Cashless: A Look into the Rise of Mobile Payments

A World Without Dollars

How often do you really carry cash around? When was the last time you handed the barista a five-dollar bill for your cappuccino at Starbucks instead of just swiping your card? Or, better yet, did you just have the cashier scan an app on your phone and pay that way? Statistically, most of you did.

A recent survey found that one in ten Americans no longer carry cash of any kind on them, while 50% have less than $20 at any time. In fact, as of holiday season 2015, 43% of shoppers used a mobile payment app and 57% believe that retailers should make the option available to use an app or something like Apple Pay or Google Wallet when doing their shopping.

And it’s easy to see why. With a mobile payment option, there are a lot of advantages ranging from small things like the notion that a decreased time-per-transaction means less time waiting in lines while customers and cashiers fiddle around with change and receipts, to an overall decrease in crime. There’s little point in mugging someone for the empty wallet they are carrying or sticking up a gas station for the paltry amount of cash that may have come in during the day. That doesn’t even begin to take into account more white collar crimes like tax fraud and evasion that would undoubtedly fall by a large amount if all transactions were traceable. Things are just more convenient when people aren’t carrying large amounts of money on them.

But, as good as a cashless society sounds on paper and may actually be for a large number of people, there are some very real concerns that have to be addressed before such a step into a digital-transactions-only world can be embraced.

The first, and most obvious, question that comes to mind is just how safe is your money? Companies like Google and Apple swear up and down that all the information stored on their side is encrypted and protected. But, let’s just be real here: it’s much more likely that a hacker is going to access a random person’s phone when they forget it on a bus than that same hacker will break into Google or Apple. Although large breaches are not uncommon at large companies - just ask Sony or Target. A pure cashless society would turn losing a phone, which already is a horrible inconvenience, into something much more dangerous because (if the person is technologically savvy) they would have access to all of your bank information stored on your phone. Until phones on the consumer level are shown to have high levels of solid encryption, security will continue to be one of the largest barriers to a truly cashless society.

The next obstacle is a little more high-minded in nature, but how might a cashless country effect the poor? While smartphones are becoming more and more popular, there still remains a huge percentage of the population without one. These people, especially in poor rural areas, may have no way to access the more integrated levels of technology and banking that are associated with a cashless society. It’s fine now when cash is still universally accepted, but in 20-30 years when technology is eons above what we have now, unless there is some sort of government program that ensures people have access to the online world, a cashless society remains daunting. Another group of people this affects is small business owners. Many places, especially in rural and impoverished areas, still only accept cash because they don’t have the technology to read credit cards, let alone accept payments from an Apple Watch. It may just be part of the rising cost of business to have to buy these machines to accept those payments, but for many people, those may just serve as another roadblock to actually starting a business of their own.

The last and most concerning part about a cashless society would be the impact on privacy. Every payment would be traceable by the government, and it would give them a huge amount of control over the money of everyday citizens. In an age where the government seems so hell-bent on knowing as much about you as it can, it doesn’t seem like a huge leap that the government may implement a bill allowing for the freezing of your cashless accounts under suspect of terrorism. From there, the bill may be applied to regular criminals or people merely suspected of committing a crime. It’s not to say that the government is trying to abuse its power. But in a world so concerned with privacy, it would seem foolish to hand this power over without safeguards in place.

The rise of a cashless society is still a long way away. The technology simply isn’t there yet and even when it is, there are plenty of reasons to still have cash flowing through the economy. But the trends don’t lie. Fewer people are carrying cash and more people are carrying smartphones. A world of payment apps and using a watch to pay for groceries is already here; but it’s where it goes that will be really interesting.