In 1946, a man named John Biggins created the first cashless credit system that allowed customers at his bank to pay local merchants through their account rather than with cash. Since then, America has progressed towards ever more cashless methods of payment. Physical currency was designed to represent wealth and ease bartering. Beginning with precious metals as coinage with actual value, money progressed into a representation of the precious metals through the use of clad coinage, and, eventually, paper money alternatives. Many view cashless systems as the next step in the process of monetary evolution. Cashless systems, however, may mean the loss of freedom and privacy, and open an easy path for totalitarian control of the people.
A cashless society is a country that has ceased to use any form of solid currency. Instead, wealth is transferred through a credit system, phone apps, or fingerprint and facial recognition technology. The absence of physical money has many benefits for the consumer and their government. Under a cashless system, payment transactions are quick and secure. Facial and fingerprint technology is virtually unhackable. Without cash, all criminal activities and corruption would be easily traceable. According to Paul Armstrong, a contributor to Forbes, and Mehul Desai, a contributor to the World Economic Forum, crimes, robbery, fraud, tax evasion, bribery, and illegal drug deals would be greatly reduced.
A cashless system, though, comes with a great risk to individual freedoms that negate these potential benefits. All transactions would be traceable and monitored by the government and/or private corporations that would have the power to deny transactions. Your wealth would be completely under someone else’s control, and they would decide how you could use it. Business Insider author Alexandra Ma cites numerous examples of Chinese financial control initiatives stopping purchases of merchandise and services based on the individual's social score, even stopping families from sending their children to better schools.
China's current economic system demonstrates how quickly a cashless system can destroy individual freedom and infringe on human rights. Cash in China is becoming extremely rare. Instead, most of China utilizes a social credit system. This system creates a score for a person based on their social behaviour. A person can raise his credit by following traffic regulations, having and retaining a decent job, and even watching Xi Jinping give a speech. A person’s social credit is negatively affected by poor driving, criminal history, browsing history, social media posts and laziness. In most cities, China has established a facial recognition system that tracks the patterns of each citizen such as locations they frequent or roads they commonly use, and monitors any irregularities in patterns, alerting law enforcement whenever one is detected.
A person's social score determines what they are permitted to purchase. In some cases, individuals are prohibited from making travel-related purchases and prevented from buying property regardless of whether or not they can afford it, according to Business Insider. Even internet access can be restricted. By blacklisting the credits of reporters who criticize the Chinese government, news that is not approved can effectively be minimized from public viewers. The system is rapidly becoming a totalitarian’s dream.
Under China’s cashless system, you are not the one deciding how to spend your money. Instead, either the government or a private corporation has that authority. In China, currency is used to control citizens’ behavior.
In the United States we have already seen this happening on rare occasions. PayPal has closed accounts associated with hate groups and has also denied service to conservative organizations. According to the National Review, banks have denied loans to firearm companies that produce controversial products. While public outcry and legal actions have limited these actions, a cashless society would undoubtedly make service discrimination easier.
The development of the Chinese system should serve as a warning for mistaking a cashless society as merely monetary progress and not a potential nightmare. There is little privacy in the Chinese system: your actions are reviewed and judged by the ones who control your money. What freedom is left is reserved for the social elite. Financial incentive has proven very effective at controlling people's behaviors and eliminating any noncompliance with the system.