A Cashless Society – It is Coming


by Virginia Fidler, Gold Telegraph:

You love your credit cards, right? Handy and easy, you just whip it out and purchase whatever you want. No cash; no hassle. And everyone makes it so easy for you

Before you bask in all this convenience, consider just who is gaining from this war on cash. The banks, of course, are charging as many fees as they can think of. More importantly, your cash card leaves a wide data trail detailing your buying preferences, used by merchants and advertisers to entice you into more buying. How convenient. These thoughtful companies even offer reward points every time you use the card. Cash offers the ultimate in privacy. Your cash card might as well be a walking billboard.

The government, of course, is extremely interested in your spending habits. The taxing authorities use an electronic money trail to monitor your spending and ensure against tax evasion. In addition, cards save the government the cost and trouble of printing and storing additional currency.

Your electronic purchase trail is nirvana to large corporations. Knowing your spending habits allows them to customize their ads to an ever-larger consumer base. They know what you need before you do and are ready to entice you with specials, sales and “act now” deals.

Monitoring against illegal habits, tax evasion, and money laundering may be considered a positive move. Increased spending can give the economy a boost (even as it depletes your bank account). No one, however, discusses the insidious dangers inherent in the move toward a cashless society.

One of the largest perils is that it all but eliminates financial prudence. You’re not handing over cash, but a mere card. The psychological difference is enormous. Cash forces you to consider your purchases as your wallet is depleted. Will there be enough green to purchase dinner? A cash card handily removes that mental obstacle and skews your perception of precisely how much of your hard-earned money is leaving your possession. Bank statements and easy credit terms are far off, so they don’t merit a great deal of consideration.

Millennials, who have embraced card purchases with considerable enthusiasm, can also be lacking in financial knowledge. They are the major group being targeted by lending institutions, and almost half of them don’t know what their interest rates are or about late fees. Easy spending without adequate financial acumen can be a dangerous combination. Greater financial education would be a positive move toward wiser spending and saving habits. However, retailers have much to gain by keeping consumers in the dark as they continue to entice with “special offers” and one-click online shopping.

Cash transactions are declining globally, and the poorest members of society are feeling the backlash. Approximately 7 percent of Americans do not have bank accounts, and the number of homeless has increased for the first time since 2010. The lack of cash has marginalized those who are most vulnerable.

One country that is making strides toward a cashless society in India. To crack down on the country’s huge black-market trade, Prime Minister Narendra Nodi is attempting to lure consumers with no bank accounts into the formal economy. That is approximately 40 percent of people in India, who are without access to banking services. The first step, in November 2016, was to withdraw the 500 and 1,000 denominations of rupee notes from general circulation. This accounts for 86 percent of India’s cash. The move has hurt Indian’s poor, some of whom are unable to buy simple fruits and vegetables. Small businesses have reduced their staff by 35 percent. While India’s economy is thriving, the elimination of cash is expected to hurt its future GDP.

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