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The Major Risks of a Cashless Society

Categories : Cash and Crises, Cash generates security, Cash is a contingency and fall-back solution
March 24, 2021
Tags : Cash and Crises, Cashless, disaster recovery
Political exploitation, discrimination, financial exclusion and post-disaster resilience were some of the key concerns explored in a thought leadership webinar held on 18th March to discuss the implications for society of shifting to a cashless economy.
James Shepherd-Barron

Disaster Risk Management Consultant, Author, and Founder of The Aid Workers Union

This post is also available in: Spanish

Moderated by Martin Gill, Professor of Criminology and Director of Perpetuity Research, the online event heard from James Shepherd-Barron, Professor of international disaster risk management at Fordham University and humanitarian adviser to CashEssentials, Andrea Nitsche, communications director at Giesecke & Devrient and chair of Cash Matters, and Paul Nicholls, business development director at Oberthur Cash Protection.

From the outset, it was recognised that smart financial technologies can offer convenience, flexibility and social benefits such as female empowerment but “are far from an unqualified social good”, especially in low-income countries and those facing disaster shocks.

The Digitalisation of Money can do considerable Harm

In terms of disaster risk reduction, it was suggested that the digitalisation  of money can do considerable harm to those affected by natural or human-induced hazards, including pandemics. “Cashless systems,” James S-B observed, “allow less benign governments to discriminate against groups they deem undesirable, either through surveillance or by simply cutting off all means of electronic payment.” Such control measures had been seen recently in Myanmar, China, Yemen and Ethiopia.

The resilience of cash in times of crisis was also highlighted, with it being noted that disaster recovery is not only slower but less efficient when cash is taken out of the response owing to considerable local economic multiplier effects which electronic payments simply cannot offer.

Electronic Payments Stimulate Over-Borrowing

Concerns were also raised over the tendency for electronic payments and micro-loans via mobile phone apps to stimulate over-borrowing, ultimately leading to downgraded credit scores and financial exclusion. Recent research has shown such over-borrowing leads to payment defaulting in at least one fifth of cases in northern Kenya, for example. “This form of discrimination ultimately widens the ‘digital divide’ between those who have, and those who have not.”

Panellists agreed with the point that no security solution – from passwords to fingerprint readers to iris scanners – is infallible. “No cashless payment,” said Paul Nicholls, “can be as completely secure as cash.”

In conclusion, it was suggested that “The monetisation of money is not an accident; it’s a plan.” Andrea Nitsche agreed, stressing that “cash is the only form of payment that isn’t directly concerned with profit and which addresses the clear motive for cashless payment providers to reduce and ultimately eliminate the use of cash altogether.” She later expanded on this point by adding, “Unnoticed by society, cash acts as a brake on rising fees from other electronic payment providers.”

Time to Challenge Philanthro-Capitalists

In light of these and other points emerging from the discussion, all three panellists felt that there should be a concerted effort from the cash industry to counter the false narrative coming out of self-serving vested interest groups with deep pockets such as The Better Than Cash Alliance. “It’s time the business case put forward by philanthro-capitalists such as the MasterCard Foundation and the Bill & Melinda Gates Foundation was challenged,” said James S-B, “as they appear not to have fully understood the wider social utility afforded society by the public good called cash.”

In order to help consumers understand the importance of maintaining the option of paying with cash, it was suggested that the full cost of transacting in all its forms be made more transparent. Only then, when the opportunity costs are known, will the true cost of monetisation be understood and the true cost to society of taking away the choice of paying with cash become clear.

A recording of the event is available at


This post is also available in: Spanish