By Amram Margalit – Leverate
More than a decade ago, banks understood the benefits of internet banking and began closing branches around the world in an effort to cut costs. As a result, todays millennials have rarely set foot in a bank and probably don’t know that a paycheck once actually involved receiving a check from your employer. Now, as cryptocurrencies take hold of our consciousness and a myriad of payment options overwhelms the already crowded market, it seems like a forgone conclusion that we have transcended cash.
But cash is not dead, despite the technology attempting to make it so. According to payment processor Paysafe, cash continues to be the most common payment method, with 88% of people using it in the last month. But people are holding less cash for transactions than in the past, with people in the UK now holding an average of £21, down from £33 in 2017.
The picture this seems to paint is a movement towards lower levels of transactions with cash, likely a continuance of the transition towards cashless living. Clearly, there is still a need for cash today, but the amount of use is dwindling. That such a large number of people still use cash only gives pause to the challenges that a world without cash would create.
The main problem with a world without cash is the continued reliance on technology. How many of us rely on technology to work all the time, without fail? How many of us cannot complete basic work tasks when the internet is down or an aspect of our software or hardware needs have failed? Granted, these are usually isolated incidents. Most of the time our tech guys will fix the problem or a restart will confirm that it is just a temporary glitch. But what happens when it’s not?
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What happens when the world of technology that underpins cash fails? Perhaps you think that it couldn’t happen. But it has happened, and it wasn’t a small issue. In the last month, TSB lost 12,500 customers due to a disastrous IT switch. Millions lost access to online and mobile banking, and were even given access to other peoples’ accounts. According to Pinar Ozcan of Warwick Business School, this is actually not surprising. “Most of us trust an established bank with our money, not realizing that these banks’ IT systems date back to the 1970s and they have not updated these systems significantly since then, precisely due to the fear of the system breaking down in the process. What we experienced with TBS is an example of such a nightmare scenario.”
Privacy is also a very real concern. With Facebook’s recent privacy issues, consumers have become more concerned about the use of their details online. A recent Osborne Clarke survey detailed that 79% of respondents were worried about their data, should mobile payment options replace cash. Not only are consumers concerned about their own exposure, but there are also significant questions as to whether it is possible for regulators to provide effective oversight and consumer protection.
On the other hand, technological advances have the capacity to provide far better protection than cash. As Mark-Alexander Christ of SumUp notes, “Even with the extremely rare prospect of a service disruption, criminality, confusion, and corruption are far more prevalent in a world where ‘cash is king’. A world of cash is not safer than one where transactions are protected by end-to-end encryption, fraud-preventing technology and a digital receipt that won’t fall out of your pocket.”
Despite the fear of technological failure crippling the transfer of money, we must not forget that technology has made a great many strides towards improving the transfer of money and providing better protection against fraud. But a transition to this sort of technology exposes users to new types of sophisticated fraud. Protection against this sort of fraud relies on technological security protection, precisely the element that the public doesn’t trust.
Notwithstanding the immense benefits conferred by technology, the challenges remain clear. A world without cash would see us dependent on technology. Now consumers have to decide if they’re willing to bet their cash on whether they trust technology to protect them.
About the Author:
Amram Margalit is a professional writer who has worked in a wide range of settings, including technology companies, nonprofits, and the entertainment industry. Within these positions, Amram has provided quality content and advertising services and is currently the Content Manager at Leverate.