NFC technology: A Cashless society 3

A world without money: T3 investigates...

Prepare to live a wallet-free existence

More on NFC technology: A Cashless society: The decline of cash I Why do we want a cashless society? I Wave and pay I Ringing the change I No need for change I Public Support I Tax and Spending I A World without Money? I NFC technology: How does it work?

Public Support

But will the public support the move away from cash? Indications are very favourable. As well as the rapid uptake of contactless and mobile payments in South Korea and Japan, initiatives in the UK have also been very well received. When O2 tested mobile phones also capable of being used as an Oyster card on London Underground 89 per cent of users said they would be interested in using mobiles and 68 per cent said they would be interested in other contactless payment options. The surge in online retail has played a big role in making consumers comfortable with card payments, although uptake will inevitably be slower in countries where consumers are still somewhat cautious. In Germany, for example, there are online retailers who still offer the option of paying cash on delivery.

The introduction of ‘chip and pin’ has served to significantly reduced people’s fear of fraud. Steve Perry of Visa Europe points out that fraud has fallen to a mere 0.05 per cent. NFC readers can only read a chip over a few centimetres which, their advocates reassure, make them inherently more secure. However, there will inevitably be concerns that will influence what kind of cashless payment method is used for different kinds of purchase in the future. We are not going to start buying cars or property with a wave of a mobile phone. Whilst we may use contactless payments for small items we will retain chip and pin for higher value payments and for large payments we may even be required to provide biometric authentification.

There have been several trials of biometric payments such as paying with fingerprints. One such trial is currently under way at Rewe supermarkets in Cologne in Germany using technology from Dermalog. Rewe spokesman Andreas Kraemer claims that ‘on average paying using a fingerprint takes only seven seconds, paying with a bank card that requires a PIN takes 12 seconds and paying with cash takes 20.’ There is the added benefit that while you may leave your phone or wallet at home one would hope you won’t misplace your finger. Others have suggested retina scans as a means of identification and payment and there have even been instances of people having chips implanted under the skin, such as to pay for drinks and gain access to the VIP area of the Baja Beach Club in Barcelona.

Tax and Spending

While there may always be people daft or pretentious enough to fall for nightclub gimmicks this hardly seems an option that many consumers will warm to. However, it does highlight growing concerns about what personal information is collected, who has access to it and what they might use it for. In ten or twenty years time could every move and every purchase we make be tracked centrally? As technology has given governments and corporations greater potential to monitor more and more of our daily lives the fear of a surveillance society has increased. Cashless payment methods could play a central role in this.

The attraction to governments of being able to monitor all our financial transactions is clear. While they are keen to point out how this could reduce organised crime and money laundering they’re generally less eager to highlight how the system could be used to squeeze more tax out of us. The small cash-in-hand payments to the babysitter or the odd job man could soon come under the scrutiny of the Inland Revenue. Cash could become associated with something furtive and illicit. More than that, it could one day even become illegal.

Things are already beginning to move slowly in this direction. The Greek government announced that from January next year any cash transaction over €1500 will no longer be legal. As the government struggles with the nation’s economic problems it’s keen to clamp down on rampant tax evasion. But countries with sizeable black economies may face the most resistance to the introduction of a fully cashless society. It’s estimated that Italy’s black economy equates to 40 per cent of GDP and even in the UK the figure is 12 per cent. That’s a sizeable portion of the economy that will be keen to retain an untraceable means of doing business.

A lack of faith in governments and banks could actually be entirely counterproductive. During the recent financial crisis many people sought refuge in cold, hard cash. Arguably it had been a reckless attitude towards ‘megabyte money’ that caused the financial crisis in the first place. The European Central Bank reported that the quantity of euro banknotes in circulation hit a record €762 billion in April 2009 with particularly high demand for €100 and €500 notes. This figure was up 15 per cent on the year before and suggests some nervous Europeans preferred to keep their money under the mattress. Even in a largely cashless society we’ll no doubt want some banknotes, gold coins or other readily tradable currency hidden away to guard against the worst case scenario.

A World without Money?

The recent global turmoil has reignited calls for a world currency, too. With the hegemony of the US dollar currently being severely challenged, some have suggested that it should be quickly replaced as the global reserve currency, perhaps by International Monetary Fund units. Nobel prize-winning economist Joseph Stiglitz who last year headed a UN panel reviewing the financial crisis argued that such a system “could contribute to global stability, economic strength, and global equity,” and could be easily implemented in the near future. It’s a move supported by several governments including China, Russia and Brazil although, unsurprisingly, not by the United States. In reality national self-interests might prove hard to overcome but the euro shows what can be achieved.

But if people are wary of their own governments then these days they are altogether more distrusting of international banks and the people that control them. When national politicians recently declared some financial institutions were ‘too big to fail’ was it confirmation that these corporations had become more powerful than democratically elected governments? The ability to control the supply and value of a global currency could concentrate enormous power in the hands of an unaccountable elite in charge of a World Bank. Would we potentially be prepared to sacrifice our freedoms for the mere convenience of a cashless global currency? That might seem an unacceptable price to pay in any money.

For five thousand years money’s attraction has been built on portability and convertability. Importantly it has also been built on trust. This crucial ingredient means that, while we may soon be dispensing with day to day use of coins and banknotes, it may prove all but impossible to totally remove the need for physical money. While Zimbabwe shows that governments are more than capable of destroying the value of the cash in your pocket through reckless printing at least the perception is that it is practically and psychologically harder to do that creating new virtual money. With the price of good, old-fashioned gold recently reached record highs it’s clear that these fears aren’t confined to Zimbabweans.

By definition a cashless system lacks the fundamentally tangible and transparent qualities that the human psyche demands. If anything the element of trust is as important as ever as the speed and scale of ‘megabyte money’ introduces greater volatility into world markets. Perhaps in the far distant future, technology will allow us to dispense with our current concepts of work, pay and commerce. Robots labour and artificial intelligence could allow us to live a life of leisure, or at least a life where financial considerations are not paramount. We can only hope. Perhaps we should resign ourselves to the fact that so long as there is a need for money there will be a need for physical cash in some form, although increasingly as a dependable store of wealth rather than a means of buying a tuna sandwich.