Living in a Cash-Less Society

In the past, exchange was done in different means, most notably is the use of valuables like gold, silver, etc. as forms of exchange. Money was later introduced as a means of exchange, but not with the backing of reserves of another commodity, especially Gold or Silver. Much later, fiat money was introduced. Fiat money simply means money not backed by reserves of another commodity. The money is given value by government decree and it was termed as the legal tender.

In common language, cash refers to money in the physical form of currency such as bank notes and coins, while in book keeping and finance it refers to current assets comprising currency or currency equivalents that can be accessed immediately or later. Cashless society is a society where no one uses cash, all purchases being made by credit cards, charge cards, cheques, or direct transfer from one account to another.

After decades of cash use, there has been call from different quarters for an alternative means of transaction. With globalization advancement in technology, many models of cashless transactions have emerged. Use of debit and credit cards to pay for goods, electronic transfer of money through banks, internet banking, mobile money, etc. has become the order of the day. Contrary to the belief of some people that a cashless society might be a mirage, it has become a dream for many countries of the world which is gradually coming true. In fact, the transition to a cashless society is being done voluntarily in many parts of the world. In the United States today, only 7 percent of all transactions are done with cash, and most of these transactions involve very small amounts of money. Our financial system is changing dramatically, and cash is kind of phasing out. National governments and banks are both encouraging the transition from paper currency and coins, joining numerous others who acknowledge the fact that we are in a digital world and that money is digital.

The big banks and the credit card companies are at the fore-front of cheerleading for a cashless economy. They have their sentiments. The big banks want the cashless society because it is more profitable for them. They earn billions in fees from debit cards and even more from credit cards. Ecobank Nigeria has stated that each debit card holder will pay N200 monthly maintenance fee as from June 2012. If each of their numerous customers across Nigeria pay N200 each on their cards monthly, imagine how much they will be making monthly on debit cards only. However, when people use cash the banks earn little or nothing. Most governments around the world are eager to transition into a cashless society because cash is expensive to print, inspect, move, store, and guard. Also, the problem of counterfeiting will continue as long as paper currency exists. Governments would be able to track virtually all transactions and would also be able to monitor tax compliance much more closely.

The government and the banks have been preaching the gospel of cashless society and many advantages it has are encouraging everyone to accept it. Reduction in crime rate is one of the advantages of a cashless society. Cash fuels all kinds of black market activities, drugs, sex work, and purchase of other illegal goods and services. Money laundering is so rampant among Nigerian politicians and this people believe might be reduced if the society goes cashless. Armed robbery is another menace Nigerians believe will reduce if the society goes cashless.

Going cashless seems no longer to be a challenge as many of the things needed are already in place. In fact, ‘cashlessness’ is already working and popular. The challenge is how secured and sustainable a cashless society would be. Opinions in some quarters are encouraging a totally cashless society but there are lots of risks associated with it. As perfect and booming the ICT industry seems, a single flaw can destroy a decade’s work. There are hackers who would take full advantage of a cashless economy and hack into people’s accounts to drain their accounts of funds. There is also the issue of identity theft which is increasing daily. In response to these fears, many companies have designed advanced biometric identity systems. IBM recently released this to the press…
You will no longer need to create, track or remember multiple passwords for various log-ins. Imagine you will be able to walk up to an ATM machine to securely withdraw money by simply speaking your name or looking into a tiny sensor that can recognize the unique patterns in the retina of your eye or by doing the same you can check your account balance on your mobile phone each person has a unique biological identity and behind all that is data. Biometric data- facial definitions, retinal scans and voice files will be composite through software to build your DNA unique online password.

Referred to as multi-factor biometrics, smarter systems will be able to use this information in real time to make sure whenever someone is attempting to access your information, it matches your unique biometric profile and the attempt is authorized. In the future, if you do not surrender your biometric identity information, you may be locked out of the entire financial system.

Another method that can be used to make financial identification more secure is to use implantable RFID microchips. All over the United States, employees are being required to carry badges that contain RFID chips, and in some instances employers are actually requiring employees to have RFID chips injected into their bodies. More advanced RFID technology is the chipless RFID ink developed by a company called Somark which can be applied directly to the skin of an animal or a human. These “RFID tattoos” are applied in about 10 seconds using micro-needles and a reusable applicator, and they can be read by an RFID reader from up to four feet away. These new technologies can ensure security in a cashless society to a large extent. But are you going to allow a chip inserted in your body? Would you carry an RFID tattoo around? What about its similarity to the end-time prophecy in the Holy Bible? What about how desperate criminal minds may become when there is little or no cash around? Would they not kidnap people and force them to wire money into their own accounts? Would their not be more robbery of properties and valuables and many more lives endangered?

In developed countries, they are already discussing a totally cashless society as cards and other electronic financial transactions are already working optimally. In Nigeria however, we are still on the verge of increasing our use of electronic financial transactions. The Central Bank of Nigeria therefore introduced a policy on cash-based transactions which stipulates a ‘cash handling charge’ on daily cash withdrawals or cash deposits that exceed N150, 000 for individuals and N1, 000,000 for corporate bodies. The policy aims at reducing the amount of cash circulating in the economy and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)

There have been comments resistant to the idea of a cashless society ranging from decreased privacy to higher-tech crime to corporate control and technological vulnerabilities.
“Without strict laws, too, a cashless society will be one in which you lack fiscal privacy.” – James

“The thing that galls me is that as soon as we adopt something like that, we will see banks and other intermediaries will start charging us various fees for the convenience. And once we are past cash, we are hostages to those parasites. Ecobank now charge N200 monthly for debit card maintenance.” – Adeniyi

“Can you imagine what might happen if electrical storms, solar flares disrupt telecommunication or electrical grid…and we are already cashless? Besides, I’d rather lose my wallet to a street thug than losing my entire portfolio to the hacker-friendly system of paperless currency!” Stacey

There are both good and bad sides to a cashless society. What is important here is that we take full advantage of the good side and ensure we don’t go too deep as to experience the terror its bad side could unleash on the society