The discourse that has done the most to frame cashlessness as an object of concern is undoubtedly that which highlights the limitations of cash and ties cashlessness to poverty alleviation and financial (and economic) inclusion. Actors in development and philanthropic sectors have weighed in on the possibilities of strategies oriented towards lessening the prevalence of and the need to use cash. USAID, for instance, announced in February 2012 an initiative to “do better than cash,” highlighting some of the limitations of cash-heavy economies around the world: the costs of paying salaries, conducting commerce, saving, transporting, and tracking cash. The USAID call echoes the proposals of those like the Global Assets Project, a part of the New America Foundation, which argued that linking conditional cash transfer projects to savings accounts to ensure electronic delivery “could accelerate economic inclusion.” Indeed, in April 2011, a conference on mobile money held at Tufts University’s Fletcher School was entitled “Killing Cash” and asked, in part, “Is cash the enemy of the poor?”
The Financial Services for the Poor group of the Bill and Melinda Gates Foundation followed the USAID announcement in July 2012 by declaring a similar shift, suggesting in their “Strategy Overview” (pdf) that
one of the reasons that it is too costly to serve poor people with affordable financial services is because most poor households conduct most or all of their financial transactions in cash. This perpetuates the poor’s marginalization from the formal economy because banks, insurance companies, utility companies, and other institutions pay high costs to store, transport and process cash. We also found that the best way to reduce the cost of reaching poor people with financial services is to help shift the majority of their cash-based financial transactions into digital form through mobile phones or another digital interface.
This focus on the risks and “transaction costs” of using cash is a common approach. Vishnu Sridharan suggested in Foreign Policy that one way new head of the World Bank Jim Yong Kim can global poverty and inequality is by “get[ting] rid of money” and emphasizing electronic transfers.
In September, USAID, the Gates Foundation, and several other large players in the payments industry and development world—including Citi, the Ford Foundation, Omidyar Network, VISA, and the UN Capital Development Fund—announced the formation of a “Better Than Cash Alliance,” which has as its mission to encourage the shift from cash to electronic or digital payments and provide “policy, technical and financial assistance to identify and implement the most effective approach for local market conditions” to realize that shift. See, in particular, this video, made by the Better Than Cash Alliance, which introduces the provision of mobile or electronic financial services as one approach to addressing the problems of cash and simultaneously “empowering people and growing emerging economies.”
In February of last year, buzz began to circulate about a book by the journalist David Wolman, The End of Money: Counterfeiters, Preachers, Techies, Dreamers—and the Coming Cashless Society. Wolman’s book chronicles his experience living without cash for a calendar year and the efforts of people and projects around the globe to investigate and create the technologies and institutions necessary for a world without cash, in which all transactions can be made using electronic payments—and in the process, presenting cashlessness as both desirable and, to a certain degree, inevitable. In interviews and book reviews, Wolman’s argument about and for a world without cash made the internet rounds. Cash, these posts suggest, is “an antiquated concept” and “ridiculous,” its continued use upheld by “magical thinking” and the “shared hallucination” that is our trust in its value. Wolman’s book—and the interview with him at Gizmodo—offers a useful and less technical summary of the argument for cashlessness: Cash has many unaccounted-for costs associated with crime and security, replacement of physical bills and coins, transportation, infrastructure, and so on. Most of these costs are products of cash’s unavoidable materiality.
A Cashless World is Coming: Reports, Examples, Histories
Alongside the surge of interest from the philanthropic and development communities about the potential for cashlessness to ameliorate the quality of life for poor people around the world, we have seen a series of reports about experiments in cashlessness. Collectively they suggest that the movement towards cashlessness has already begun. One news report, citing studies measuring the limited role of bills and coins in the Swedish economy (3%, well below averages for the eurozone and the US), suggests that in Sweden, the first country in Europe to introduce bank notes (in 1661), cash is already an artifact of that past era (h/t Lana). Many of the concerns are familiar, security and crime foremost among them. The former deputy governor of the Swedish central bank predicted that cash may not disappear, but will survive “like the crocodile, even though it may be forced to see its habitat gradually cut back.”
Others have pointed to Canada as a model for the development of a cashless society; one article highlights the national public debit system Interac. And in April, reports surfaced (also: here) that the Royal Canadian Mint would roll out a new digital payment vehicle—MintChip, designed to facilitate small-denomination transactions or micropayments—and hold a contest for software developers to submit their ideas and applications for using the new currency. This only days after announcing the process of phasing out the use of the Canadian penny, and in the midst of creating slick new $50 and $100 bills made out of plastic. Winners of the MintChip Challenge were announced in September, and they include applications that donate cents automatically with every MintChip transaction; make easy simultaneous payments by multiple patrons at restaurants; and, the grand prize winner, allow P2P transactions of virtual value. The application, called MintWallet, utilizes a peer-to-peer network hosted on a cloud to facilitate mobile payments:
MintWallet enables you to pay for your latest acquisition on Craigslist, sell your old CD collection in a garage sale or collect donations for charity. Creating a money request is as simple as filling in a few fields. The money request is sent to all of the participants that you choose. […] To send money is as simple as selecting a payee, entering the amount and adding a reference. When sending money in reply to a money request the fields are automatically filled in for you. Once a payment is successfully generated from your MintChip, it will be locally stored. Even on unreliable network connections no money is lost. The payment can be sent over the air or it can be scanned from one device to another via an automatically generated QR code. MintWallet provides a rich platform that enables inventive scenarios. […] Handling cash has never been this easy!
