago were technically cashless. Today, however, the term refers to the growing use of not only debit and credit cards, but also smartphone apps and digital payment systems. Are we looking at the death of cash?
Cash on the Decline
In addition to the rising popularity of digital payments and the increasing use of credit cards and debit cards, the use of cash is correspondingly on the decline in many countries. According to an online survey of 1,000 Canadians conducted by GfK, only 25% of transactions in Canada in 2015 were done with cash, down 2% from 2014. Credit- and debit-card processing firm Moneris estimates that by 2030, only 10% of the money spent in Canada will be in cash.
Canada is not alone. Digital payments are on the rise in most tech-savvy nations, with Sweden leading the pack. The country with Europe’s most prolific use of digital payments, Sweden is as close to a cashless society as there is in the world right now. According to Sweden’s central bank, Riksbank, cash is used in fewer than 20% of in-store transactions. A Forex Bonuses study found that Sweden led the world in adoption of digital payments, with 59% of all transactions done digitally. (Canada was at 57%, but edged out Sweden in overall non-cash use due to wider use of credit cards, with an average of two cards per Canadian.)
Trust Issues vs. Early Adoption
One technologically-advanced country that still lags behind Sweden and Canada in terms of digital payments is the United States. While mobile payment methods are plentiful in the US, a 2014 poll found that 71% of Americans were worried about security when it came to online banking, and 57% had similar concerns regarding online shopping. Swedes, by contrast, have much more faith in both their banks and technology. “Swedes tend to trust banks, we trust institutions,” Niklas Arvidsson, a professor at Stockholm’s Royal Institute of Technology, told the BBC. “People are not afraid of the sort-of ‘Big Brother’ issues or fraud connected to electronic payment.”
And as much as Canadians are increasingly happy to use their cards and smartphones in lieu of cash, they seem to fall somewhere in between the US and Sweden. The GfK study also found that 53% of Canadians were concerned about their personal data when using a mobile payment app, and just 22% were confident that their mobile payments were totally secure.
The Pros and Cons of Going Cashless
In a study of 100 cities conducted for Visa, thinktank Roubini ThoughtLab predicted that digital payments would save consumers and businesses a combined 3.2 billion hours of time from now to 2032, with the net benefits to the economy from increased use of digital payments amounting to $470 billion. It also forecast a decline in cash-based crime. While there are fees for processing electronic payments, a cashless business doesn’t have to send employees to a nearby bank to deposit a bag of cash or require an accountant’s services to verify that those cash deposits match sales.
But the downside is, of course, security. Consumer data firm Equifax reported a massive data breach in 2017, exposing millions of Americans’ data and highlighting the issue of data security. Even Sweden, that haven of early adopters, was recently rocked by a major data-breach scandal.
“We have to figure out as an industry how we’re going to communicate safety and security,” Stephen Popeil, vice-president of GfK Canada, told The Canadian Press. “In many cases, how do we convince people that divulging certain things about their financial state via these systems is safe and secure? Once we’ve cracked that nut we’re going to see massive uptake on a lot of this.”
Between the growing use of online retail, digital systems like Apple Pay and Google Wallet, and the continued popularity of credit cards, the argument that we’re becoming a cashless society does seem compelling. And while data security remains a top-of-mind issue for many, the drive to abandon hard currency for all-digital transactions will still be an uncomfortable stretch for some, regardless of their age or generation. Cash seems unlikely to ever truly disappear, even as digital payments become more common. For now, however, going cashless does seem to be a trend on the rise.
Justin Anderson | Staff Writer