Whither Cash?

With every big data breach, news reports highlight consumers swearing they’ll never use their credit cards again. Of course they’re soon back at it: for most folks, paying for everything using cash or check is tedious in today’s marketplaces.

In fact, there’s opposing pressure, toward a cashless society. Sweden has mostly achieved this already, with 80% of all retail transactions there made with credit or debit cards, and predictions of the country being “all-cashless” by 2030.

This seems less likely in the U.S., but that doesn’t stop it from being a discussion topic. A recent Wall Street Journal article broached the idea by asking, “Should We Move to a Mostly Cashless Society?”, although it largely focused on use of large ($100) bills. Proponents note that crime depends heavily on cash, and claim that its elimination would thus reduce crime. Detractors argue that the non-criminal underclass also depend on cash, and that crime would continue, just moving more into non-cash ways of moving money around.

Perhaps a more interesting question is how going cashless might be implemented, and the side-effects that might cause. Beyond traditional physical credit and debit cards, most consumer-level cash replacements—from Apple Pay and Android Pay to Venmo, Dwolla, iZettle, and even just PayPal in app form—are smartphone-based. It seems quite likely that our smartphones will become even more critical to everyday life as these tools proliferate.

Of course there’s a potential downside, even if you’re not a criminal or otherwise dependent on cash as your monetary instrument of choice. The United States has long resisted the lure of a national identity card, due to citizen concerns about freedom and privacy. This is so ingrained that it seems farfetched for Americans to accept the idea any time soon.

However, if smartphone apps become the most common basis for payments, your phone eventually becomes your de facto identity. This is already true for many businesses, whose apps are all but required.

And government (intelligence agencies and law enforcement) will explore using that identity to track “persons of interest.” Which will increase pressure on courts to allow warrantless searches of at least phone metadata, and perhaps deeper.

So while going cashless may superficially be appealing, it may imply a tradeoff that some of us would rather not make!

 

About the Author
Phil Smith III is a distinguished technologist and Senior Architect & Product Manager, Mainframe & Enterprise, at Micro Focus, formerly HPE Software. He is the author of the popular blog series, Cryptography for Mere Mortals. Learn more about how Voltage secures payments data with SecureData for Payments.

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