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Cashless society
A cashless society describes an economic state whereby financial transactions are not conducted with money in the form of physical banknotes or
coins, but rather through the transfer of digital information (usually an electronic representation of money) between the transacting parties.[1] Cashless
societies have existed from the time when human society came into existence, based on barter and other methods of exchange, and cashless transactions
have also become possible in modern times using digital currencies such as bitcoin. However this article discusses and focuses on the term "cashless
society" in the sense of a move towards, and implications of, a society where cash is replaced by its digital equivalent - in other words, legal tender
(money) exists, is recorded, and is exchanged only in electronic digital form.
Such a concept has been discussed widely, particularly because the world is experiencing a rapid and increasing use of digital methods of recording,
managing, and exchanging money in commerce, investment and daily life in many parts of the world, and transactions which would historically have
been undertaken with cash are often now undertaken electronically.[2][3] Some countries now set limits on transactions and transaction values for which
non-electronic payment may be legally used.[4]
Contents
History
Measurement
Share of payments
Amount of cash in circulation
Legal status
Advantages of a cashless society
Reduced business risks and costs
Reducing transmittal of disease via cash
Transaction speed
Reduction in criminal activity by eliminating high-denomination notes
Better collection of economic data
Easier consumer budgeting
Concerns
Privacy
Problems for the unbanked
Fraudulent Activities
Centralized control
Overspending
See also
References
External links
History
The trend towards use of non-cash transactions and settlement began in daily life during the 1990s, when electronic banking became popular. By the
2010s digital payment methods were widespread in many countries, with examples including intermediaries such as PayPal, digital wallet systems
operated by companies like Apple, contactless and NFC payments by electronic card or smartphone, and electronic bills and banking, all in widespread
use.[3] By the 2010s cash had become actively disfavored in some kinds of transaction which would historically have been very ordinary to pay with
physical tender, and larger cash amounts were in some situations treated with suspicion, due to its versatility and ease of use in money laundering and
financing of terrorism, and actively prohibited by some suppliers and retailers,[5] to the point of coining the expression of a "war on cash".[6] By 2016 in
the United Kingdom it was reported that 1 in 7 people no longer carries or uses cash.[7] The 2016 United States User Consumer Survey Study claims that
75% of respondents preferred a credit or debit card as their payment method while only 11% of respondents preferred cash.[8] Since the founding of both
companies in 2009, digital payments can now be made by methods such as Venmo and Square. Venmo allows individuals to make direct payments to
other individuals without having cash accessible. Square is an innovation that allows primarily small businesses to receive payments from their clients.
By 2016, only about 2% of the value transacted in Sweden was by cash, and only about 20% of retail transactions were in cash. Fewer than half of bank
branches in the country conducted cash transactions.[2] The move away from cash is attributed to banks convincing employers to use direct deposit in the
1960s, banks charging for checks starting in the 1990s, banks launching the convenient Swish smartphone-to-phone payment system in 2012, and the
launch of iZettle for small merchants to accept credit cards in 2011.[2]
Measurement
Share of payments
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A common measure of how close to a "cashless society" a country is becoming is some measure of the number of cashless Estimated share of
payments or person to person transactions are done in that country. For instance the Nordic countries conduct more cashless payments done by
cashless methods (from
transactions than most Europeans. Levels of cash in circulation can widely differ among two countries with similar measure of studies published 2008-
