01:24 GMT12 April 2021
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    The world over, traditional methods of monetary transaction are in seemingly terminal decline, supplanted by an array of digital provisions. In Sweden, payments using cash are down to one percent of the national economy. There are even instances of robbers leaving banks empty-handed, due to there being literally no physical money on the premises.

    Many consumers and businesses alike have welcomed this revolution with open arms, adopting online banking, contactless payments, and associated apps in ever-increasingly vast numbers. For its part, the mainstream media almost universally hails this emerging milieu a very good thing indeed — but not all are convinced of the virtues of cashlessness.

    Among the dissenters is campaigner Brett Scott, author of The Heretic's Guide to Global Finance, who for some time has observed this inexorable march with growing concern. He believes people rarely understand how and why this clamour for a digitally-monopolized payments future has become louder and louder over time, and just who benefits from the push. Speaking exclusively to Sputnik journalist Kit Klarenberg, he sums up his assorted worries.

    Manufacturing Consent

    It would be easy to dismiss opposition to cashlessness as natural yet irrational resistance to change. After all, as a vast number of influential fora perpetually hammer home, cashless societies are supposedly inevitable, a logical evolution and advancement in payments, offering fresh benefits to consumers while eradicating — or at least minimizing — the shortcomings of the means and structures that preceded them.

    Pedestrians walk past ATM machines (L and R) for digital currency Bitcoin in Hong Kong on December 18, 2017
    © AFP 2021 / Anthony WALLACE
    Pedestrians walk past ATM machines (L and R) for digital currency Bitcoin in Hong Kong on December 18, 2017
    Moreover, this destiny is one millions are apparently willingly consenting to, as evidenced by the rapid closure of bank branches and incremental disappearance of cash machines in towns and cities throughout the Western world. Banks seemingly have little choice but to respond to a changing market, and customer attitudes and habits metamorphose.

    However, Brett believes a self-perpetuating and dangerous feedback loop underpins the tectonic shift toward cashlessness in recent years — a feedback loop of financial institutions' own making, in the pursuit of profit. Ultimately, the less banks spend on physical infrastructure, and the more payment giants like Mastercard and Visa increase their transaction volumes, the more money they make. The needs, concerns and interests of consumers are thus secondary considerations for Big Finance, if at all.

    "One of the ways we've reached this point is through what behavioral economists call ‘nudging'. Finance industry players want the public to adopt digital, so slowly make it difficult to use any alternative. For example, they start shutting down ATMs, which makes it harder to access cash, which makes digital systems thus appear relatively more convenient by default, which induces people to ‘choose' digital. For centuries, there was no public angst at all about physical currency's ‘inconvenience', and I still see people use cash every day without any obvious difficulty — yet we're constantly told it's burdensome. This is psychological reverse-engineering," Brett told Sputnik.

    Negative Feedback

    Supporting these efforts, and further perpetuating the digital payments feedback loop, are extremely well-funded propaganda blitzes — major banks and payment system providers both have dedicated marketing teams relentlessly pushing cashlessness, via major ad campaigns and PR stunts, such as competitions to find the most ‘digitized' businesses. 

    These efforts, coupled with the proliferation of technology such as smartphones and the overall advance of financial technology, have made fintech pushers and providers a progressively influential lobbying force, meaning governments and other powerful bodies end up giving citizens a digital payments nudge too. For example, in June the European Commission concluded an inquiry "on restrictions on payments in cash", which considered the idea of imposing ‘thresholds', limiting the size of cash transactions.

    In this photo taken on Jan. 17, 2018, a worker walks along a row of computer rigs that run around the clock 'mining' bitcoin inside the Genesis Mining cryptocurrency mine in Keflavik, Iceland
    © AP Photo / Egill Bjarnason
    In this photo taken on Jan. 17, 2018, a worker walks along a row of computer rigs that run around the clock 'mining' bitcoin inside the Genesis Mining cryptocurrency mine in Keflavik, Iceland
    It concluded there were many positives to such restrictions — particularly in respect of fighting money laundering — although stopped short of recommending legislative action. Brett suggests thresholds would be an ideal way of gradually weaning citizens off using cash. Again, by making it harder to conduct transactions using hard currency, people would be forced — and become accustomed to — using digital for large payments, and over time the threshold could be reduced due to the policy's 'success'.  

    In the UK, the Treasury ran a public consultation March — June on "the role of cash and digital payments in the new economy". Brett submitted evidence — but argues the consultation's ‘call for evidence' document "was uncritical about digital payments, while demonizing cash", associating the latter with crime, money laundering and tax evasion, while barely mentioning any negative aspects of the former. 

    One representative passage boasted of how the government had "made digital payments simpler, quicker, and cheaper", and made clear the primary purpose of the consultation was to "know more about what can be done to remove barriers to digital payments" — while "[understanding] more about the costs and disincentives that still exist in making digital payments", and whether government "could play a greater role in addressing them".

    "I certainly won't argue there aren't benefits to digital payments, but what we're moving towards — a totally cash-free society, where citizens can only engage in economic exchange digitally via banks — is hazardous. People like having the option to use digital payments, but that doesn't mean they want the option to use cash removed, particularly when they see the negatives sides of cashlessness, which include increased surveillance, cybercrime, and disenfranchisement of those who don't have bank accounts" Brett told Sputnik.

