FYIAre We Headed for a Cashless Society ?
Predictions of a cashless society have been around for decades, but they have not come to fruition. For example, Business Week predicted in 1975 that electronic means of payment would soon revolutionize the very concept of money itself, only to reverse itself several years later. Pilot projects in recent years with smart cards to convert consumers to the use of e-money have not been a success. Mondex, one of the widely touted, early stored-value cards that was launched in Britain in 1995, is only used on a few British university campuses. In Germany and Belgium, millions of people carry bank cards with computer chips embedded in them that enable them to make use of e-money, but very few use them. Why has the movement to a cashless society been so slow in coming?
Although e-money might be more convenient and may be more efficient than a payment system based on paper, several factors work against the disappearance of the paper system. First, it is very expensive to set up the computer, card reader, and telecommunications networks necessary to make electronic money the dominant form of payment. Second, electronic means of payment raise security and privacy concerns. We often hear media reports that an unauthorized hacker has been able to access a computer database and to alter information stored there. Because this is not an uncommon occurrence, unscrupulous persons might be able to access bank accounts in electronic payment systems and steal funds by moving them from someone else s accounts into their own. The prevention of this type of fraud is no easy task, and a whole new field of computer science has developed to cope with security issues. A further concern is that the use of electronic means of payment leaves an electronic trail that contains a large amount of personal data on buying habits. There are worries that government, employers, and marketers might be able to access these data, thereby encroaching on our privacy.
The conclusion from this discussion is that, although the use of e-money will surely increase in the future, to rephrase Mark Twain, the reports of cash s death are greatly exaggerated.