Cashless Debate: the pros and cons agree on the risk of privacy

A recent statement from the People’s Bank of China reveals that it fined 16 public and private organisations last year for refusing to accept cash. The episode was one more skirmish in the ongoing war between digital and physical currencies — one that highlights the dual role of cash as both a means of payment and as a safeguard of personal freedoms and privacy.
The central bank of China said that it issued the fines in an effort to protect the rights of people to use cash. The move comes at a time when China is rapidly transforming itself into one of the most cash-free economies in the world. The pace of digital change is so great that the central bank needs to remind people cash is still a legal form of payment.
A report last year from the South China Morning Post stated that China’s domestic financial market had an estimated 87% of consumers using fintech services. It also had a $29 trillion mobile payment market in 2019, as well as the largest global market for online securities trading.
The report also suggested that mobile payments already accounted for four out of every five transactions. And this was before Covid-19 accelerated technological trends around the globe.
However, in China’s swift move towards digitalisation, citizens’ rights are being progressively eroded, both through deliberate actions from the state, and through subtle secondary effects rooted in the digitisation of transactions.
“China is building what I think is a blueprint, a road map of persecution for other regimes around the world and they’re doing it with surveillance,” explained David Curry from the Open Doors, a charity that aids persecuted Christians around the world.
Many invested parties, players in the digital financial sector, aim to reduce the amount of transactions conducted with cash; their impulses are logically profit-oriented. However, even they are forced to acknowledge that cashless economies such as China represent a clear danger for individual privacy.
Cash and personal freedom
The option to pay with cash is something many people take for granted, but it has many less-considered strengths. Paying in cash is a well-known budgeting technique, for instance, helping people to be more mindful of their spending and, therefore, allowing them to exert greater control over their finances.
But, beyond this sort of benefit, the oldest monetary transaction also offers the bearer something more fundamental: autonomy. If you transact in cash, you need nothing else — no cards, machines, or data — and you need no third party to facilitate the process. Cash, in this sense, offers independence and empowerment to the individual.
“Perpetrators controlling the family finances can make it difficult for victims to leave and seek refuge by limiting access to accounts,” according to Which?.
Tellingly, people escaping such relationships often feel more comfortable paying in cash once they are free, keeping their activities as private as possible — just in case anyone tries tracking them down.
But what if the abuse comes not from a partner or family member but from your own government?
There are many good reasons to wish that your transactions are not recorded by companies or authorities. Just as freedom of speech is a crucial pillar of democracy, freedom from transactional surveillance also indirectly protects individual rights, such as the right to protest, or the right to personal expression.
In China, people found guilty of minor crimes can be excluded from the digital economy through a five-year payments app ban. Described as “a social death” by one internet user, this is just one way — among many that could be devised — to use digitalisation to coerce and punish individuals that the government dislikes.
Digital transactions are one more cog in the machine, allowing governments to monitor every aspect of a citizen’s life — where they go, what they buy, when, and how often.
The same technologies used by advertisers to track and predict spending behaviour online are now leveraged against the individual. When combined with facial recognition, artificial intelligence, and biometric data, the end of privacy becomes a near-certainty.
And yet, it is not clear whether the eradication of cash is actually feasible. Even in nations with massive capacity to control and coerce their populations, such as China, cash could be extremely resistant to elimination. Cashless forecasters need to consider the human element.
Data acquired by the financial website Finbold  indicates that about 287 million adults, or 20% of the Chinese population, are unbanked as of the first quarter of 2021. That is roughly 12 times the number of unbanked citizens in the United States.
This section of the population living outside of the banking system might be difficult or even impossible to transform.
These issues concern democracies too
But such issues do not only concern autocratic and totalitarian regimes. Monitoring people’s transactions is one weapon among many that can be used to destabilise a teetering democracy. And yet, removing cash from the economy might not be as realistic as any government would hope.
Just as propaganda and opportunistic gaming of public sentiment can change the complexion of civil liberties in a nation, financial surveillance can also serve as a bludgeon for the populist who seeks to silence his detractors.
As these technologies become increasingly cheap to possess and use, we will see them deployed in lower wealth, struggling democracies as a way to ensnare even the technologically savvy.
But healthier democracies should be concerned as well. Even those on the pro-cashless side of the aisle acknowledge that the amount of power and control governments would acquire through taking their economies completely digital could have a corrosive effect on citizens’ rights.
According to Jay Stanley, a senior policy analyst at The American Civil Liberties Union, this exact concern is playing out right now in the United States. He believes that Congress is allowing weak privacy laws to go unchecked, placing little to no limits on the kinds of financial data banks and companies can store and trade about citizens.
While an absolute transition to cashlessness might, in fact, be impossible, the cost of making it happen is also deeply concerning.
Given recent digitalisation political trends, the United States might be less secure as a democracy than people think. Such privacy loss is clearly misaligned with the reinforcement of democratic ideals.
Digitalisation, in general, arrives in the global context of declining personal freedoms and weakening democratic institutions. Retaining cash as a form of payment is more than a matter of preference: it serves as a bulwark against abusive state surveillance and arbitrary financial punishment. And even more discouragingly, a truly cashless economy might not be as achievable as many people think.

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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.

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