Is Going Cashless Discriminatory?

Payment cards. Mobile payments. Digital currencies/cryptocurrencies. All these payment methods are becoming more and more popular challenging the good old cash money.

In fact, it looks like going cashless is starting to become a worldwide trend. Governments along with central banks are joining forces to push the societies towards the cashless economy, or at least towards the one with less cash.

Going cashless is a world-wide trend.

One of the key reasons behind this is obviously more control and a quest to eliminate, or at least limit the shadow economy. And some countries are doing a really great job in pursuing this.

Looking at Europe, we for sure must outline the Nordics, primarily Sweden and Norway where cash levels are at less than 5%. Looking at the global perspective, China is for sure the leading player here. As argued couple of times, I wouldn't be surprised if China would become the first cashless economy in the world.

Note: more about China, and why cash is there becoming obsolete you can read here.

The Biggest Myth about Cash

There's a widespread argument stating that cash is by far the most expensive means of exchange, therefore, a move towards cashless society should bring a lot of efficiency. There is even a study from 2013 arguing that cash costs circa 200 billion to the US taxpayers every year.

Yet, it appears to be more of a widespread myth rather than a proven argument. To illustrate this, earlier I have taken a look at 2 studies bringing us to more or less the same conclusions.

The data and the analysis have showed that cash and debit cards have the lowest social cost per transaction. Therefore, one can conclude that cashless society does not necessarily mean lower cost (at least social ones).

Note: more about the Biggest Myth about Cash and analysed studies you can read here.

So what about Discrimination?

The truth of the matter is that despite moving forward to digital economy and heavy digitisation, cash is still the dominant or at least one of the dominant means of exchange/payment. Globally.

Cash is still one of the most dominant means of exchange globally.

Thus, going completely cashless in essence would negatively impact people who are not familiar with the new means of payment, be it cards, mobile wallets or cryptos. Take the US as an example. According to a recent survey, banning the use of cash would be a discriminatory practice that would disproportionately impact the 10% of DC residents who are unbanked, and an additional 25% of residents who are underbanked and may not have access to a payment card.

Further, such an approach would also be discriminatory against youth, who are often unable to obtain a payment card, impacting many of the middle school and high school students. Last but not least, is obviously the elderly people, who more or less always choose to pay by cash despite the fact that they might actually have a payment card.

An interesting thing that I saw recently: many elderly people in Lithuania actually own a payment card, yet they always choose to withdraw all the money out of ATM, and hence use cash on a regular basis. They just seem not to trust banks. And trust is the KEY when it comes to finance and money.

The Take

To keep things simple I must say that as long as the infrastructure and the user habits won't change, going completely (and I stress - completely) cashless would be discriminatory by nature as it wouldn't allow customers to buy goods or services in the most easy and convenient way for them. And it's all about the customer, right?

Just remember one simple thing:  when someone wants to buy something and is ready to pay, don’t make it difficult.

P.S. You might enjoy my earlier pieces as well:

?? Digital Ecosystems are the Future of Business

?? Will Coinbase Bring Digital Assets to the Mainstream?

?? FinTech Predictions for 2018

?? Blockchain Predictions for 2018

?? Bitcoin is NOT a Currency, and Never Will Be

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About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at one of the leading alternative banking and payments providers in EEA, I'm an active member of FinTech community and a TechFin evangelist.

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