Name: Cloudmoney
Rating: 4.1 (523 reviews)
Author: Brett Scott

What’s in it for me? Discover the ongoing “war on cash” – and how it affects all of us.

In the modern societies we live in, we spend a lot of time buying things. And whether it’s online or offline, cashless ways to purchase goods are on the rise. Gone are the days of having to count out coins for the cashier – now, all you need to do is tap your phone or card against a payment terminal and, like magic, the transaction is complete.

But underneath the speed and convenience of cashless transactions lies the murky world of big finance and big tech. When you pay with cash, it’s a direct, usually anonymous transaction between buyer and seller. In the world of digital payments, though, this is not the case.

In this Blink, we’ll take you on a journey through today’s payment landscape. You’ll see that big tech and big finance are waging a sinister “war against cash.” We’ll look into how this came about – and what can be done to stop it.

The war on cash

Let’s take a look at how we got to where we are today. Our story begins during the 2008 financial crisis. Back then, anti-bank sentiment was rife – big financial institutions were viewed as the cause of the economy’s crash, after all. The ramifications of the crisis were huge, and much of the global economy entered into a recession.

At the same time, a technological revolution was happening. In the summer of 2007, just before the financial crisis really got moving, Apple released the first iPhone. This led to startups quickly coming up with apps for all sorts of things, including finance. The promise of this new “fintech” industry? To disrupt the power of the banks, democratize finance, and widen financial access. In the near future, they declared, we would live in a “cashless society” with frictionless transactions.

But what happened next was not the promised revolution over the banks. Instead, as the tech industry morphed into “big tech,” it became part of the established order it had promised to replace. Companies like PayPal that originally set out to disrupt finance ended up being a new interface to transmit money from our existing, traditional bank accounts.

If anything, the advent of fintech has embedded the financial industry even more into our daily lives. We’re fed the narrative that digital, cashless payments are the way of the future, and that we don’t need cash anymore. We see this in the slow disappearance of ATMs and bank branches – the excuse is that customers are moving toward digital payments and no longer require them. But is this actually a big, collective desire from below? Are people really demanding a cashless society?

It turns out that this bottom-up narrative of customers clamoring for a cashless world is false. In fact, there’s been a huge top-down push against the cash system from powerful financial institutions. They have two goals here: to make profit and get data.

Let’s consider a perfectly normal situation – you’re ordering a drink at one of the increasing numbers of cashless bars. To do so, you need to download an app. Then, to log in, you’re asked to confirm your identity with Google or Facebook. Two commercial bank accounts are involved, as well as Visa or Mastercard who enable the transaction between the banks.

During this process, you’ve interacted with at least three corporate giants. Visa or Mastercard have taken a small fee for conducting the transaction. Studies show that the marginal transaction cost of a cashless payment is 50 to 150 percent higher than when using cash.

Meanwhile, Google or Facebook now know what you’ve bought. They’ll harvest the transaction data and sell it to companies who’ll use it to target ads toward you. Who knows – you might even receive ads related to the drinks you like to purchase at bars!

At the end of this process, you receive one drink. Of course, in most bars you can still pay for your drink with cash. But with the war on cash accelerating, more and more businesses are going cashless.

Over the years, the anti-cash front of financial giants has used many arguments to get businesses and their customers to go cashless. In the past, it was convenience and speed. Now, in the age of Covid-19, they’ve used a new argument to dramatically accelerate the war on cash:hygiene.

Take large retailers, for example. Egged on by payment companies, many of them stopped accepting cash payments at the beginning of the pandemic. Sports superstore Decathlon was one of them. But were they right? Well, England’s central bank released a report early in the pandemic saying that card machines, shopping wagon handles, goods, and self-checkout screens all posed a much higher risk of transmitting the virus than cash. So what’s going on here?

The fact is that the anti-cash alliance is able to afford huge amounts of propaganda in the form of lobbying and PR. This means it’s becoming harder and harder to fight back. After all, who’s fighting on the side of cash? Central banks are essentially neutral on the topic. With financial institutions having a lot to gain in defeating cash, what do the rest of us have to gain in preserving it?

“Cash doesn’t crash”

To understand the value of cash, let’s unpack a metaphor which anti-cash advocates often use – that of the horse cart and the car. The insinuation is that those clinging on to cash are similar to the people who clung on to the out-of-date horse cart after the invention of the better, faster car. Eventually, though, horse carts became a thing of the past – and financial institutions want the same thing to happen with cash.

But this metaphor is problematic. While slow horse carts did get in the way of faster cars, cash doesn’t block cashless. A better metaphor is cash as a bicycle instead of a horse cart. Phasing out cash is like closing down bike lanes that run alongside roads – all in order to make more space for cars. But although bikes are slower, they’re also safer, don’t produce air pollution, and reduce traffic.

Cryptocurrencies and the future of money

So, we’ve established that it’s important to protect cash in order to fight against corporate capitalism’s advance. But is there anything else we can be doing? Are there any new weapons we should be developing to attack the power of big tech and big finance?

Well, once upon a time, there was the hope that Bitcoin and other cryptocurrencies might facilitate a payment system that didn’t rely on big banks. That was back in 2008, when the notorious person or group known as Satoshi Nakamoto brought Bitcoin into the world. Indeed, its stated goal was to be a peer-to-peer electronic cash system.

Worum geht es in Cloudmoney?

Cloudmoney (2022) provides an overview of our present payment landscape. As it turns out, the age-old question of “cash or card” is not as simple as it seems. Underneath the push toward cashless is a murky world of powerful interests trying to extract profit and data from people’s purchases. And the disappearance of cash has more disadvantages than you might think.