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A cashless economy to root out theft and petty crime?


The prospect of making crime disappear has been addressed simultaneously with simply deleting other human woes, such as tax evasion and poverty, namely by economist Ken Rogoff. But just as going cashless would merely add more red tape to being poor, suppressing paper currency would do nothing to stymie crime. In fact, our increasingly cashless society has given birth to new, bigger, stealthier forms of crime.




It may have sounded like a good idea at the time: to avoid being robbed, how about moving our money to the electronic world? No more mugging, no more coins falling between the seats of the car, and no more being held at gunpoint for a fistful of dollars. The idea was also promoted by one of the first forms of cashless transaction devices: debit cards. Whenever debit card fraud occurred, the bank insurance covered the theft, which had been carried out bloodlessly in the first place. So, that’s it, then, going cashless will make crime and theft disappear and we should throw cash out the window? Well, not really. Not at all, actually.
 
Electronic payments initially got a good reputation for safety, in the 80s and 90s, when they were still relatively uncommon. The crime world was still used to targeting cash and had not yet developed the skills to steal electronic money. But by stealing only cash, thieves exposed themselves to what happened shortly after: as money was becoming increasingly electronic, their potential loot was melting like snow in the sun. Financial institution Finder writes : “A recent finder.com survey found that an estimated 110 million Americans have used a digital wallet at some point in their lives. Reflecting a rise in e-wallet popularity, that’s 3.5 million more people than just two years ago who said they used an e-wallet with Facebook Messenger, Google Wallet, Venmo and similar services.”. Quickly, they adapted to the new electronic economy, and followed the money.
 
Now that thieves and criminal organizations have caught up with the technological gap, it becomes clear that banks, and financial solution companies, have in fact opened up wonderful opportunities for criminal enterprises who were previously limited to stealing a few hundred dollars at a time (with a high chance of getting caught red-handed, each time, too). In the UK alone, over 500 cases of fraud are reported on a daily basis, and the digitization of the global economy has made the occurrence of theft far worse. Stripe analyzes that “ As chip-enabled cards have made brick-and-mortar shopping safer, fraudsters are increasingly targeting online stores—and these internet businesses are responsible for not only detecting fraud, but also paying the associated costs. On average, every $1 of fraudulent orders costs an online store an additional $2.62 and a mobile store $3.34 [...] Unfortunately, repeat fraud on a card is common: more than 40% of compromised cards are charged for more than one fraudulent transaction”, making even small-amount fraud add to high levels.
 
Online banking has profoundly changed the industry, because the funds are increasingly managed by the customer himself, and not by a professional banker who has been trained in financial security. Therefore, each new fraudulent technique designed to skim online accounts is not only more likely to succeed but will probably last much longer before being detected. In recent years, a steady increase of financial crime has been observed, to the point that it has superseded “traditional crime” in several countries. Security expert Douglas Bonderud says : “According to newly released fraud statistics, the total amount of “fraudulent conduct” reported in 2017 dropped by 6 percent. However, identity fraud is up, according to Cifas’ “The Fraudscape” report. It rose 1 percent last year to 174,523 total cases.” Finally, courthouses tend to be far more lenient, should the criminal be arrested, when the crime or misdemeanor has been carried out without violence. So, the equation was quickly figured out by criminals, after the start of the digital revolution: beating up a victim for their wallet used to yield a few banknotes and expose to years in prison, but new generation online-fraud procures millions and exposes to months inside.
 
What’s not to like? The Times reporter Anna Temkin says : “Never has a generation been so trusting of technology. Too trusting, according to a report this month by Policy Network, the international think-tank. Its research, commissioned by NatWest, suggests that twentysomethings in the UK are more susceptible to online financial fraud than the elderly because we are more willing to share our data.” With each new development, is born a new way to steal. Thieves are eager to exploit nascent NFC technology by simply huddling in crowded public transport and invisibly grabbing thousands of dollars from within the backpacks of unsuspecting victims.
 
Finally, electronic money has not caused the disappearance of violence, on the mere basis that money is now carried in phones, rather than in leather wallets. Phone theft has risen, of course, as valuable smartphones have become more common. In fact, this new era has yielded some kind of “theft guarantee”: stealing the phone may or may not give access to the victim’s funds (according to the perpetrator’s electronic proficiency), but if it doesn’t, there is still up to a thousand dollars to be made by simply selling the phone. Back in 2013, the Telegraph wrote : “Smartphones stolen in Britain are being sold for up to £1,000 abroad as the black market price for handsets that contain personal and financial data soars [...] Police and industry sources have admitted that the international element of the crime, and sophistication of the criminal groups involved, has made it incredibly difficult to counter, according to The Times. Official figures recently suggested that mobile phone theft has increased 25 per cent in the last three years.”. And, of course, the process of mugging a citizen for his or her smartphone, has no reason to be any less violent than stealing a wallet or a purse.
 
It always takes some time for the dust to settle, after a major change, and the digital revolution is no exception to this rule. The idea that going cashless was safer was probably true at the very beginning of the economic shift, but the crime world quickly adapted to the new settings and are now back to wreak even greater havoc. In the old days, grabbing cash yielded little, and was extremely risky, due to the necessary physical contact with the victim, who would subsequently be delighted to identify the thief in a police station. Nowadays, as thieves discretely board subway lines during rush hour, with skimming devices siphoning NFC phones left unlocked from within the pockets of their owners, cash has become, once again, the safer option.










The cashless society from an ethical point of view

The debate about the move towards a cashless society has been at the center of the scene for several years, now. Various angles have been taken by economists, politicians, banking institutions and sociologists. Beyond the technicalities of the debate, lies the question of freedom, of inter-citizen solidarity and of governmental responsibility. The debate cannot remain in the hands of financial specialists, it is first and foremost an ethical, political and societal issue.

The cashless society from an ethical point of view









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The debate

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Inclusion: a cashless economy fights the poorest, not poverty

A cashless economy to root out theft and petty crime?

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Does a cashless economy really boost economic growth for all?

Governments and sovereignty concerns in a cashless society

Why commercial banks are lobbying in favor of a cashless economy

Ecology: the carbon footprint of payment means in a cashless economy

The convenience of payments means in a cashless economy