The banks cashless payments topic is trending. One thing should be clear: one of the main beneficiaries of the evolution towards digital payments is the banking sector. Precisely for this reason, Brian Moynihan, CEO of Bank of America, openly stated the following: "We want a cashless society," adding that his company has "more to gain than anyone else" with the move to digital transactions.
This is obvious when you think about the differences between cash transactions and those made with cards or applications. The first are located and are made here and now between two people by the simple act of handing over a ticket. A digital bank transfer, on the other hand, is never localized: it is initiated through a device - a card, a phone, or a computer - that communicates with a distant banking data centre.
The so-called cashless transactions take place between two banks acting on your behalf, and which stand between buyers and sellers. And this has serious implications for privacy.
Companies like Bank of America are excited about the idea of ending paper money not only because of the fees, but also because they get massive amounts of data on who transfers how much to whom. This information is extremely useful for profiling customers (information that can be used for cross-selling or to decide to establish a risk profile).
Banks cashless payments
In addition, major technology companies, such as Google, can use them to track, for example, the effectiveness of their online advertising.
In the cashless society that Moynihan and other executives aim to build, anyone who cannot have a bank account is effectively excluded from the economy. This could happen if you are part of a minority group that banks do not consider profitable enough to offer services, or also for political reasons.
One of the main concerns about the rise of digital payments in countries with authoritarian governments is that banks can be ordered, for example, to prevent political dissidents or democracy advocates from buying certain things from certain people.
During the 2019 Hong Kong protests, activists were queuing up to buy subway tickets with cash just in case card payment made it possible to track them and find out that they were heading to the protest sites. In a society without paper money, your payments could be not only monitored, but also blocked to prevent you from traveling.
Banks cashless payments example
We see a limited-scale example of this paternalism in the Australian "cashless welfare card," which prevents welfare recipients from buying alcohol and other unapproved products in unauthorized establishments. It also prevents them from withdrawing cash to circumvent restrictions.
But the most overlooked element of this story is the fact that the attack on cash is an attack on the local businesses that form the backbone of communities. One of the criticisms of the Australian welfare card is that it alienates citizens from supporting local businesses that prioritize cash and directs them towards large retailers that work with Mastercard and Visa.
Physical money moves by nature in a localized way, and it is not likely that it will end up being used to support a distant technological giant. In past decades it was normal for people to pay with paper money in local shops, but currently digital payment by users is being imposed on large platforms such as Amazon.
But what about cryptocurrencies? One of the claims of the growing cryptocurrency industry is that tokens help to "democratize" digital finance away from large institutions.
Banks cashless payments and bitcoin
However, most people who own bitcoin see it as a speculative asset and not as a form of money itself. And even when it is used for exchange, people depend on its dollar price to decide what amount to deliver.
Crypto tokens face the same hacking and resistance issues as any digital system, and they also subject users to wild, price-destabilizing volatilities when trading on speculative markets. Cryptocurrencies have a place but putting the focus of this debate on them is a distraction.
The most vulnerable people in the world depend on the already existing physical money system, and our priority should be to protect that system. However, this campaign to protect paper money also benefits those who enjoy digital platforms.
The fight for bike lanes in car-dominated cities is not necessarily an anti-car movement: car advocates also benefit from reduced traffic and the option to use their bike from time to time. In the same way, we must fight for a cash infrastructure and for laws in favour of it to prevent economies and the lives of citizens from becoming dependent on a single set of digital giants.
You can enjoy the advantages of Bizum and digital payments, but that does not mean that a system away from the online world for specific occasions does not come in handy.
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