    Watchful Eyes

    The significant surveillance opportunities cashlessness inescapably creates for banks, businesses and governments is of some anxiety to civil liberties campaigners — but despite growing public concern about how much personal information can be harvested from social media accounts, there seems to be little comparable anxiety about the rise of digital payments, despite payment data being far more revealing.

    "What someone discloses about themselves on social media is by and large at their discretion — a public persona they have a high degree of control over. If every monetary transaction in the world has to be passed through a nexus of companies, banks and apps, there's by definition no truly private means of monetary transaction — and all one's interests, likes and potential dislikes, activities and actions can be recorded and analyzed," Brett told Sputnik.

    Many potentially mephitic actors are surely salivating at the prospect of being able to monitor the private activities of citizens on an extremely granular level. Such a trove would of course be of immense interest to major corporations, allowing them to understand consumer traits and behaviors, and market products and manipulate individuals more effectively than ever before.

    Governments already inclined towards indiscriminate mass-surveillance would similarly be keen to tap into such a wellspring, gaining an even more intimate and extensive view of citizens' daily activities. More sinisterly though, it could even allow states to ostracise individuals entirely from economic action, banning them from purchasing anything — or at least certain products and services.

    Most obviously though, a centralized payments system depended upon by everyone also makes everyone equally vulnerable to attacks from criminals, or simply ghosts in the machine. For instance, on June 1 Visa suffered an unprecedented hardware failure, with catastrophic implications for millions of customers across Europe — many couldn't pay for often vital goods and services, others were stranded many miles from home. The glitch took the best part of 24 hours to fully rectify.

    "It's funny, for all the talk of cash's inconvenience, what's truly inconvenient is when a payment network crashes and millions can't make any payments at all. In a truly cashless world, we'd be just one hardware failure or critical error away from not losing control over our finances until the issue is corrected — that's likely to only be temporary, but it could still last hours, days or even weeks. Cash, on the other hand, is incapable of crashing, because its use isn't dependent on external data centres," Brett told Sputnik.

    Common Cents

    Nonetheless, Brett doesn't see cashless societies as necessarily unavoidable — despite multi-billion dollar marketing crusades, increasingly common use of digital payments, and evidently widespread political support, there's growing unease in some quarters about ever-reducing physical currency usage.

    Ironically, such disquiet is often most prevalent in the most cashless societies. Swedish Central Bank Governor Stefan Ingves has repeatedly warned in 2018 the lack of cash transactions in the country is a problem, damaging the economy's resilience, and making even brief breakdowns an extremely parlous prospect for all. He has proposed new regulation to protect the long-term status of the Swedish kronor by forcing banks to handle cash.

    "There are those who [think] we've nothing to fear in a world where public funds have been completely replaced by private options. I think they're wrong. That commercial players in all scenarios would shoulder the responsibility to meet public demand for safe payments is unlikely. If nothing is done, Sweden is heading for a situation where all means of payment the public has access to are given and controlled by commercial actors," he wrote in February.

    Brett has also encountered resistance among national security specialists, which he feels notable — one would perhaps presume such individuals would support a shift away from cash payments, given their prevalence in terrorism funding and the drug trade. "The resilience question makes them think twice," he says, "if you're in charge of maintaining the integrity and safety of your country, the pandemonium that could erupt if a digital system collapses is a major concern. For example, what if your digital payment system is subject to a coordinated terrorist cyberattack?"

    Brett hopes such warnings offer some pause to more determinedly pro-digital politicians elsewhere. He also suggests citizens, governments and banks alike should remain circumspect about cryptocurrencies, which are frequently touted by true believers in the sphere as a panacea for the various issues inherent in digital payments.

    A man watches the prices of bitcoin at Bithumb cryptocurrency exchange in Seoul, South Korea, Wednesday, June 20, 2018
    © AP Photo / Ahn Young-joon
    A man watches the prices of bitcoin at Bithumb cryptocurrency exchange in Seoul, South Korea, Wednesday, June 20, 2018
    "Whenever I write an article criticizing cashlessness, I get a ton of Bitcoin advocates tweeting at me, claiming all the problems I cite would be solved by cryptocurrencies. I feel sympathy for them. They're putting a lot of effort into making their alternative work, but they're also often unprepared to accept criticism. If you're in that bubble, you interpret information through a certain lens — so if a central banker expresses skepticism about Bitcoin, many crypto pundits see it as proof central bankers are worried about crypto's disruptive potential, but the reality is many bankers simply don't perceive it as a threat," Brett told Sputnik.

    His skepticism stems from the fact cryptocurrencies often don't actually operate like currency — they're effectively tokens priced in US dollars, and in fact remain dependent on the fiat money system. While he thinks they're innovative, and uses them from time to time, he thinks it's not obvious they have the ability to replace the global banking system. In the mean time, he suggests we defend cash as much as possible — after all, if it ain't broke, don't fix it

    .The views and opinions expressed in this article are those of Brett Scott and do not necessarily reflect those of Sputnik.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.


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    digital payments, cryptocurrency, cashless society, surveillance, Sweden, Europe, United Kingdom
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