Exploding dollar bill

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The declining use of cash suggests it is also of declining necessity, but its existence is an invaluable aid for the most vulnerable in society and for freedom itself. Hannah Duncan reports.

In the UK, cash makes up a meagre 18% of transactions. But for millions of Brits, it is necessary for survival. “Poorer people – those on benefits – rely so much on cash,” says cash campaigner Martin Quinn. “They will earmark every single penny.”

Research from the Royal Society of Arts (RSA) found that one in five would struggle in a cashless society, while for 48% it would be “problematic”. Disturbingly, the study also reveals that a Britain without cash would lead to “economic exclusion, isolation, exploitation, debt, and rising costs” for the most vulnerable. 

It is already well established that people spend significantly more using bank cards than notes and coins – up to 83% more according to one report. “Forcing people onto digital could lead to a loss of control over finances and spiralling debts,” warns the RSA. 

Why, then, is cash getting phased out? “It’s certainly nothing to do with hygiene,” says payments expert Ron Delnevo. “There’s no evidence that even one person on this planet has been infected from handling cash.”

According to both Mr Quinn and Mr Delnevo: “The banks want to get rid of cash because it doesn’t make them money.” 

If not digital, then untouchable

It is undoubtedly true that the notes and coins lining the wallets of everyday people are out of reach for most financial services. They cannot lend out this money in order to collect interest. The deposit multiplier effect is redundant. 

Banks cannot add overdraft fees to cash payments either, which generate eye-watering sums of money. In 2021, for example, US banks Wells Fargo, JPMorgan and Bank of America made $1.41bn, $1.21bn and $1.14bn, respectively. The relentless application of late and overdraft fees even drove president Joe Biden to make a stand in October 2022, who in a speech proclaimed that credit card late fees and other banking fees cost Americans "24 billion dollars a year".

Forcing people onto digital could lead to a loss of control over finances and spiralling debts

Royal Society of Arts

Of course, payment corporations also miss out when people choose cash. They cannot charge merchants per transaction. “Mastercard and Visa […] are making a lot of money, and they see the potential to make a lot more. That’s why they’re working to destroy cash,” Mr Delnevo adds. “They’re set up to make profits for shareholders.”

Cash, in short, is costing financial services a lot of opportunities. And frankly, since the Fed introduced a zero reserve policy in March 2020, banks may not even have the means to pay out cash to their account holders anymore – yet another reason to encourage digital banking.

A pillar of democracy

The idea of financial services generating profits and protecting their own interests, at the expense of vulnerable people, is unappetising enough. But there are also fears that the steady dismantling of cash could lead to the erosion of our autonomy and democracy too. 

If you think this sounds dramatic or far-fetched, look no further than China’s largely cashless society. “It terrifies me to see the amount of control the Chinese government has over the public,” stresses Mr Delnevo. 

In 2019, 23 million citizens were financially cut off from flying or taking a train by the state. The high surveillance and social credit system mean that people can be denied transport, education and other rights for something as trivial as not visiting their parents enough, jaywalking or cheating in video games

As the government imposes its digital currency, these draconian measures are expected to ramp up even more. Soon the state will be able to survey, freeze or even drain accounts based on behaviour. Citizens will find that their payments cannot be processed beyond certain borders, or that they get dramatically different interest rates depending on their politics. This is something nobody wants, no matter how profitable it is for financial services in the short term. 

Unlike banks, payment corporations or governments, cash has no agenda. It is simply a means of payment. If we want to shield ourselves against the risk of a big brother state, while supporting the most vulnerable, we must prevent it from sliding into obscurity. Perhaps we should even reinstate cash as king. 

Both Mr Quinn and Mr Delnevo are lobbying the government to enforce a Payments Choice Act in the UK. “The biggest threat to cash is not being able to use it,” Mr Delnevo explains. “I will drag the Treasury back if I have to. This is something that must happen to protect our rights.”

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