cashless transactions. For example, Denmark has more than double the amount of cash in circulation as Sweden and a 2013)[9]
considerably higher percent in the largest denomination banknote, the 1000kr bill. Country %
Singapore 61
Across the 33 countries covered in the European Payment Cards Yearbook 2015-16, the average number of card
payments per capita per year is 88.4. In comparison, the average Dane makes 268.6 card payments each year, Netherlands 60
the average Finn 243.6, the average Icelander 375.5, the average Norwegian 353.7 and the average Swede 270.2. France 59
This makes card payments in the Nordics two-and a-half to four times higher than the European average. Sweden 59
United Taiwan 6
3.9% 4.6% $94 $1,429
Kingdom(2016)
Italy 6
Canada 4.3% 9.4% $73 $2,021
South Africa 6
Turkey 4.3% 29.7% $35 $437
Poland 5
Australia 4.6% 22.8% $64 $2,606
Russia 4
Indonesia 5.1% 50.0% $51 $196
Mexico 4
Korea 6.2% 12.7% $101 $1,966
Greece 2
Argentina 6.8% 63.3% $42 $944
Colombia 2
Mexico 6.8% 36.1% $78 $631
India 2
Saudi Arabia 7.9% 17.3% $54 $1,663
Kenya 2
United States 8.2% 44.5% $1,618 $4,949
Thailand 2
China 9.5% 14.2% $1,184 $852
Malaysia 2
Singapore 10.2% 24.9% $34 $6,106
Saudi Arabia 1
Russia 10.4% 48.9% $165 $1,123
Peru 1
India 10.7% 63.4% $286 $218
Egypt 1
Euro area 10.7% 15.4% $1,440 $4,224
Indonesia 0
Switzerland 12.7% 13.3% $87 $10,280
Nigeria 0
Hong Kong SAR 17.3% 28.8% $59 $7,948
Japan 20.4% 14.9% $991 $7,818
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Banknotes and coins in circulation at end of year.[12] Values are expressed in native currency
and are total value per capita
Country Avg. year 2011 2012 2013 2014 2015
Turkey 12.1% 751 815 993 1,115 1,332
Korea 11.9% 975,301 1,084,361 1,259,466 1,483,891 1,711,506
Mexico 8.0% 7,017 7,270 7,802 8,934 10,303
India 7.9% ₹8,871 ₹9,696 ₹10,546 ₹11,431 ₹12,965
Brazil 6.0% R$825 R$941 R$1,016 R$1,091 R$1,103
Hong Kong SAR 6.0% 37,962 42,063 47,110 48,649 50,763
Singapore 5.5% 5,301 5,481 5,863 6,292 6,943
Saudi Arabia 5.4% 4,928 5,234 5,547 5,879 6,407
United States 5.1% $3,453 $3,725 $3,926 $4,218 $4,433
Switzerland 4.4% 7,401 8,091 8,495 8,622 9,169
Russia 3.8% 48,284 53,598 57,942 61,523 58,270
Euro Area 3.8% €2,721 €2,787 €2,913 €3,089 €3,280
Australia 3.8% $2,639 $2,739 $2,873 $2,999 $3,175
Canada 3.2% $1,937 $1,995 $2,058 $2,134 $2,271
Japan 3.2% ¥692,858 ¥715,452 ¥744,471 ¥769,088 ¥811,266
United Kingdom 3.2% £913 £948 £968 £1,019 £1,067
South Africa -3.7% R2,137 R3,021 R2,253 R2,521 R1,765
Sweden -6.9% 10,515kr 10,059kr 8,849kr 8,578kr 7,362kr
The amount of cash in circulation was much lower in past decades in all countries except Sweden. The oldest comparative figures at Bank for
International Settlements were from 1988.
Legal status
Massachusetts state law from 1978[14] requires retail businesses to accept cash,[15] but as of 2018 is the only U.S. state with such a law.[16]
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Transaction speed
Restraurant chain Sweetgreen found cashless locations (with customers using payment cards or the chain's mobile app) could process transactions 15%
faster.[19]
Some have proposed a "reduced cash" system, where small bills and coins are available for anonymous, everyday transactions, but high-denomination
notes are eliminated. This would make the amount of cash needed to move large amounts of value physically awkward and easier to detect. Large notes
are also the most valuable to counterfeit. The United Kingdom declared only banknotes of 5 pounds or less were legal tender after World War II because
of fear of Nazi counterfeiting. In 1969, the federal government of the United States declared that banknotes of value over $100 would remain legal
tender, but any notes in government hands would be destroyed and that no new notes of those denominations would be printed in the future. Such notes
were last printed in the USA in 1945. Canada did the same thing with the CAD$1000 banknote in the year 2000. Sweden printed 10,000kr banknotes in
1939 and 1958, but declared them invalid after 31 December 1991. Singapore has recently announced that they would no longer produce the SGD$10,000
banknote. The European Central Bank has announced that the €500 denomination banknote would not be included in the next series of euro banknotes.
