The Strategist

Visa's plan to push cashless transactions: what about ethics?


01/04/2018 - 08:22



Visa has launched the Cashless Challenge, in which it will give 10 000 dollars to 50 selected shops across the US, if they completely stop accepting cash payments. Its goal, pushing the cashless evolution of the economy to the brink, and killing cash off completely, so as to conquer the entire market. But many ethical questions lie in the way of the campaign, which Visa seems uninterested in acknowledging.



Cashless challenge is one of the first formalized moves by a private business since the beginning of the cashless slide which started at the end of last century, when consumers started leaving cash aside and paying with plastic instead. Since those early days, many new means of payment have arrived on the market, with a huge boost provided by smartphones flooding the market. Of course, many different parties were fond of this natural trend, such as governments (which see in cash an incentive for crime and a vector for tax evasion) and financial institutions, such as banks and virtual payment companies. Using soft power and media influence, they encouraged it. Riju Dave wrote for the Indian Economic Times : “The ease of conducting financial transactions is probably the biggest motivator to go digital. You will no longer need to carry wads of cash, plastic cards, or even queue up for ATM withdrawals. It’s also a safer and easier spending option when you are travelling.” But things, it seems, were not going fast enough, so Visa decided to give fate a nudge and set up a program which would select 50 participants and hand them over 10,000 dollars. All they have to do in return in give up cash completely, and refuse their customer’s payments if they are in cash. The intent is clearly to push the cashless trend all the way, and kill cash completely. But what would happen to society altogether if Visa, and its many allies in the war on cash, were to win?
 
Kartik Jhaveri is a director for Transcend Consulting. He says :“The benefits are enormous if you leave out the low-income group, which will face a huge challenge”. While the average middle-class citizen has about 10 different ways to pay, according to the setting and his mood, the most modest citizen only has one : cash. He doesn’t have a bank account because banks won’t bother opening one for him, he has no smartphone because he can’t afford one, and he has no credit card terminal because he doesn’t have a use for it and, in many cases in the world, he doesn’t have access to electricity. So, the only way for him to get around is with the little bit of cash in his pocket, earned or panhandled.
 
Many whistleblowers are very worried about what will happen to that man if cash disappears. In last November, India struck hard on cash, by simply cancelling the validity of lower value banknotes (which represented 90% of the nation’s currency). This dealt, as a side effect, a devastating blow to the lower castes, who had nothing else to survive on. Ranjit Goswami wrote for Quartz: “As could have been anticipated, a crisis has engulfed the nation. The degree of suffering directly relates to income, with the poorest of the poor worst affected. Since Nov. 08, 55 people have died due to the currency chaos, never mind the suffering hundreds of millions of ordinary people, mostly among the marginalised, have been enduring.” In short, still a world where the poor get poorer, and the rich get richer. Or do they?
 
What the well-off will gain in convenience and presumed improved economic performance, they will lose sharply in civil liberties. Clearly this is not the intent of Visa, who is merely trying to increase its profits as any business would, but, purposeful or not, the effect will be the same : because every citizen will be forced into the financial and computerized system (which he often only partially comprehends), he will be under the potential scrutiny of very powerful organizations, such as corporations who sell customer data to one another, and their own State. If every transaction is logged and recorded, it will give a perfect tracking tool to those who hold the data : where the customer was, at which time, what he bought, from whom, etc. Bill Jamieson, from Scotsman, warns : “Indeed government control of our savings and wealth - far greater than any intrusion by HMRC or the VAT inspector – is now technologically possible.”  And to those who see this perspective as distantly innocuous, or who trust the state to respect their freedom even if the State does hold the power to pressure them, he reminds that the European Central bank is already “punishing” citizens who refuse to spend their money, in accordance with the ECB policy to boost spending, by pressing interest rates below zero. 
 
In other words, if citizens place their money in the bank instead of spending it, as the ECB would like them to, they will pay a penalty. He specifies : ”[...] back in September the Bank of England’s chief economist Andy Haldane suggested that negative interest rates could be necessary to discourage saving and boost spending and domestic demand. Those with bank deposit accounts would not experience an interest rate reward for saving, but a penalty by way of deduction.” The only way to save their earnings for such citizens is to convert it to cash and withdraw it from the banking network. If cash goes, citizens will obey the State or be stripped. 
 
As a long-term trend, which has accelerated in the past few years, citizens across the world have been increasingly wondering if business interests should always be placed at the top of all social considerations, or if human aspects of life, such as liberties and solidarity, should be yielded to. In the current cashless transformation of the economy, Visa may well encounter popular and activist opposition which it hadn’t accounted for, a few years ago, when the campaign was being designed.  





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