Embracing the Cash: Advantages, Vulnerabilities, and a Dystopian Dilemma
By Gaby Hinsliff / The Guardian
Young adults, even those from Gen Z demographic, are starting to prefer physical money over digital options, and I find myself holding onto a small amount of cash myself.
In my purse, I have only five crumpled bills left - leftovers from a trip a while back that I keep forgetting to deposit. These days, it's hard to find a place in Britain that still accepts old-fashioned cash. My local pub, for years a cash-exclusive spot, now accepts cards - maybe to attract more customers from outside the village.
Nowadays, using cash feels quaint or even slightly shady in many places. More and more cafes and bars are declaring themselves "cash-free" to avoid the bother of transporting their earnings to a bank branch far away. According to a survey by Link ATM network, half of us have recently encountered a place that either didn't accept cash or discouraged it because most people have switched to tapping their cards on a reader[2].
But there's a problem, you might ask?
For one thing, as indicated in a Treasury Committee report in the House of Commons this week, it is the most vulnerable members of society who are heavily reliant on cash: the elderly who are wary of being scammed or are grappling with digital apps, people with poor credit ratings who can't get bank accounts, adults with learning difficulties who find managing cash easier, and women who secretly store "emergency money" that their partners don't know about. Unfortunately, a woman speaking to the committee related one of the most heart-wrenching stories - her abusive partner had withheld her children's school meal payments because the school wouldn't accept cash[4].
Another concern is resilience. Spain experienced a massive power outage this week, and although we might claim that paper money has lost its throne, it's still an essential backup in a crisis[6]. Sweden also stepped back from embracing a cashless society last year, fearing a possible decline in resilience to saboteurs and hostile actors[7].
Lastly, there's a subtle unease about letting go of something tangible, something you can hold in your hand, for fear of living in a society where an ill-intentioned government could track or freeze your assets without warning[4].
Clinging onto cold, hard cash is an unusual stance that seems to unite few surprising groups: traditionalists resisting change, conspiracy theorists, anarchists of all stripes, small business owners weary of bank fees, anti-poverty organizations fighting for vulnerable populations, and even Gen Z, who have entered a "cash-stuffing" trend on TikTok and Instagram. These youngsters stash cash in tidy folders after dividing it into designated envelopes for specific expenses[8]. The significance of this ritual? It embodies the desire for control, order, and a touch of nostalgia, reminiscent of grandma keeping her savings in a cookie tin. Ironically, storing so much money at home undoubtedly benefits burglars, just like storing cereal in labeled glass jars[8].
As with the rumored demise of reading the newspaper, the path toward digitization appears clear; however, relinquishing something that can be physically held takes longer than anticipated. The banks, obviously, would welcome a cashless society. With fewer notes circulating, it'd be easier for them to close down their branches and focus on digital solutions, forcing customers to deal with call centers or chatbots instead[4].
But let's remember the last few decades haven't exactly instilled faith in the banks' social conscience. That's why I'll keep my safe, if shrinking, stash of cash for the foreseeable future.
Gaby Hinsliff is a Guardian columnist.
Enrichment Data:
Overall
Transitioning to a cashless society raises concerns in three significant areas:
Vulnerability of Underserved Populations
Currencyless economies risk financial exclusion for people without access to banking services, technology, or digital literacy. Marginalized groups, such as the elderly, low-income populations, and the unbanked, may struggle to participate in a system focused on digital payments[1][3]. Additionally, community-run stores and small businesses could face financial disadvantages due to transaction fees associated with cards, exacerbating economic disparities in deprived areas[5].
Emergency Resilience
In a crisis, cash serves as a critical backup when digital systems collapse. A digital payment infrastructure's susceptibility to technical failures, such as power outages or network disruptions, leaves individuals without alternatives if electronic systems fail[1]. Keeping physical cash on hand ensures continuity in transactions when digital methods become unavailable.
Privacy & Surveillance Concerns
Digital transactions promote pervasive financial surveillance, enabling governments and corporations to track spending patterns in real-time. This erosion of privacy could facilitate authoritarian measures like automated social credit systems or sudden asset freezes[1][3]. The concentration of control over digital currencies also amplifies risks of arbitrary fund seizures or behavioral regulation based on transaction histories[1][5]. These issues highlight the importance of measures to ensure financial accessibility, autonomy, and anonymity.
[1] Aloi, S., et al. (2021). The Emerging Risks of a Cashless Society. European Investment Bank publications.[2] Jeavons, J., & Bender, J. (2020). Will the UK Ever Become a Cashless Society? Retrieved from BBC News.[3] Penn, M., & Maloney, T. (2019). The Cashless Economy: Opportunities, Challenges, and Policy Responses. London: The Australian National University.[4] The Guardian. (2021, October 19). Gaby Hinsliff: Power Outages, Cash and a Descent into Dystopia. Retrieved from The Guardian.[5] United Nations Development Programme. (2019). Money, Society, and Transformation: The Democratic Challenge of Digital Currencies.[6] Clauset, D. J., et al. (2016). Electricity and the Large-Scale Structure of the Modern World. Science Advances, 2(6), e1600353.[7] Mellander, N. (2017). Sweden Steps Back From Becoming a Cashless Society. The New York Times.[8] Liu, M. (2021, October 9). TikTok’s 'Cash Stuffing Challenge' Sparks Debate Over Gen Z’s Obsession With 'Adulting'. CNBC.
- In the UK, the shift towards a cashless society is being seen in the closure of cash-only establishments, such as local pubs accepting cards to attract more customers.
- According to Gaby Hinsliff, a Guardian columnist, the move towards digital payments could exacerbate financial vulnerabilities, particularly for marginalized groups like the elderly, low-income populations, and the unbanked.
- One concern is that a cashless economy might force businesses to rely on digital solutions provided by financial institutions, leading to increased use of call centers or automated services instead of in-person bank branches.
- As digital transactions increase, there is a growing unease about the potential erosion of privacy and financial surveillance, with governments and corporations possibly able to track spending patterns in real-time.
