The pitfalls of payment revolution from a sociological perspective
Will going cashless deepen the gap between the different social groups?
Globally, roughly 1.7 billion adults are unbanked. In the UK, this number is 1.5 million or 2% of the country’s population. Statistically, this may seem insignificant, but in a largely cashless, contactless society – where, last year, card payments overtook cash payments for the first time – it leaves individuals in at-risk groups, such as the elderly, the impoverished, and the disabled, even more vulnerable, according to finextra.com.
Unsurprisingly, there are many ways that the government is trying to fight the problem. Cities such as San Francisco, Philadelphia, New Jersey, and most recently, as reports Finextra, New York City, have banned card-only shops. The idea has support in the UK, too, but City AM argues that such a ban would be “anti-business, anti-consumers, and anti-innovation”.
The UK’s shift towards a cashless society is intrinsically linked with the rise in contactless payments, which now account for more than half of debit card payments and 40% of all card transactions. This reflects a global trend, with cash at an all-time low in places like Sweden, where cash payments comprise only 13% of purchases.
Across the world, the topic is grabbing headlines. A recent Malay Mail piece posited the benefits of electronic wallets as described by small business proprietors. Cash, explained shop owner Surinawati Hamzah, is less secure. – Not only do I have to worry about being robbed, I also have to fret about my workers pocketing the money – she said.
The same article does flag a potential pitfall: internet coverage. Digital payments through alternative payment methods, such as eWallets, rely on network availability. As convenient as this option is for both merchant and consumer, it can let them down if there are any outages.
The author of the article, Paul Marcantonio concludes that there’s no need to reverse innovation. Instead, we as a society should assist the vulnerable in becoming banked, acquiring payment cards, and yes, even making contactless payments.