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12/05/2015
In Sweden, the first country in Europe to print banknotes, monetary transactions made using cash are down to three percent of the national economy. Two years ago, a robber left a Stockholm bank empty-handed, as there was no physical money on the premises. Last week, the government of Denmark passed a law permitting businesses to refuse cash payments.

Rates of paper and metal currency usage are dwindling the world over, without the need for government intervention. Last month, data issued by Halifax suggested that only around £18.33 in every £100 is spent using coins or notes in the UK.

Governments would almost certainly welcome a cashless society. Money can be expensive to print and mint. In the US, pennies and nickels currently cost over twice their own value to produce. It is easy for business to underreport cash earnings, avoiding taxes in the process. Furthermore, cash is the favoured payment method of criminals – and by definition, cashless payments mean an end to counterfeit money.  Many retailers and banks would likewise prefer a cashless monetary future. Handling cash can be expensive and time consuming and there are obvious security risks inherent in holding cash on-site, and in its transportation.

Evidently, the future is likely to be a cashless one. The question is, what does this mean for consumers?

In theory, consumers will enjoy more convenience and security in a cashless society. No longer will card-carriers get caught out if a shop only accepts cash. Mobile payment technology allows those who leave their cards at home to pay for goods and services. If you misplace your wallet or purse, its contents can be swiped and will be untraceable – phones, bank accounts and cards come equipped with security measures including encryption, passwords, PINs, signatures and even fingerprint scanning.

However, in practice, technically savvy criminals can bypass such security measures and steal not only your money, but your identity. The loss of physical cash might be an annoyance and inconvenience, but the loss of an identity can be truly catastrophic; your personal data can be erased, bank accounts opened and credit applied for in your name, and your life savings wiped out.

In nigh-on cashless Sweden, cases of card fraud have doubled in the last decade –in 2011, there were almost six times as many computerised monetary fraud cases in Sweden than in 2000. In the UK, as reported by YourMoney.com, identity theft accounts for 40 per cent of all fraud. On 15 February, internet security software giant Kaspersky Labs issued a report detailing how a global gang of cyber-attackers stole almost $1bn in two years, via the infiltration of over 100 banks in 30 countries. If a society moves increasingly towards a digitised monetary future, it follows that the risk of cyber-attacks on banks and financial institutions will rise in step. (For more information, see the YourMoney.com guide ‘Cyber-attacks and you’).

A cashless society could also be a more expensive one for consumers. Card transactions cost businesses money to process, with costs generally passed onto the customer via additional payment charges. Without businesses accepting cash, and with an expensive payment infrastructure to purchase and maintain, retailers could be forced to increase prices – and consumers will almost certainly fit the bill.

The negative psychological impact of cashless payments has been established, too. In 2011, the Journal of Consumer Research published a study which found that consumers who paid via credit did not feel a strong sense of monetary loss, whereas those who paid via cash did, and were more likely to be careful in their spending as a result.

The end of cash may be a matter of inevitable process, rather than conscious decision. Nevertheless, there’s still some way to go before cash disappears completely. In 2012, journalist David Wolman published a book entitled The End of Money, in which he outlines his attempt to live for a year without using physical currency; encountering few problems in North America and Europe, he was forced to place his experiment on hold entirely when he visited India. Perhaps a society can never be truly cashless as long as notes and coins remain the dominant payment method in other parts of the world.

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