Concerns
Privacy
In a digitized economy, payment made will be traceable. With traceable transactions, institutions would have potential access to this information.[23]
With these digital traces left behind, digital transactions become vulnerable. Such transactions allow businesses a way to build a consumer’s personal
profiles based on their spending patterns. The issue of data mining also come into place as countries head towards a cashless society. Cashless
transactions leave a record in the database of the company as one make payment, and this information becomes a way for prediction of future events.
Through large number of records, data mining then allows the organization to compile a profile of an individual through its' records in the database.[24]
Going all-digital, these data retrieved from transactions lead to widespread surveillance where individuals can be tracked by both corporations and the
government.[25] These records might also be available to hackers and could be made public after a data breach.
As part of its Smart Nation initiative, Singapore has been moving towards a cashless economy. 14.4% of the country's population is over 65 years old,[32]
and the majority of seniors still use cash as their only mode of payment. Not used to digitized payment methods, troubleshooting issues such as
managing lost cards or passwords and managing their expenses can create potential trouble for anyone transitioning from cash.[33]
Fraudulent Activities
When payment transactions are stored in servers, it increases the risks of unauthorized breaches by hackers.[34] Financial cyber attacks and digital crime
also form a greater risks when going cashless.[25] Many companies already suffer data breaches, including of payment systems.[35] Electronic accounts are
vulnerable to unauthorized access and transfer of funds to another account or unauthorized purchases.[24]
Attacks on or accidental outages of telecommunication infrastructure also prevents electronic payments from working, unlike cash transactions which
can continue with minimal infrastructure.[36]
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Centralized control
Opponents point out that an entirely cashless system, in addition to tracking all transactions, would enable a central government to:
Overspending
Consumers are less aware about the amount of money they are spending day-to-day when swiping their card to complete a transaction than if they
budgeted money into a wallet and paid in cash.[42]
See also
Global economy
Digital currency
Legal tender
Mass surveillance
Cheque § Declining use
Amazon Go
References
1. "THE COST OF CASH IN THE UNITED STATES" (http://fletcher.tufts.edu/CostofCash/~/media/Fletcher/Microsites/Cost%20of%20Cash/CostofCash
StudyFinal.pdf) (PDF). The Fletcher School Tufts University. p. 9. Retrieved 17 December 2016.
2. Sweden leads the race to become cashless society (https://www.theguardian.com/business/2016/jun/04/sweden-cashless-society-cards-phone-app
s-leading-europe)
3. UK moves towards cashless society (https://www.independent.co.uk/news/business/news/uk-moves-towards-cashless-society-10267215.html)
4. "Cashless-Society.org" (http://cashless-society.org/). Cashless-Society.org. Retrieved 2017-01-27.
5. A cashless society? Some retailers turn their noses up at currency (https://www.usatoday.com/story/money/nation-now/2016/09/04/cash-cashless-s
ociety-credit-cards/89726644/)
6. Negative Interest Rates and the War on Cash (https://professorwerner.wordpress.com/2016/02/09/negative-interest-rates-and-the-war-on-cash)
7. Alex West (23 October 2016). "One in seven Brits no longer carries cash, as we become increasingly reliant on card and smartphone payments" (htt
ps://www.thesun.co.uk/news/2034280/one-in-seven-brits-no-longer-carries-cash-as-we-become-increasingly-reliant-on-card-and-smartphone-payme
nts/). thesun.co.uk. The Sun. Retrieved 12 November 2016.
8. "2016 User Consumer Study" (https://www.tsys.com/Assets/TSYS/downloads/rs_2016-us-consumer-payment-study.pdf) (PDF).
9. "Measuring progress toward a cashless society" (https://newsroom.mastercard.com/wp-content/uploads/2014/08/MasterCardAdvisors-CashlessSoci
ety-July-20146.pdf) (PDF). MasterCard. Retrieved 3 December 2018.