The discourse of the MintChip challenge is explicitly evolutionary: The shift to digital currencies is framed as the most recent in a long line of evolutions in the form of money. (It’s tagline is “the evolution of currency,” and the MintChip homepage has front and center an awesome linear chart connecting, with arrows, what looks to be a goat, to wheat, to silver coins, to gold bars, to bills, to a memory chip emblazoned with the MintChip logo. It also appears in this amazing promotional video before dissolving into a screen full of moving numbers.) Interestingly, however: the prize for the winners? Gold! (“Wafers” and “Maple Leaf Coins”) (Oh, and if that wasn’t juicy enough, David Wolman was scheduled to speak at the award ceremony.)
Many stories about cashlessness fall into two categories. There are those—such as this New York Times article about the slowing of the US Treasury’s printing presses (although it also reports that cash is still “the best available technology for paying baby sitters and tipping bellhops” and for small businesses and criminals, and that $100 bills in particular are hoarded as stores of value around the world)—that report on the decline of cash as a trend already underway. See also this report from Rasmussen (h/t Lana), which declares that 43% of US adults have gone a week without paying for anything with cash. Other stories, however, are exposé-style portraits of individuals who, like Wolman, have decided to go without cash. The story of Daniel Suelo, who “quit money” and lives in a cave in Utah, while describing his life on his website “Living without Money.” Suelo’s story was turned into a book (The Man Who Quit Money) and a BBC report (h/t Stevie). At Slate, Seth Stevenson documented his endeavor to live without cash (reporting some of the difficulties and investigating imperative questions like how to visit a strip club without cash and how the illicit economy might work cashlessly).
In the midst of all this talk about the coming “cashless society,” Slate held a forum linking cashlessness to other persistent debates about money: seigniorage (revenue produced by the difference between the face value of currency and its cost of production, especially that produced by exporting dollars around the world); counterfeiting; how paper money facilitates tax evasion, black market commerce, and crime; online currencies like Facebook Credits (or the recently announced Amazon coins); the cost of producing coinage—even the potential effects of cashlessness on charities that rely on cash donations and saving. The suggestion by Matthew Yglesias that eliminating paper money could help ameliorate recessions by allowing central banks to lower interest rates below zero generated discussion, including responses from economists such as Tyler Cowen, Scott Sumner, and Miles Kimball.
Other online forums have popped up exploring the possibilities—and limits—of cashlessness. Pymnts.com hosts a collection of articles and reports about developments in the discourse on cashlessness, but one which also highlights some of the ways in which cash remains the most prevalent medium of exchange and mode of payment. BlackRock implores investors to “rethink the cost of cash” as a component of investment portfolios, indicating that cash is “probably the most conservative option” (h/t Lana). The Webisteme blog posted notes from the “Digital Money Unconference” in September 2012, which includes historical comparisons to the mid-17th century, a presentation by David Wolman, and sessions on Bitcoin, catastrophic events, and paths to the creation of a cashless society.
Others have offered criticism of the discourse around cashlessness. A columnist for the Washington Post highlighted some of the drawbacks of cashlessness in a response to Wolman’s book. Gizmodo pointed out the continuing popularity of the one-hundred dollar bill as a store of value around the world. Felix Salmon argues that cashless payment makes it too easy to spend money, especially for those who live on limited means. And this article from Naoki Wakamori and Angelika Welte uses shopping diaries to investigate why cash remains the dominant payment for small-value transactions.
Finally, it’s important to acknowledge the history that undergirds the current surge of interest in cashlessness. Dave Birch from Consult Hyperion, while suggesting (with Barclays Bank) that cash is both costly and “tedious,” provides some background to the current discourse. Chris Skinner from the Financial Services Club Blog looks at the snapshots from the history of advertisements for point-of-sale technology, from the cash tills and registers of the early 20th century to the advertising campaign of Square. The images he posts of early print ads for cash machines are brilliant. At Bloomberg’s excellent Echoes blog, Bernardo Bátiz-Lazo, Thomas Haigh, and David Stearns provide an important outline of the history of “visions of a cashless society,” beginning in the mid-20th century. And finally, Stearns and Bátiz-Lazo have organized an online web archive, the Cashless Society Project, to provide a correction to the “historical myopia” that characterizes much popular reporting on cashlesness. Two of their working papers (“How the Future Shaped the Past” and Matthew Hollow’s “Pre-1900 Utopian Visions of the ‘Cashless Society’”) offer historically nuanced explorations of the roots of cashlessness.