Cash: Neither a Cockroach Nor a Mayfly

Is Cash like a Bee then? Fighting the onslaught of digital banking and leaving signs of domino effects for humans? Making sense of the new butterfly called cryptocurrency?

Long after governments and industry vendors have urged (sometimes, arm-twisted) users to use digital alternatives for payment; long past the attempts to curb black money, way beyond the skyline of digital ecosystems and a new banking infrastructure, it will stand – a tad confused, a bit hopeful and a lot curious about what happens next – Cash – standing courageously, plus, precariously, on the cliff of a D-day.

The D here – is Digital. We don’t need any more numbers to corroborate the heavy push that is coming from all directions via heavy-lifted attempts for elbowing out cash. The housewife’s nest egg, the candy-lover’s sound of delight, the frugal spender’s grip of control on monthly budget– cash – it’s facing a big question mark on its destiny today.

Yet, it is not on any ventilator yet, thanks to its innate benefits that are also inimitable when compared with other options. Is there anything as easy, as fast, as private, as simple and as tangible as cash? Think hard. Specially for people who want to use money for smaller denominations and transactions. Or who would love to have privacy even if they are not sponsoring terrorism but only indulging in a chocolate bar in their favourite but small street somewhere. Should every penny earned or spent be really a subject of panoptic surveillance?

Ka-Ching!

A G4S Cash Report 2018[ unravelled that cash is not only the most widely-used, but also the most efficient, payment instrument across many continents. More than half of the transactions under $25 (60 per cent for under $10) in America are still done using cash.  In Europe too, 79 per cent of PoS (Point of Sale) transactions are happening in cash. Even after the influx of e-commerce ease, 75 per cent of purchases done online are being paid through cash-on-delivery in Asia (the scenario is similar for the Middle East). The Currency in Circulation (CiC) is also on an upswing in regions like Africa, South America, Australia and New Zealand.

Now comes the stumper – businesses that that did not accept cash at the onset saw a spurt in growth after they introduced a cash option. Like – Uber, that witnessed an exponential uptick after offering cash options in Asia, Africa and South America.

Care to pick a fine-toothed comb and let it go through this December 2018 report  ‘ Is Britain Ready to go Cashless?’ Cash was not only observed as ‘still an economic necessity for around 25 million people’ but the idea of going cashless is a germ of great anxiety for specific segments like the poor, the not-so-young or digitally-not-savvy age group and people who are not quite mobile/connectivity-powered.

Also note that cash enjoys preference because of what it gives – choice (34 per cent of the population), privacy (six per cent) or simply peace of mind that it will always work (55 per cent). Independence, a sense of control, local economies spines, and freedom from ‘poverty premium’ (that pops when one is not being able to buy things easily or in bulk) – cash arms people with more than what meets the eye.

If you thought the digital natives were not cash-y enough, remember that millennials, of all the generations, have been spotted with an inclination to use cash investments to set aside money – the one they don’t plan to touch for 10 or more years. A Bankrate survey sussed out that 30 per cent of 18-to-37-year olds found cash investments as the best place to park money (the number was 21 per cent for those 38 and older).

Then there are the world’s Ultra High Net Worth Individuals (UHNWIs) – yeah, the Richie-Riches who hold $30 million or more in assets, who are apparently moving their allocations into cash – a fresh Knight Frank Wealth Report has just filled us in with more ‘What-the-@%^’ moments.  Yes, turns out that globally, 45 per cent more wealth managers have seen clients increasing their cash positions in 2018, and that 27 per cent more managers expect their clients to follow the pattern in 2019.  The survey was done on 600 private bankers and wealth advisers managing over $3 trillion, by the way.

Don’t say Toodles yet

Clearly, people will take time and more strong reasons to wean away from cash. Those who argue against cash (36 per cent in the UK report think a cashless society will have less crime) have interesting assumptions that we need to discuss before going for Iron-man tactics. Can going cashless really discourage white-collar thieves or help in gumming up tax-crime? Can it really pump up tax collections? Is cash the predominant throat to choke for money-laundering and tax-evasion? What about other motives and gaps that make people choose the wrong route – cash (or any other system) could be just a tool behind the psychological or economic incentive of all this.

May be that’s why more reports are warning regulators to avoid ‘sleepwalking’ into a cashless society. If we look at ‘The Access to Cash Review ’, ( by former financial ombudsman Natalie Ceeney), it reminds – without mincing any words – that digital payments don’t yet work for everyone and around eight million adults (17 per cent of the population) would struggle to cope in a cashless society.

Another riddle is that of security – what is safer, a wallet full of cash that can be mugged anywhere or a card or a digital wallet (how many times can your fingers be cut or a gun put on your head to steal that fingerprint or PIN, right?). Wait, did someone, cough-cough, say something about card-theft fiascos, wallet-burglaries, fat-finger goof-ups and IT failures that the world has seen so much of in the last two-three years?

And scratch your head about this – what happens to the billions of global citizens who still have no bank accounts when cash is pushed out in favour of other alternatives?

Can’t Swat The Fly?

It is, nevertheless, hard to dismiss the decline of cash encouraged in South Korea and Sweden, for instance. The Report from Britain found 73 per cent people rooting for digital for its speed and convenience. And 72 per cent love the idea of having a pulse on how much money they have in the account. Plus, grey and black economies have been guessed to be about 223 billion pounds  (43 per cent Brits believe a digital economy would reduce the size of black economy). Rise of contactless payments and digital terminals are upending banking and financial fabric of many countries in a strong way. But jawboning cash-leaning people is not going to help. What they need is an alternative that endows them with the same comfort, ease and privacy as they prefer along with the transparency, speed and cost-effectiveness that governments look for.

Could crypto industry slide in like a Hero with an answer (slo-mo swagger walk with things exploding behind his back would just add to the effect)? If it does then cash would not have to end up living in the drains, out of everyone’s eye. It can survive as that resilient spider that somehow finds a spot and time to weave a new taut cobweb no matter how many times you place a foot on it.

Now that’s where it gets interesting – crushing a web by foot only tends to spread the eggs around – check that insect-trivia out.  You might just as well start looking at spiders differently.  Not with fear or disdain but with something else.