Inclusion and privacy policies may lag cashless growth

Outlook

Servicing cash -- minting, sorting and distribution -- costs an advanced nation 0.5% of its annual GDP. Eradicating it is convenient for customers, and creates a credit history, helping them to borrow. It increases the market that small firms can access and helps governments cut fraud and tax evasion.

However, in developed and developing nations, millions of people are not ‘cashless’, many in rural areas, unemployed or elderly. This can make many tasks harder, including receiving social security, travelling or job applications.

Moreover, some cashless converts are reluctant users, fearing breaches of privacy and security as millions of records are compromised annually.

Impacts

• More financial inclusion in developing nations, especially in rural areas, underpins each one of the UN’s Sustainable Development Goals.
• Policies supporting inclusion are key in advanced nations; millions do not have bank accounts, and many do but do not transact digitally.
• Cashless-only trading is banned in two US states, and more propose bans; other countries will consider bans to guard against exclusion.
• The data ‘cashless’ trading creates cuts fraud but endangers consumer privacy and gives the big-tech firms an advantage.
• Breaches will be frequent, as hackers are more able than security systems to keep up with cashless spending growth.