Ruth Euling: Limits of a Cashless Society (Cash and digital: co-existing for inclusion)

2017-07-26 IMI

This article appeared in OMFIF Commentary on July 10, 2017. Ruth Euling is Global Sales Director at De La Rue. Reports of the end of cash are greatly exaggerated. With qualities including portability, divisibility and durability, cash is forecast to continue expanding. A 'cashless society' is about as probable as the 'paperless office' that some insisted was within reach 20-30 years ago. Just as technologies like email and cloud computing came to co-exist alongside paper, innovations including credit cards, digital wallets and cryptocurrencies are complementing cash rather than replacing it. Although countries are right to welcome technologies that promote diversity of choice and social inclusion, one cannot lose sight of the facts. Around the world, 38% of the population do not have bank accounts – although the proportion of global wealth this represents is tiny. The demand for ATMs continues to grow globally, with numbers set to increase by around 5% per year. December 2016 saw more cash withdrawn from ATMs in the UK than any month in history. Sweden, which many consider to be the economy least dependent on cash worldwide, is reviewing its policy of removing ATMs as a result of public feedback. While the proportion of transactions carried out in cash will decline, the total volume of cash in circulation globally is expected to rise by 3%-4% a year over the next 10 years. Access to financial services is key to achieving the United Nations' sustainable development goals by 2030. However, the infrastructure needed to support cashless transactions is unavailable in much of the world. High costs, geography and political priorities are among the reasons inhibiting the expansion of this infrastructure. Where the infrastructure does exist, even temporary breakdowns can cause major problems. In October 2016 Asda, the UK supermarket chain, incurred the wrath of customers when a loss of internet connection prevented electronic payments from being processed. The Office of the UN High Commissioner for Refugees reports that 1m children per week are born without their births being registered. No birth certificate means no proof of identity and therefore no bank account or access to financial tools. Changing demographics further complicate the issue. Aging populations are less digitally savvy than younger ones. In addition, there is a risk any pronounced shift to a cashless society would further exacerbate the differences between the wealthiest and poorest parts of society. Global paper production still shows growth, despite the impact of email and other technologies, a clear indication that the digital and the physical can co-exist. No fully accessible and reliable infrastructure for a cashless society is yet on offer. Digital opportunities are certainly growing. But cash will continue to co-exist with digital offerings, and as a key component of an open and inclusive society.

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Ruth Euling: Limits of a Cashless Society (Cash and digital: co-existing for inclusion)

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