Cashless future as notes and coins decline
Last year Britain processed 19,276 debit card payments every single minute. Mobile and contactless card payments are both rising — and fast. Should we embrace a future without cash?
It is a normal Saturday morning. You check your bank balance on your smartphone as you eat breakfast, and then buy a new ebook for your tablet. You leave the house and pick up a coffee, waving your contactless card as you chat to your favourite barista. You meet some friends, and remember that you owe one of them money — luckily, there’s an app for that. Each of your transactions is processed through a complex digital web of vendors, servers and banks. Numbers shift. Data is recorded.
Welcome to the cashless society.
It is increasingly normal in Britain: last year, for the first time, cash was used for less than half of all payments — only 45% of purchases involved coins and pieces of paper. Meanwhile contactless card transactions tripled; there were over one billion throughout the year.
In a way, it is a familiar story. Money has only ever meant something because society says so, and it has always been linked to new technologies. When writing was first invented in 3000 BCE, it was to keep records of trade. When coins were first minted in 600 BCE, they were used as tokens between merchants. Paper money became popular in Europe in the 17th century: in Britain it took the form of handwritten notes from the Bank of England which could be exchanged for gold.
Today, an English banknote still carries the words ‘I promise to pay the bearer on demand the sum of’ five, ten, or twenty pounds (and so on). It is easy to forget that it is just a piece of paper.
Now less than 10% of the world’s money has a physical form and so a cashless society is the natural next step for many. But it comes with clear consequences. For the 1.5 million British adults without bank accounts, cash is the only way to buy anything — abandoning it would exclude them completely. Meanwhile, not everyone is comfortable knowing that their every purchase is carefully tracked.
Should we really look forward to a cashless future?
Money, money, money
‘Bring it on!’ say some. Carrying around a wallet full of jangling coins is not just irritating, it’s archaic. It is also dangerous: cash attracts petty crime, and its anonymous nature makes it more attractive for dodgy deals and the black market. A cashless society would eliminate these problems, and encourage more transparency throughout the financial system.
But others warn that one man’s ‘transparency’ is another’s ‘invasion of privacy’. Recording all our financial dealings could lead to Big-Brother style surveillance for ordinary people as well as criminals. And there is no guarantee of security — in Sweden, where four out of five payments are cashless, electronic fraud has doubled in the last ten years. This is not a future to be taken lightly.
- It is 2020 and the government has banned paying for things with cash. Will you miss it?
- Is the convenience of cashless payments worth the privacy and security risks?
- Design a banknote which will be used for the next ten years. How will it represent the 21st century?
- Draw a timeline which tracks the history of money.
Some People Say...
“Money is meaningless.”
What do you think?
Q & A
- Why would it matter if someone can see how much I spend at Starbucks?
- Everyone has a right to privacy. If someone knows what you spend your money on, there is no way of knowing how that information could be manipulated or used against you. ‘It’s easy to imagine a daring divorce lawyer or a government agent trying to gain access to our financial history,’ says Rainey Reitman, activism director at the Electronic Frontiers Foundation.
- So is the cashless society coming to Britain?
- Not officially. But as technology makes digital payments easier and easier, people will continue to use them more often. In some countries, like Denmark and Sweden, governments are actively working towards eliminating cash. In others — such as in the developing world — a cashless future is a long way off.
- According to Payments UK, a trade association which represents banks and payment companies like PayPal.
- This was first developed in ancient Sumer, one of the first urban civilisations in the world. It is now part of modern-day Iraq.
- The first coins were developed in the ancient kingdom of Lydia, now part of modern-day Turkey. They were made from electrum, a mixture of gold and silver, and featured a design of a roaring lion on one side.
- Paper money
- This was first used in the Tang dynasty in China, which lasted from 618 to 907 CE. Marco Polo introduced the idea to Europe after he had travelled to China in 1290, but it did not catch on until a few centuries later.
- Bank of England
- The national bank was first established in 1694, when it began issuing banknotes almost immediately.
- Less than 10%
- Around 92% of the world’s money is found in digital bank accounts, according to economists. The cash that exists is worth around $1.2 trillion.
- 1.5 million
- According to a study by the University of Birmingham and the Friends Provident Foundation.