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Who are the greatest beneficiaries of a cashless society?

Categories : Cash connects people, Cash is the first step of financial inclusion
October 9, 2017
Tags : Cash substitution, Cashless, Payments competition, Privacy and anonymity, Sweden
Contrary to what is said, the push for cashlessness in Sweden is not "natural" and not demanded by consumers. There is a lot to gain from a cashless society for players of the payments landscape.
Communication Team / Equipo de Comunicación

Sweden is on its way to becoming the world’s first cashless economy thanks to the government’s push for digital payments and mobile apps. While the move is often presented as a “natural progress” supported by consumers, studies indicate that cash remains extremely popular, at least when the option to pay with it still exists. Experts denounce a misleading campaign led by banks, the government and digital payment providers who fail to communicate the potential disadvantages of a purely cashless society.

Supporters of this movement focus only on the convenience of digital and mobile instruments – advantages that are strategically put forth by providers of cashless services – overlooking the dangers linked to data theft and surveillance, to name a couple. Indeed, privacy has no place in a cashless system, in which every transaction can be recorded and analysed. The government and financial authorities have full control over citizens’ money, enabling them to impose negative interest rates but also to block access to one’s savings. As a result, a cashless society opens the door to a potential economic censorship where authorities can decide where and when one can spend money.

Furthermore, many are waging a war on cash, arguing that paper money is obsolete and induces high handling costs. Yet, it has been proven that digital methods such as cards are more expensive to implement and require sophisticated data protection software. Institutions are also striving to reduce cash’s accessibility by closing local bank branches and imposing cash withdrawal limits or by demonetizing high value banknotes, such as in the case of India last year.

Before moving too far ahead, one should remember that there are also many drawbacks that only hard cash can remedy. Maintaining a diverse payments ecosystem appears crucial to guarantee consumer freedom and ensure that no one is left behind, such as the very young, the elderly, the underbanked and the unbanked.

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