Cashlessness
Modern times utilize modern functions. Our typewriters have been replaced with word processing software and printers, allowing mistakes to come at a cheaper price and customization becoming easier to access than ever before. Typewriters were certainly useful, but it eventually made more sense to utilize more efficient technology. In this same sense, our US dollar has become obsolete with the utility that electronic cash brings to our modern world.
This idea is not new by any means. As described by Daniel Gersten Reiss, a specialist in payments and competition at the Central Bank of Brazil, numerous advancements in e-payments including cross-border money transfers, “bill payments, and loan requests” now bolster the idea that digital currency will overtake its paper counterpart. This idea has been brought to prevalence over time, with its first advocates announcing their enthusiasm “about the potential adoption of payment cards” in the 1990s despite lacking a clear “economic rationale for the adoption of e-money.” In the present day, there are rationales even beyond the economic realm that emphasize a need to transition to e-currency.
I strongly believe that the United States should transition to cashlessness because of its economic efficiency, its pre-established normalcy through already present banking services, and its potential to reduce crime rates. An important aspect of our economy’s efficiency is how much it costs to produce our money in the first place. Due to increased costs of metals, “the cost of producing pennies and nickels has exceeded their worth since 2006” according to Hannah H. Kim, an experienced journalist who worked in conjunction with the widely recognized Congressional Quarterly Researcher. She clarifies that in “2015, a penny cost about 1.7 cents to make, while a nickel cost 8 cents to produce.”
I’d also like to note that this cost is further exacerbated by “expenses associated with collecting, sorting, and transporting cash, as well as ATM fees” that total to about $200 billion in annual expenses paid by consumers as explained by Norbert J. Michel. Michel is the director of The Heritage Foundation, a conservative think tank, serving as a specialist in monetary policy and markets research. I find these numbers significant due to their scale and upkeep. The US Mint continually produces coinage when needed and the $200 billion in question is an annual expense. Even considering the possibility of enhancing efficiency of the organization of cash to minimize these expenses, it is extremely difficult to reduce the cost of the many steps involved in a coin-making process: retrieving raw materials, calculating how many coins must be made, determining which coins to make, and distributing these coins, not to mention paying each worker involved in the process. By going cashless, the US government has one less system to spend its budget on and provides it more financial freedom for other issues.
Transitioning to cashlessness wouldn’t be an abundantly transformative process due to its pre-established normalcy in American society. A mere thirty-seven percent of American consumers use cash for purchases under twenty dollars according to Shelle Santana, an assistant professor of business administration at Harvard Business School. This tendency to use cards over cash for such small purchases “may be the first indication of a declining domestic need for cash.” Also, giant infrastructure investments aren’t necessary for this transition. This is because “mobile services have gained more widespread adoption than financial services among poorer segments of the population.” Since mobile phones can be used for e-payments, already established telecommunications infrastructures can be used for cashless transactions. We are already comfortable with making small purchases through non-cash means, and even poorer Americans tend to have cell phones. With these two facts in mind, it’s pretty clear that utilizing cashless payments on a day to day basis is highly unlikely to pose problems to our overall population.
I also have faith that reduction of crime rates is extremely likely through the transition to cashlessness. As stated by Kenneth Rogoff, an economics professor at Harvard University, cash’s anonymity is a large contributor to illegal activities. A great example of this is “large-scale real estate transactions, where people are trying to launder money.” CNBC’s technology and media specialist Julia Boorstin emphasizes this point; by utilizing digital economic systems, trails of transactions will reduce crimes like “tax fraud [and] money laundering.” There are already people and softwares that help keep these digitized economic systems secure as well, with one such software being the Synack security company. Their CEO, Jay Kaplan, describes that the very large banks they currently work to protect in this way “have seen tremendous success in locking down banking systems, locking down mobile banking apps and making sure money can’t be stolen from a victim’s account.” A wide variety of cash-related crimes that rely on its anonymity can be cracked down upon through the transition to cashlessness while the systems that would be relied on can be secured through industry professionals who already have experience in cybersecurity. This transition will not only reduce crimes made viable right now, but will also give more opportunities for current professionals to make a profit off of their already refined expertise in cybersecurity, preventing future crimes from occurring.
