LONDON — Ian Bright, a senior economist with Dutch bank ING, believes that society will never end up being truly cashless because there will always be some form of utility in the usage of cash because people like using it.
Speaking to Business Insider, Bright said: “There are aspects of things that people prefer about cash. It was fairly clear in our survey that people note cash carries more degree of privacy over non-cash items. And that was one of the key reasons people said they will continue to use cash in their transactions.”
Bright pointed to data from an ING survey which showed that 76% of the close to 15,000 people the bank asked believed they will never go completely cashless, compared to only 24% who could envision themselves ever being in a position not to use physical money.
Findings varied from country to country, with more than 80% of citizens in the Czech Republic, Austria, Germany and Italy saying they’d never go cashless, compared to just 59% of people in the Netherlands.
Here is the chart:
Bright argued that numerous older and potentially outmoded technologies still exist in the modern world, despite apparently being surpassed my more modern alternatives.
“I use the example of shoelaces. There’s lot of other ways of doing up shoes. You can use velcro, have slip-ons, buckles etc. But shoelaces persist. If the technology works, why bother disturbing it.
“Cash continues to have many many advantages. It is tried, trusted, and true. It is a technology that works, it is simple, and if need be, you can get by on it,” he said.
Rather than completely ceasing to circulate, Bright said, cash will simply be used for smaller transactions like buying a coffee or a newspaper in future, while non-cash payments — using cards, mobile phones and other devices — will be used for everything else.
“When we looked at the actual sizes of transactions people are using cash for, after about €50 people generally say that they use card, or non-cash. For smaller types of transactions (lunch or a snack etc) people tend to use cash. Cash is always going to have a role in society for smaller everyday transactions. It is quick, it is easy, you don’t have to mess around with it.”
Cash or no cash?
Cashlessness is a polarising concept. Some within the financial world believe that a cashless society is close, while others, like Bright, don’t see it ever happening.
“By the time we get to another generation, 30 years down the track, will there be any cash? I very much doubt it. The idea of carrying coins — 2p, 1p, 50p all cluttering up your pocket — it will be an anachronism. It will seem as antediluvian as carrying a pouch full of gold,” Barnett told BI’s Oscar Williams-Grut.
On the flipside of that argument, Deutsche Bank last year compiled a report arguing that reports of cash’s death are greatly exaggerated. Deutsche based its argument on what it believes is the false assumption that getting rid of cash can help to lower levels of criminal activity like money laundering.
“It is debatable that a cashless society would mean less crime. For example, the ratio of damage caused by card fraud to the value of counterfeit notes in circulation is over 10 to 1,” economist Heike Mai wrote.
Both sides have stats to back them up. On the cashless side for instance, electronic payments overtook cash payments by volume in 2014 in the UK for the first time, with Scandinavian countries and South Korea also making big steps toward cashlessness.
However, Bright points to a Bank of England report which showed that cash circulation is actually growing quicker than nominal GDP. “Despite these developments [the rise of mobile and card-based payments], cash continues to be important in the United Kingdom, with demand for Bank of England notes growing faster than nominal GDP,” a 2015 BoE paper said.
“There is now the equivalent of around £1,000 in banknotes in circulation for each person in the United Kingdom.”
Regardless of anti-cash arguments, Bright concluded, there is simply “no need” for us to ever reach a point of total cashlessness.
Business Insider Emails & Alerts
Site highlights each day to your inbox.