All you need to know about the financial institutions cashless payments topic is here: say goodbye to cash - financial institutions are quietly working to get rid of it.

"Dispense with a horse and save yourself the expense, care and stress of keeping it," read the first advertisement for a car in 1898. One of the first terms for these cars was "horseless carriage", implying that the innovation was not related to the limitations of horses. I like to imagine the first defenders of the automobile trying to overtake a horse cart on a country road to the cry of: "Make way for the future!".

Now, in a remarkably analogous way, the providers of so-called cashless payments (all those bank cards, fintech platforms and mobile applications that facilitate the transfer of digital money between accounts) present physical money as that horse cart, claiming that it continues to exist only at the insistence of the most conservative.

In a 2016 Super Bowl ad, PayPal attacked "old money," comparing it to a world of digital "new money." Companies like Visa and PayPal talk about digital money as an upgrade from cash; the former even reached an agreement with the NFL to promote a cashless Super Bowl in 2020. Like the term "horseless carriage", the expression "cashless payment" implies a breakthrough.

This denigration of cash is proving amazingly effective. In large cities around the world, many businesses are beginning to renege on paper money, especially because of COVID-19. In the United Kingdom, for example, the use of cash plummeted by 50% in 2020, as some stores refused to accept it as a payment method.

Financial institutions cashless payments

However, the idea that physical money is an inferior system to digital is as misleading as it is dangerous. In fact, this rush to disappear from the world could cause millions of people to be totally excluded from the global economy.

Even those who prefer card or app payments should reject the idea that this is the only option. If we allow absolutely everything to be paid digitally, we would be totally exposed to the powerful financial institutions, to their surveillance and control, and to their incompetence.

We would be totally and dependent on banks, prone to financial crises, system failures and cyber-attacks.

Unlike the transition from horse carts to cars, digital bank transfers are not an improvement on the current system. The easiest way to understand it is through an analogy. Do casino chips represent an "improvement" to the cash that is given to obtain them? No. Rather, it is a form of money of limited use, issued by a casino. But if you could not redeem a token for money, it would not have any value.

Many people do not realize that conventional digital money is something similar. The numbers you see in your bank account are "digital tokens", issued by your bank, which you control with your payment card or mobile application. The entire digital payment system (facilitated by companies such as Visa and Mastercard) is an elaborate network to transfer these numbers issued by the bank, but they are still anchored to the cash system. When you go to a cash MACHINE to withdraw money, you are demanding that the chips be redeemed.

Financial institutions cashless payments revealed

It is unclear whether the digital monetary system could even exist without access to physical money. The money you have in the bank and whose figure you see through a screen, would be nothing if you could not exchange it for cash. Despite this, banks in many countries hope that people will gradually forget that they have the right to withdraw their money, closing cash machines and branches and thus blocking access.

While young people are forgetting that the possibility of having money out of the bank exists, the elderly are not forgotten. However, people are increasingly linked to financial institutions that monitor and influence the payment infrastructure.

The promoters of a cashless society paint it as an old-fashioned obstacle, like those horse carts blocking the road for cars. However, there is no conflict in maintaining cash and digital money systems.

Unlike horse carts versus cars, paper money circulates by different routes than digital payments. It is a parallel system, and from the user's perspective, cash looks more like a bicycle than a horse cart. It may not move as fast or go as far as transnational digital systems, but it is great for short outings, it is more inclusive, and it certainly comes in handy when the other system gets stuck.

A digital bank account depends on its accessibility and on that system being maintained. Cash, on the other hand, is not blocked when electricity fails or when a cyberattack brings down a payment system.

Financial institutions cashless payments platforms

Any society that depends exclusively on digital platforms managed by large institutions will end up having resilience problems. If institutions go offline, you may suddenly find yourself unable to interact with your environment. During a 10-hour outage in Visa's European systems in 2018 (caused by a failure in its main data centre), 5.2 million payment attempts were blocked, causing everyone to start desperately looking for a cash MACHINE (which are increasingly difficult to find on some sites).

In the US, for example, there is usually a strong demand for cash before the arrival of hurricanes. People understand that digital systems are insecure, and in a world where the climate crisis makes extreme weather events more likely, putting all the eggs in the digital basket leads to the economy being much less resilient.

But even in normal times, many people prefer paper money, especially in situations were paying by card seems exaggerated. Think of a game of cards at home, where friends put cash in a common pot, or in the little Perspex boxes to make donations in a church, museum, or store.

Financial institutions cashless payments problems: Depositing the money at the till is simple, does not require an account or a digital infrastructure, and works well in this everyday situation. And why do digital payments companies around the world have to stand between you and someone you want to give money to for charity?

It is also no secret that there are class dynamics: wealthier people are more likely to use digital payments, in part because they have greater confidence in institutions such as banks and better access to them. A 2021 Morning Consult survey revealed that 10% of US adults did not have a bank account.

Financial institutions cashless payments society

You also do not need a sociology degree to realize that establishments that reject cash are more successful in areas where more capital moves. If this trend continues, we will witness the formation of a divided economy, where millions of users who use paper money (including elderly people, ethnic minorities, or people averse to financial institutions) will be further excluded.

Despite how crucial it is to maintain an inclusive payment system; digital is gaining ground. The ads for digital payments do not say: "Enjoy the speed, convenience, surveillance, cyberbanking, exclusion and weaknesses of critical infrastructures that our platform provides," although this is what they hide under the surface of convenience.

Hope you liked our Financial institutions cashless payments article!