It’s also been shown that cashless transitory methods are a modern and worldwide expectation that our country fails to meet. Canada no longer accepts passport payments in cash and has eliminated pennies from its currency; the European Central Bank no longer produces 500 Euro banknotes as of 2016; payments of more than 1,000 Euros are illegal in Italy as declared by its prime minister in 2011; and “in 2015 the Bank of England’s chief economist publicly made the case for abolishing cash.” Sweden is a particularly intriguing example, with its entire population likely going cashless by 2023. Daniel Levine, the director of the Avant-Guide Institute, a business consultancy on trends influencing the global marketplace, believes that the US is “behind.” Other notable supporters of cashless actions include Larry Summers, former US Treasury secretary, and Peter Sands, a senior fellow at Harvard. They declare that $100 bills must be banned on the grounds that “that any losses in commercial convenience are dwarfed by the gains in combating criminal activity”; despite their wishes, no serious federal attempts at any cash-banning policies have been made. Our economic experts are expressing their desire for economic changes with other countries serving as examples in numerous ways, yet the federal government still hasn’t discussed these changes in a meaningful way. Completely ignoring the potential benefits of adopting these policies — even to a degree short of complete cashlessness — puts a hamper on our economy’s growth potential, therefore hampering our own successes. It is vital that these policies are discussed.
While many argue that low-income individuals are given less opportunities through a transition to cashlessness, proponents of my cause have already made solutions to address this issue. One whistleblower for this counterargument is Liz Alderman, a chief European business correspondent for The New York Times, who explains that low-income groups often “have little or no access to electronic payments.” Referring back to Reiss’ study, telecommunications devices and infrastructure can be utilized for these payments, which even most poorer individuals have in the United States. One possible solution for the population that lacks these devices comes from Rogoff, a professor of public policy and economics at Harvard. He proposes that “poor and unbanked individuals have access to free… basic smartphones, as several countries have already done or are contemplating” which would be payed for either by the government or banks who would eventually pass on the cost to consumers. By taking advantage of our current infrastructure and Rogoff’s proposed strategy, cashless requirements would be accessible to all citizens of the United States without financial discrimination. Americans could still benefit from a more efficient financial system without concern for our less fortunate citizens who otherwise wouldn’t be able to use my proposed cashless system.
I have always been concerned about the working class’ safety and how they can be protected in the modern day. Luckily, workers’ safety, businesses’ security, and businesses’ profitability can all be enhanced through cashlessness. Many owners of cashless businesses support cashlessness in part due to reduced “losses from robberies or employees’ difficulties in counting change.” A lack of cash also allows workers more time to serve their customers rather than “make change, go on bank runs or manage accounting books.” Most importantly, some business owners have noted the importance of improved welfare for workers through cashlessness. Annamária Ferencz, vegan restaurant chain ByChloe’s regional director, describes that her workers feel more secure, especially during “preopening [sic] and closing hours when [their] stores are relatively empty.” The risk of robbery and similar crimes in stores is higher during the hours mentioned, and any policy that minimizes this risk can reduce stress and enhance safety of our working class who often have less money to spend on extreme emergencies. Allowing our businesses to protect their employees and their stores gives them peace of mind both in an economic and humanitarian perspective. By enacting cashless policies, our US-based workers can have better safety standards while our businesses can prosper even more.
Putting our typewriters in the attic was both necessary and trivial; pivoting toward cashlessness is a renovation long overdue within our US’ metaphorical household. I’d like to reiterate that making this advancement would be a smooth transition due to established normalcy of e-banking, allow our country to be more economically efficient, reduce ourcrime rates, enhance our workers’ safety, and maximize our business’ profits. If this transition is not made, we will fall behind our international peers in both modern public policy and economics, ultimately limiting our growth potential. Our federal government must initiate conversations regarding this issue to figure out what changes should be enacted and at what pace for the betterment of our lives. Discussions in our House of Representatives and beyond are a must for this issue.