10. http://www.euromonitor.com/financial-cards-and-payments-in-denmark/report
11. Statistics on payment, clearing and settlement systems in the CPMI countries - Figures for 2017 (https://stats.bis.org/statx/srs/table/CT2?p=2017&c
=) - Bank for International Settlements "red books"
12. Statistics on payment, clearing and settlement systems in the CPMI countries - Figures for 2015 (http://www.bis.org/cpmi/publ/d155.htm) - Bank for
International Settlements "red books"
13. Statistics on payment, clearing and settlement systems in 11 countries - Figures for 1988 (https://www.bis.org/cpmi/publ/d08.pdf) - Bank for
International Settlements "red books" pg 509
14. No cash allowed: Stores refusing to accept money (https://www.bostonglobe.com/business/2016/08/03/paying-cash-some-stores-say-thanks-greenb
acks-credit-only/a4EvjwgTpI7r4lD3xVOENO/story.html)
15. MGL 255D §10A [1] (https://malegislature.gov/Laws/GeneralLaws/PartIII/TitleIV/Chapter255D/Section10A)
16. Not everyone is happy that restaurants are going cashless (https://nypost.com/2018/04/24/not-everyone-is-happy-that-restaurants-are-going-cashle
ss/)
17. Sivabalan, Srinivasan (17 July 2017). "Going Cashless? Bad for Tax Cheats, Privacy, Poor" (https://www.bloomberg.com/news/articles/2017-07-17/g
oing-cashless-bad-for-tax-cheats-privacy-poor-quicktake-q-a). Bloomberg Businessweek. Retrieved 10 April 2018.
18. Toward a Metagenomic Understanding on the Bacterial Composition and Resistome in Hong Kong Banknotes (https://www.frontiersin.org/articles/1
0.3389/fmicb.2017.00632/full)
19. As restaurants go cashless, a backlash is building. Will D.C. intervene? (https://www.washingtonpost.com/local/dc-politics/as-restaurants-go-cashles
s-a-backlash-is-building-will-dc-intervene/2018/07/07/89f3f1d8-8098-11e8-b0ef-fffcabeff946_story.html)
20. The Sinister Side of Cash (https://www.wsj.com/articles/the-sinister-side-of-cash-1472137692)
21. Poh, Joanne (17 October 2017). "Why is the Singapore Government So Adamant About Going Cashless" (https://sg.finance.yahoo.com/news/why-s
ingapore-government-adamant-going-090020456.html). YahooFinance. Retrieved 10 April 2018.
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22. Poh, Joanne (16 September 2017). "Ignoring this one point about a cashless society could have a huge impact on Singaporeans' finance" (http://ww
w.asiaone.com/business/ignoring-one-point-about-cashless-society-could-have-huge-impact-singaporeans-finance). asiaone. Retrieved 10 April
2018.
23. Frisby, Dominic (21 March 2016). "Why we should fear a cashless world" (https://www.theguardian.com/money/commentisfree/2016/mar/21/fear-cas
hless-world-contactless). The Guardian. Retrieved 8 April 2018.
24. Catherine, Downey (1996). "The High Price of a Cashless Society: Exchanging Privacy Rights for Digital Cash, 14J. Marshall J. Computer & Info. L.
303 (1996)" (https://repository.jmls.edu/cgi/viewcontent.cgi?referer=https://www.google.com.sg/&httpsredir=1&article=1312&context=jitpl).
25. O'Dwyer, Rachel (2018). Gloerich, Inte; Lovink, Geert; De Vries, Paricia, eds. MoneyLab, Overcoming the Hype. Institute of Network Cultures,
Amsterdam. p. 151.
26. Auyong, Hawyee (4 September 2017). "Inclusivity the key to success of cashless drive" (https://www.todayonline.com/commentary/inclusivity-key-su
ccess-cashless-drive). Today. Retrieved 10 April 2018.
