A recent article in The New York Times looks at how retailers have figured out how customers can pay for their goods without using cash, a credit card, or a debit card. In Starbucks' case, the company has designed an app that lets customers use their phone by loading money onto a Starbucks rewards card. It's a win-win. Customers don't have to worry about a data breach. Starbucks doesn't have to worry about paying exorbitant processing fees.
This is just one example of how we're evolving into a cashless society.
In his book The End of Money, journalist David Wolman gets by for an entire year without using cash. At the end of his experiment he certainly seems to think that cash--not necessarily money--could be the root of all evil.
Lately it seems like the only people who carry cash are aspiring terrorists, corrupt government officials, drug traffickers, bank robbers, tax evaders, counterfeiters and rich college kids buying little bags of marijuana.
Although predictions about the end of cash are as old as credit cards, a number of developments are ganging up on physical money like never before: mistrust of national currencies, novel payment tools, anxiety about government debt, the triumph of mobile phones, innovative alternative currencies, environmental concerns and growing evidence that cash is most harmful to the billions of people who have so little of it.The poorer you are, the higher the costs and risks of cash become. Anyone you know can beg you for a few bucks or steal the hard-earned money that you're trying to save to pay your children's school fees. A fire or natural disaster can obliterate your meager savings. And you may have to spend days riding buses and walking to the countryside to deliver cash to, or retrieve it from, a relative. Even if a wire service is accessible, that means paying steep service fees.
Of course going without cash also means we're susceptible to a data breach, such as the one that Target shoppers were subjected to earlier this year. It's a risk that Scott A. Shay, chairman of Signature Bank, says we need to take seriously.
Econgularity, shorthand for economic singularity, is an ugly word I created to describe an unfortunate approaching moment in time when our current technological snooping prowess, the ease of big data manipulation and our sprint to a cashless economy will converge. This will happen in such a way as to permit governments to exercise incredibly powerful control over all human behavior.
So how close are we to doing away with dollars and cents? It's a question Harvard historian Nancy Koehn took on today on Boston Public Radio.
If you look at Sweden you'd think pretty close. In Stockholm homeless venders, who sell the equivalent of Spare Change News, have been outfitted with smartphones so they can accept debit card purchases. Koehn, however, assures us that the cashless train that we're on is not without breaks. Cash still greases the palms of a lot of people. Babysitters, hairdressers, and general contractors are among those who are still largely paid in cash. As James Surowiecki points out in The New Yorker, "Americans still hold an enormous amount of cold, hard cash—as much as seven hundred and fifty billion dollars."
To find out how close we are to going cashless, why we prefer to buy things without cash, and what the historical analog is to this new economy, listen to Nancy Koehn here: