I’m sure you’ve noticed that you need every time less cash when you leave your house. Need a coffee? A gum? In almost every coffee shop or grocery store there is no minimum payment to be made with your credit card. In fact, 24% of millennials say that they leave house with less than $5 cash every day. But do we really know what the end of cash means? What does this idea involve? Are we arriving to the end of cash? We are giving you all the details below.
Since 2016, Norway and Sweden are working on the abolition of cash, in an idea to reduce the already low rate of money laundering, tax avoiding and terrorist financing. By using electronic payments to pay almost everything, it’s easy to keep track of money and to control the whole country finance. In fact, there’s no need to have a credit card to make your payments, thanks to new technologies, a smartphone or a smartwatch can also serve as a method of payment. Besides, we have this idea of money being dirty, so what would be better than not having to touch any coin?
Now it’s time to ask yourself: what about developing countries? The first insight coming to our mind is that it wouldn’t be as easy for them coming to the end of paper-based money and coins as their habitants have less possibilities to own state-of-the-art technological devices, and lots of store don’t own a POS. But actually, countries like India, or from LATAM are deeply thinking about the possibility of ending cash forever. It seems fair, a lot of money is being lost by tax avoiding, and money laundering is a real problem. Let’s see up next why some people are fighting about this revolutionary idea of ending a 4000 years old habit.
Imagine that you want to buy something you wouldn’t like anybody to know, specially not your banker with whom you maintain a formal relationship. With the end of cash, that would be impossible. People who are fighting against this new way of consuming argue that technological payment implicate a lack of privacy. They are also claiming that elderlies are used to pay cash, and they do not feel as comfortable as younger people using a mobile phone, or a credit card to make their payments. What about the ones you can’t afford a smartphone? And the ones who don’t live in the city and have a less powerful mobile connection? Is electronic payment going to create another social gap and kind of discrimination?
With all this information in hands, what would be the benefice for banks and users of ending cash? Electronic payments mean a total knowledge of cash flows. Which means that with the correct analysis of their clients expenses; and by that I mean an ethical way of treating information; banks would be able to offer their clients the services they want faster, and anticipate their needs. Banks would also be able to anticipate tendencies and create more suitable products and services for the financial market.
Nowadays, the end of paper-based money seems still pretty far away from our daily life. While some governments and banks are wishing to end this habit, we are realizing that there is much at stake, and no matter what, it would take a long time before accepting this idea and turning it into reality.