The cashless society and its consequences

October 24, 2012, 9:23 pm
Author: James Griffiths

The cashless society is an idea that’s been floated around for the past few decades but in recent years has started to gain momentum in the mainstream media. News articles abound with information explaining how electronic transactions will remove the headache of lost or stolen debit/credit cards, solve the problem of not having enough cash or spare change in your pocket to pay for products/services with and eliminate waiting times with current payment methods by offering the ability, for example, to pay via a swipe of a payment screen on a smart phone.

Sounds great doesn’t it?

A streamlined, clutter-free, easy method of making payments without the hassle of digging through bank notes and loose change in the wallet. Too never again be caught short by not having enough or any money to pay with. What could be wrong with such a vision?

Quite a lot as it happens.

As is often the case the emphasis is placed on the benefits of adopting such an approach without exploring, or at the very least only paying lip service to, the drawbacks of implementing such a technology.

And though the benefits of such a change in the way that society conducts its transactions may seem very attractive and welcome it’s the drawbacks that paint a true picture of what those changes would mean for a society that adopts them.

  1. No fallback option. If there’s no cash in circulation and all payments are now conducted electronically what happens when there’s a glitch with the payment system or your payment has been declined? At least with the inconvenience of a debit or credit card payment being declined you have the option of resorting to cash. How do you adjust though when there is no fallback option?
  2. If there’s one thing that computer technology should have taught us it’s that no system is fool proof and the more systems and processes that are moved online the greater the scope for error and the more widespread and devastating the consequences of such errors. What would happen for example if an electronically centralised and controlled system of transaction were to stop working, or processed transactions inaccurately, even for a small amount of time? The consequences would affect every single individual and organisation in that society to a greater or lesser extent, impacting on livelihoods and the ability to go about their day unimpeded
  3. Can such an approach to conducting transactions be made secure? The more that data is centralised and controlled the easier it becomes to target as is evident from the exploits of hackers and cyber criminals in recent years. Networks and systems would be probed for weaknesses and exploited where found making it harder for the end recipients of such attacks to prove that transactions conducted through their accounts are indeed fraudulent – and you thought that dealing with fraudulent transactions was difficult now?
  4. Securing such a system through the use of biometric authorisation is a recipe for disaster on so many levels. Biometric systems can, and often do, fall prone to errors rendering them less than ideal as a means through which to implement reliable ID authorisation. Organised criminals will resort to extreme measures such as amputations to bypass such security which, once again, renders the use of such systems redundant (not to mention the consequences of being forced by criminals to hand over identification highly undesirable to those not engaged in such activity). The potential for having digitally stored biometric data hacked and stolen and/or sold on the black market to the highest bidders means that such security measures will eventually become redundant as technological means are developed to overcome them using said stolen/purchased biometric data. And last, but certainly not least, if your biometric credentials are compromised through criminal activity then you are screwed for the rest of your days. You cannot replace your biometrics as you can a stolen debit or credit card. You can’t change your account or request a new pin. Once those details are stolen you have no security for the rest of your time on this planet. Game over
  5. Given the track record of banks over the last few years and the aftermath of questionable, at best, banking practices on the livelihoods of millions of people all over the world (do the following sound familiar: foreclosures and austerity measures?) would we really want the banks to be able to not only monitor every single transaction made by every single human being (which in itself grants an obscene, de–facto level of power – being able to authorise or decline each transaction on an algorithmic basis) but also to be able to make charges on each and every one of those transactions thereby furthering financial gain and leverage?
  6. Related to the previous point is the ability to track and determine a person’s lifestyle choices and behaviour through their transactions and, as a result, generate significant volumes of data which could be used by marketeers, insurance providers and other agencies whose interests wouldn’t necessarily be aligned with the individuals targeted by such data

Are we, as a society, awake and informed enough to the perils of pursuing such a course or are we too distracted by the promises of an easy life to see what pitfalls lay ahead?

The next few years will be crucial in determining which course society takes and the ramifications of that choice.

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