The Chancellor of the Exchequer Rishi Sunak is reported to be keen on introducing a National Digital Currency called “Britcoin” which would be a direct equivalent to physical money. In reported plans it would be overseen by the Bank of England giving the Treasury the same control it does with Sterling. While some people may see this as a welcome move, others will be wary about putting their faith in a totally digital system.
With the rise in popularity in Cryptocurrencie such as Bitcoin, governments across the world have been looking into creating their own versions with the United States, European Union and China all signalling they could create their own versions. However some economists see this a too risky and could even create more not less instability.
Rishi Sunak has setup a Treasury task force that will report to him by the end of the year on whether Britcoin is feasible. Under Treasury plans, the digital currency would be held in accounts linked to the Bank of England, not high Street banks, and would be pegged to the value of Pounds Sterling. By tying it to the pound, it is hoped that this would prevent the big increases and decreases seen in currency Cryptocurrencies. Sometimes groups online have been able to manipulate the price just with a little organisation. This is the so called Pump and Dump, much like is illegal in stock trading. How this would be prevented by a central cryptocurrency is yet to be answered.
The Rise of Contact Payment
Contactless payment, it’s the latest method to pay in the cashless revolution. In the United Kingdom, everyone with a contactless card can make a payment without entering their PIN, as long as the value is £45 or below. It had been £30, but the pandemic saw this increase as more and more retailers asked for cashless payment.
Usually, after so many contactless payments customers are required to enter their PIN to ensure it is still the owner using it. This however, isn’t universal.
Contactless payment usually use one of two types of technology; radio-frequency identification (RFID) or near field communication (NFC). While very different tech wise, both work in the same way; if you are in close enough proximity to the payment terminal, it will work.
Fraudsters have realised that if they get close enough to people, they can skim £45 a time from people. All they have to do is walk up and down a busy street.
It is now common to see wallets, and purses, advertising that they protect your contactless cards from fraud but, many people still don’t realise what the risk is.
Millions of people lose bank cards each year. While they may cancel them as soon as they notice, there’s still a window where any budding thief can attempt to use the card before then. Banks may give you the money back but, it isn’t the easiest process to go through.
Some cards don’t require a PIN entry until 30 contactless payments have been made. That’s up to £1,350 gone straight away and, you certainly won’t get it back immediately unless it’s a credit card.
Is their an answer to this? Possibly more education on the dangers of theft by proximity? Who knows. Either way contactless is here to stay and is becoming the main form of payment.
Cash Reliance Still Exists
There are some who might scoff at the thought that there are people who still mainly use hard cash. The truth of the matter is that there is still a large number of people who do.
A lot will say it is mostly elderly people who are stuck in the past but, that simply isn’t the case.
For starters, take homeless people. How often do you see some on the street asking for money with a credit and debit card terminal? In an ideal world we wouldn’t have people on the streets. We don’t live in an ideal world though.
I’d like to think that we will do more to help homeless people off the streets but sadly I doubt we can ever eradicate it unless something drastic changes.
Another group of people who’d be affected if we had no cash are those who buy things from others in their local area. For example; from a Facebook Buy, Swap & Sell page.
Unless everyone has a card terminal or, you’re willing to give out your email address to a stranger for PayPal, this would cause issues. There are so many classified ads online and in newspapers.
There is of course some who do it for a very simple and logical reason. They like to keep track of what they have spent and how much they have left.
If you are on benefits or a low income for example, it is a much better way to manage your money. You can see what you have and it helps you in budgeting. This may not be an issue for some but, it certainly is for others.
What of the loved market trader or the farmers market. Not everywhere especially rural areas, have a good enough mobile signal to use a portable card terminal.
You aren’t going to pay for a raffle with a debit card are you?
Technology and Weaknesses
Technology. It’s impossible to escape it. Shop tills, libraries, healthcare providers and of course, your bank. They all rely on technology to run smoothly. When it doesn’t, all hell breaks loose.
In most shops, if card payments stop working they simply switch to cash only. If we eradicate cash all together what then? Do we just go without food and essentials? Retailers certainly aren’t going to rely on good faith and let us leave without paying.
A major issue banks face almost daily is cyber attacks. With billions of pounds just a click away for the right person, is having no back up really a good idea?
Furthermore, several UK banks have suffered outages that left their customers being unable to pay for anything with their card. If this happened in an entirely cashless society, it could paralyse a country. Nations States such as North Korea and Russia have been accused of conducting cyber attacks and, I have no doubt that Western Nations do the same.
If a country or even a lone wolf hacker wanted to cause havoc, a cashless state would be the perfect target.
Physical Banks, A Dying Institution
Across the UK banks are closing their branches citing a fall in customers visiting them. This is undoubtedly pushing people towards using less cash and to doing their banking online.
It also makes it harder for local businesses to deposit their cash takings. This has a side effect of businesses holding more cash and thus making it riskier for them. Some insurance companies only allow certain amounts to be held, a business stockpiling cash to save long bank runs risks not being covered.
The accelerating closure of branches also serves in the banks best interests. With fewer branches, they have lower costs to pay. Moving us towards an entirely cashless system will only serve to boost their profits even more. However, under the UK government’s plans, they’d be cut out of the fold completely. What then for them?
More Intrusion by Government and Companies
Tax evasion is a huge problem. Some in favour of a cashless system say that it will help reduce it. While this may be true to a certain extent, the big tax dodgers are more likely to be using creative accounting, rather than cash to avoid paying their fair share.
The government already like to keep track of us. The Metropolitan Police have been trialling facial recognition across London. Government departments will now regularly check social media to see what people are up to.
The question is this; Do we want or need, the ability for the government to oversee every financial transaction we make? There are those who say “if you have nothing to hide why worry?”
The answer to that is; why do they need that ability?
Being entirely cashless would also benefit retailers. Some retailers use their loyalty cards to learn our spending habits so that they can target their advertising. Amazon and Ebay do this when we buy from their website.
Being entirely cashless would make our spending data worth a lot of money to any retailer. Is that something we really want?
It seems to be that the incentive on being cashless is for the benefit of everyone except the average person.
While it may seem like a cashless society is decades away, don’t think there won’t be efforts to bring that forward.
Black Isle Journalism is a totally independent news organisation without corporate backing or pudhy investors. We rely on the goodwill of our readers to help pay our staff and run the site. If you’d like to support us, please consider donating or sponsoring us. In the age of client journalism, Independent Journalism is even more important.