27. As restaurants go cashless, a backlash is building. Will D.C. intervene? (https://www.washingtonpost.com/local/dc-politics/as-restaurants-go-cashles
s-a-backlash-is-building-will-dc-intervene/2018/07/07/89f3f1d8-8098-11e8-b0ef-fffcabeff946_story.html?noredirect=on)
28. Ng, Nicole (22 September 2017). "Going Cashless: Who's Left Behind" (https://dollarsandsense.sg/going-cashless-whos-left-behind). Dollars And
Sense. Retrieved 8 April 2018.
29. Sivy, Michael (20 November 2012). "Why So Many Americans Don't have Bank Accounts" (http://business.time.com/2012/11/20/why-so-many-ameri
cans-dont-have-bank-accounts). TIME. Retrieved 8 April 2018.
30. Burhouse, Susan; Chu, Karyen (20 October 2016). "2011 FDIC National Survey of Unbanked and Underbanked Households" (https://www.fdic.gov/h
ouseholdsurvey/2015/2015report.pdf) (PDF). Retrieved 8 April 2018.
31. Corporation for Enterprise Development. "The Most Unbanked Places in America" (http://cfed.org/assets/pdfs/Most_Unbanked_Places_in_America.
pdf) (PDF). Retrieved 2016-09-10.
32. Toh, Elgin (28 September 2017). "Singapore ageing at faster pace than a decade ago" (http://www.straitstimes.com/singapore/spore-ageing-at-faste
r-pace-than-a-decade-ago). The Straits Times. Retrieved 8 April 2018.
33. Mokhtar, Faris (28 August 2017). "Govt will seek to ensure no one is left behind in cashless drive" (http://www.todayonline.com/singapore/govt-will-s
eek-ensure-no-one-left-behind-cashless-drive). Today. Retrieved 8 April 2018.
34. Domagoj, Sajter (2011). "Privacy, Identity, and the Perils of the Cashless Society" (http://www.chronosmag.eu/files/chronosmag/contentVOL25/Sajte
r-Privacy-SSRN-id2285438.pdf) (PDF).
35. Smith (1 December 2018). "Forever 21: Hackers breached payment system for 7 months" (https://www.csoonline.com/article/3245069/security/forev
er-21-hackers-breached-payment-system-for-7-months-no-encryption-on-pos-devices.html). CSO. Retrieved 10 April 2018.
36. As Society Becomes Increasingly Cashless, Is Massachusetts Ready? (https://www.wgbh.org/news/2018/02/13/news/society-becomes-increasingly-
cashless-massachusetts-ready)
37. Banking Transaction Tax is a Dangerous Idea (http://www.dnaindia.com/analysis/column-banking-transaction-tax-is-a-dangerous-idea-1959448)
38. The Sinister Side of a Cashless Society (http://www.americanthinker.com/articles/2016/08/the_sinister_side_of_a_cashless_society.html)
39. Economics Professor: Negative Interest Rates Aimed at Driving Small Banks Out of Business and Eliminating Cash (http://www.washingtonsblog.co
m/2016/02/economics-professor-negative-interest-rates-aimed-driving-small-banks-business-eliminating-cash.html)
40. The Cashless Society Is a Creepy Fantasy (https://www.bloomberg.com/view/articles/2016-10-14/the-cashless-society-is-a-creepy-fantasy)
41. What Happens When We Become A Cashless Society? (https://www.fastcoexist.com/3056736/what-happens-when-we-become-a-cashless-society)
42. "Consumers' Attitude and Perception towards Doing Cashless Transactions: An Empirical Study in Vadodara" (https://content.ebscohost.com/Conte
ntServer.asp?EbscoContent=dGJyMNLe80SeprU4wtvhOLCmr0%2BeqLFSr6u4S7eWxWXS&ContentCustomer=dGJyMPGpsUm0qq5NuePfgeyx84
7f1d%2BI5wAA&T=P&P=AN&S=R&D=bth&K=125099819).
External links
A Cashless Society Working Party (https://www.actuaries.org.uk/practice-areas/finance-and-investment/finance-and-investment-research-working-p
arties/cashless-society-working-party), Institute and Faculty of Actuaries (UK)
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