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Is a Cashless Society inevitable?

By Andrew Perchard - Posted on 19 February 2013

To mark the launch of the Glasgow Business History Seminar Series, Dr Andrew Perchard & Dr Niall MacKenzie discuss the work of, recent speaker, Professor Bernardo Batiz-Lazo on the emergence of the Cashless Society.

What was the last thing you bought using your credit or debit card? A newspaper, dinner, a new television…..a car?  You probably haven’t thought about it. While it may have been unusual just a decade ago, making electronic payments for anything from small everyday items, right up to large purchases, is now increasingly commonplace.

While for many the idea of a society without money belongs firmly in the realms of Star Trek and other science fiction, the truth is, the Cashless Society has been creeping up on us for more than sixty years.  Just this month Canada became the latest country to signal the evolution of cash, joining New Zealand, Australia, the Netherlands and Sweden, by ceasing production of its lowest denomination of coin, the Canadian penny.

In fact, the development of a Cashless Society really began with the growth of financial automation in the early 1950’s, as Bernardo Bátiz-Lazo, Professor of Business History and Bank Management at Wales’ Bangor University, explained at the inaugural Glasgow Business History seminar.

As computing developed throughout the 1960’s and 70’s commentators began imagining more sophisticated means of transferring funds electronically, while financial institutions such as the US Federal Reserve, urged the banking industry to develop Cashless Payments as a response to the increasingly high costs of processing paper cheques.

While the desire was there among government, the media and science-fiction writers, a lack of consumer interest, merchant scepticism and disagreement between credit card networks, Interbank (now MasterCard) and National Bank Amercard (now Visa), meant it was not until the early 1990’s that debit cards became widely issued.

Today, as technology has advanced, so too has the notion of a Cashless society. Companies like visa are now promoting the use of smartphones as efficient, cheap and secure, ‘digital wallets’, while American Express has recently become the first company to allow payments through Twitter.

Recent figures from the World Bank suggest three-quarters of the global population can now access mobile telecommunications more easily than traditional banking services, mobile payments could also increase financial inclusion and opportunities, especially in the developing world.

However, while the ambition is there, the final transition to a truly Cashless Society may not be as straightforward as many would like. As this recent history demonstrates, the interests of consumers, merchants and competing alternative digital solutions, means the only ‘inevitability’ about the Cashless Society is its complex, slow and protracted development.

What are your thoughts on the Cashless Society, is it an inevitability? Will it really improve financial inclusion? Let us know your thoughts in the comments below.

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