If I look back at my five years in the US in Grad School, I’ve perhaps spent less than 20% of my small stipend in cash. That means that upwards of 80% of my spending since coming here is contained in a database or a number of databases on the servers of private companies. For all intents and purposes, my entire purchasing history can be obtained by anyone be they security agencies or private commercial data brokerage firms to be used for whatever purpose they aim to use it. That alone is a recipe for disaster if we go completely cashless, but there are way more problems with going cashless than just the state weaponizing your spending habits for social control.
There is a new trend among governments in the global south, i.e. poor countries selling the idea of connecting poorer and more rural populations to the banking grid through various mechanisms including mobile payments and opening of bank accounts where possible. In May this year, the Vice President Mahamudu Bawumia at a launch of mobile payments systems in Accra said that we are getting to a point where the Ghanaian government will no longer accept payments in cash. And he is not alone in this: two years ago, the business-loving right-wing Narendra Modi government suddenly announced a ban on over 80% of India’s bank notes in favor of his cashless society dream to chaos across the nation of almost a billion and half, in China, almost every citizen in their megafast growing cities now mainly shop with online payment systems developed by two major companies Tencent and Alibaba. Politicians in the developing world, have for all intents and purposes, bought the idea of cashless society wholesale. It is basically the same in the developed world as well. In fact, in countries like Switzerland and Sweden, it is almost becoming a hassle finding cash or using cash in large parts of their countries. But just who wants this system and who stands to benefit from it.
In almost all cases I’ve looked at, two major players are pushing the cashless society craze: commercial banks (and corporations that offer banking services), and governments (specifically tax and security agencies). An economist at Harvard and former IMF official at the frontline of this push outlined his main reasons for wanting this cashless society as 1) need to ensure everyone pays taxes, and 2) avoid criminal enterprises from moving cash clandestinely. The commercial banks on the other hand argue that keeping and maintaining cash is expensive operationally for them. These are the two main players and their stated reasons for wanting the cashless system. Our own Vice President said at the same program I mentioned above that going cashless was meant to ensure no one could steal money.
If you look at the stated reasons by the governments, you start to develop serious worries about its implications for society going forward. In essence, the governments want to be able to know and track all the transactions all their citizens engage in so that they can control the monetary habits of their populations. In their own words, they can prevent citizens from stealing or engaging in fraud, and evading taxes. I think this should worry any freedom-loving person and privacy advocate. To have everything you spend your money on monitored and tracked by the government is getting into dangerous territory here. Already, the Chinese government deducts points from citizens (on their Orwellian Social Credit system) who buy alcohol because most Chinese citizens now use AliPay and TenPay to buy everything. In a way, allowing the government to know everything we buy is a rather scary scenario and has rather ominous Orwellian implications. Are we then to become wards or children of the state so that the state decides what we can and cannot purchase with our hard earned money?
The banks present an even more ominous prospect for me in a political situation in virtually every country today where the government “for security reasons” can force these companies to divulge the data they have collected on the monetary and spending habits of their citizens. In China, and the US, this is already the case, much more egregious in China perhaps. If you read the hundreds of pages of tiny prints User Agreements of companies like PayPal and Amazon and Apple, and MasterCard and VISA, they burry within them rules that say that when you agree to use their services, they can share your data with data brokerage firms like Google and Facebook and other large data selling firms. So whatever you purchase using your Discover card, the information can be sold to another company to use in whatever they deem fit. And they are already doing it. I’ve noticed that after I pay for something using my credit card, I end up getting offers from similar products from completely unrelated sellers. So again, if you are a privacy advocate, that is certainly very worrying.
Now, the truly problematic issue here is that a number of critical kinds of information is getting consolidated here that makes it easy to map a complete psycho-social profile of a person in this increasingly digital and cashless society. I use Apple Pay to pay for groceries and sometimes pay for things on Facebook and Google and Amazon. And this is tied to both my credit cards and debit cards. Apple, Facebook, and Google, and Amazon keep a record of where I go. Apple actually can tell me how many steps I walk outside the house and can tell whether I was on a bicycle or a car. And if they can, Facebook whose Facebook/Instagram/WhatsApp apps are on my phone also can. So in many ways, if you combine the data from these location tracking, search tracking, financial tracking, purchase tracking, Apple, Facebook, Google, or Amazon probably knows me better than I know myself because they have more available data about me than I have about myself. I probably can’t tell you what I bought last month but Amazon and Discover know everything I have purchased in the past five years. That is way too much information for an outsider to have about another person. And if you factor in the issue here: a private corporation out to make money in whatever unethical way it can, having access to this much intrusive information, then it is ominous.
The other issue I have with this cashless system is that when it completely replaces cash, we’d be giving way too much power to commercial and private banks and corporations. We’d be completely altering how money works in our society. Estimates already put it at about 90%+ of money in the current global monetary system being held in banks and in digital bank money. If we go completely cashless, it will almost obliterate the little power central banks or publicly accountable banking institutions have on our monetary system. Currently, there are two kinds of money: physical cash backed by government power, and digital money issued by private commercial banks. With the cash system, you can work and store your money wherever you feel like it for whatever emergency you might come into. When you go and put your money in the bank, you can go withdraw it when you don’t want it in your bank anymore. When a bank is about to fail, you can run to the bank and withdraw it. What happens in a cashless system? If a bank collapses, how do you get your money back, especially if the central bank didn’t issue the bank notes? In a cashless system, all your monetary power is in the hands of a private commercial entity.
What happens to security of large sums of money in society when it is held in banks as digital currency alone? There is too much vulnerability for societies with this cashless system too. Imagine the entire city or country is cashless and a disaster strikes the power grid of the nation and for twenty four hours, no one has access to energy to go online. That will spell disaster for the livelihoods of millions if not billions. Putting all our eggs in one basket is a recipe for disaster and I think we should pump our breaks with this mad rush to cashlessness.
I am by no means saying these innovations are not convenient for society. Heck, I use these perhaps more than most. I hardly have any cash on me at all. Maximum I might have ten or twenty dollars on me at any time. I can sit in Texas and buy mobile credit for my mother or data for my brother or send them mobile money and they can cash it in minutes. I love the convenience of all these. And not having to carry cash is a breeze for me always. But I don’t think we should eliminate cash as these governments, especially in the global south, are in a mad rush to do. And I don’t trust that in these countries, these credit card companies and these giant American conglomerates are the ones pushing this cashless agenda. In Ghana, VISA and MasterCard are the main drivers of this cashless agenda. I will rather these heartless debt based profiteers were not spearheading this. And I sure hope Ghana doesn’t go cashless anytime soon. Unless the government at least issues the digital currencies themselves. We can use both systems side by side. When the car was invented, we didn’t stop using horses, and bicycles. Imagine a government had pushed to ban horses and bicycles because we now have cars. That would be absurd. And like what Narendra Modi’s debacle showed us, we should at least not rush into it because it would cause untold hardships to our people. And looking at China’s model, we should be fearful of all this consolidation of power by large multinationals and our governments.