Little by little, our society is going cashless. More and more people are jettisoning cumbersome coins and notes in favor of the convenience of instant electronic transactions. They might be quicker and easier in the moment but going cashless comes with grave implications for our privacy which we risk forgetting.
When it comes to privacy, nothing comes close to cash. It is the most private form of transaction and the most anonymous. By contrast, electronic payments involve providing personal information not just to merchants, but also third parties.
Electronic payments, on the other hand, present privacy risks that cash payments do not. The convenience of paying electronically means, inevitably, your data and your money must be stored remotely elsewhere. That makes it vulnerable to being exposed in data breaches. It exposes you to fraud and makes your personal data ripe for hackers and other criminal actors.
It is easy to dismiss that idea as an abstract threat. What are the chances of that happening to me, you might ask. In fact, it probably already has happened to you. Alarming research suggests that 15 billion credentials are in circulation on dark web marketplaces used by criminals to trade stolen data.
Every time you sign up to a paid service which involves non-cash transactions, even something as innocuous as an online streaming service, you are willingly pouring information about yourself into yet another remote database. If someone nefarious accesses it from the backend, you will probably not find out until it is already too late.
The heart of the cashless debate is this. Any number of organizations currently hold your data as a result of online transactions you have completed in the past. Many will be organizations you have never directly interacted with, and perhaps never even heard of, since there are often several parties involved in the backend processing of payments. Do you truly have faith in the integrity and trustworthiness of each and every one of those organizations which know a great deal about you? In fact, how can you, since you do not know who all of them are?
Even more pertinently, do you trust that each of those organizations will take the proper care of your data, and guard it with the same vociferousness that you do yourself? They probably deal with personal information from thousands of different people at a time, as part of enormous spreadsheets. The slightest slipup can expose vulnerabilities to hackers, especially in the modern age where data can be retrieved from a laptop on the other side of the world without a trace.
More than crime, perhaps the greatest threats to privacy come from state actors. An increasing number of state and local governments have eliminated the ability to pay for access to key services like public transit and highways with cash. By going down this cashless path, they are encroaching on citizens’ privacy and increasing their ability to monitor and surveil the movements and activities of the population.
Politicians are not blind to the new powers they are acquiring as we abandon cash en masse. In fact, the federal government has become increasingly intrusive in monitoring transactions. For example, in 2020, federal regulators issued a proposed rule, “modifying the rule implementing the Bank Secrecy Act requiring financial institutions to collect and retain information on certain funds transfers and transmittals of funds,” lowering the threshold for reporting from “$3,000 to $250 for funds transfers and transmittals of funds that begin or end outside the United States.” This ought to be of grave concern to anyone who values their privacy and their independence from the government.
A cashless society would be a society with diminished privacy for all. When it comes to privacy, cash is still king. Naturally, the convenience and speed of electronic transactions is hard to resist. But we must not make momentous decisions like abandoning cash without first considering the risks, and ideally maintaining a prominent place for cash in our society and economy as a reliable fallback option.
There are accessibility risks in the rush to go cashless, too. Going cashless may freeze out the most vulnerable, those with lower incomes who cannot afford to tap away freely on contactless card machines and need to keep a close eye on how much money they have to get through the week. It also presents new barriers to completing simple, everyday tasks like buying groceries for those with some disabilities or who struggle with technology, like the elderly.
Of course, in the free market, businesses may abandon cash payments if they so wish, and their customer base has no objection. But as a society, we ought to consider carefully the possible risks of such a momentous shift in the way we trade and barter with each other.
Jason Reed is the spokesperson for Young Voices and a policy analyst and political commentator for a wide range of outlets. Follow him on Twitter @JasonReed624