When society becomes cashless –
From “The American Thinker“
Most importantly, there is the matter of privacy and the threat to our liberties posed by a cashless society. That’s a topic that proponents of a cashless society are loath to examine. Maybe I have a legitimate reason for not wanting an electronic record of all of my transactions. Maybe my reason is not legit. It doesn’t matter. I have the right to live my life free from government surveillance.
That right is guaranteed under the Fourth Amendment: The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated[.] “Papers, and effects” includes currency – and government has no right to force an accounting of those “effects” by eliminating a practical means of cash transactions.
Make no mistake: government will always abuse the powers citizens cede to it. Government has already stepped vastly beyond its constitutional limits. The Obama administration has not even made a pretense of constitutionality for many of its executive actions. The elimination of cash currency would be another large step, along with repeal of the Second Amendment, in the direction of totalitarianism.
Source: The Sinister Side of a Cashless Society – The American Thinker
Lack of privacy
In a digitized economy, payment made will be traceable. With traceable transactions, institutions would have potential access to this information. With these digital traces left behind, digital transactions become vulnerable. Such transactions allow businesses a way to build a consumer’s personal profiles based on their spending patterns. The issue of data mining also come into place as countries head towards a cashless society. Cashless transactions leave a record in the database of the company as one make payment, and this information becomes a way for prediction of future events. Through large number of records, data mining then allows the organization to compile a profile of an individual through its records in the database.
Going all-digital, these data retrieved from transactions lead to widespread surveillance where individuals can be tracked by both corporations and the government. These records might also be available to hackers and could be made public after a data breach.
Problems for the unbanked
Cashless systems can be problematic for people who currently rely on cash, who are concentrated in certain populations such as the poor, near poor, elderly, undocumented immigrants, and youth. Electronic transactions require a bank account and some familiarity with the payment system. Many people in impoverished areas are underbanked or unbanked. In the United States, almost one-third of the population lacked the full range of basic financial services. According to FDIC data, of households that earn an annual income of less than $15,000 per year, almost 25.6% do not have a bank account. Nationwide, 7.7% of people in United States do not have bank accounts, with levels over 20% in some cities and rural counties, and over 40% in some census tracts.
As part of its Smart Nation initiative, Singapore has been moving towards a cashless economy. 14.4% of the country’s population is over 65 years old, and the majority of seniors still use cash as their only mode of payment. Not used to digitized payment methods, troubleshooting issues such as managing lost cards or passwords and managing their expenses can create potential trouble for anyone transitioning from cash.
When payment transactions are stored in servers, it increases the risks of unauthorized breaches by hackers. Financial cyber attacks and digital crime also form a greater risks when going cashless. Many companies already suffer data breaches, including of payment systems. Electronic accounts are vulnerable to unauthorized access and transfer of funds to another account or unauthorized purchases.
Attacks on or accidental outages of telecommunication infrastructure also prevents electronic payments from working, unlike cash transactions which can continue with minimal infrastructure.
Opponents point out that an entirely cashless system, in addition to tracking all transactions, would enable a central government to:
- Enforce a transaction tax on every person-to-person payment
- Eliminate storage of cash as a means to escape nominal negative interest rates, which are used to fight deflation by discouraging savings (most effective if combined with bans on barter, private currencies like bitcoin, and storage of precious metals like gold). Certain types of money could be set to “expire” and be worthless if not spent in specific ways or by specific times. This is also possible with cash, if the government allows high inflation or lets its currency undergo a devaluation.
- Totalitarian regimes could conduct more effective mass surveillance and quickly prevent certain individuals from buying anything or earning any money
- Restrict the type of consumer goods that can be purchased with a certain amount of money (and parents might be able to do the same with allowance money).