The convenience of a cashless transaction is hard to resist. It promises the ease of paying for a coffee with the tap of your phone, of not having to remember to bring your wallet everywhere or go through the humbling process of testing your basic arithmetic skills when counting change. Nowadays, cash can often seem useful only for operating the rickety washer-dryer unit in your rental basement that insists on only working once it has been fed exactly seven quarters and vigorously kicked three times.
But when we replace the act of physically exchanging money–placing it from one hand into another—with the virtually imperceptible movement of a simple tap or click, we think less about the act of financial spending. According to a University of Adelaide study, cashless payments relinquish us of the “pain of paying,” eliminating the burden of physical loss from financial transactions, which results in people spending more. The global cashless shift—produced by modern digitalization and rapidly accelerated by the Covid-19 pandemic—heralded the emergence of an unpredictable but reconceptualized relationship between the individual and the money they (now digitally) possess. Whilst national economies might benefit from this increase in consumer spending, governments and consumers should be wary of promoting the goal of transitioning to a cashless society, especially one reliant on digital payment services. The dangers of a cashless shift extend beyond enabling individuals’ reckless spending habits. The digital mechanisms emerging for cashless transactions paired with this mindless approach to acts of cashless spending produces an economic environment that, at its extreme, is fecund with the potential for state exploitation and surveillance, and even at its most benign, introduces new and harmful barriers to entry.
For decades, credit and debit cards reigned as the principal methods of cashless payments. However, in more recent years, mobile payment apps have risen to be an essential facet of the cashless society framework. In China, the two most popular payment apps are Alipay and WeChat Pay, through which users can connect their bank accounts and pay for goods with only their smartphone on hand. Eliminating the need to carry stealable physical cash, this payment method increases speed, convenience, and safety. However, in its quest for modernity, the Chinese cashless system sacrifices accessibility. Both apps not only require bank accounts for registration but also the submission of additional security documents, a passport, or People’s Republic of China Foreign Permanent Resident ID Card. Anyone denied a passport is thus not only denied the ability to travel outside of the country but also the ability to effectively interact with the financial frameworks within their own country. For users who are not Chinese citizens, WeChat Pay also requires further identity verification—which may include the request of pictures of your passport, resident ID cards, or mainland travel or residence permits. Slowly but surely, to exist functionally in Chinese society means to be technologically literate, and to have these documents on hand.
Sweden has a similar system. The popular cashless payment app “Swish” only works if you have a Swedish BankID, which in turn is only accessible to individuals with bosatt status–permanent residents with a tax agency prescribed personnummer (social security number). Two years ago, it was reported that 77 percent of the Swedish population had the payment app “Swish”—created less than ten years prior—on their phones. There is no doubt that the numbers have only risen dramatically since then. The problem with Swish’s registration requirements is not only that tourists cannot get access to the app: Refugees, immigrants, and individuals without the correct documentation are being unduly hindered from integration into local society. This February, when the Swedish government finally introduced legislation allowing Ukrainians fleeing Russian invasion to obtain temporary protection status, discussions surrounding the decision acknowledged the necessity of these refugees being able to get their own personnummers in order to get BankIDs and Swish accounts.
A heightened barrier to access, however, is not an inherent consequence of a digital payment system. In fact, the Swahili service M-PESA stands as an example of a digital payment system lowering barriers to access. In a complete inverse of the structure of Swish or Alipay, M-PESA allows users to deposit and transfer money without any bank account, functioning as a substitute for the complex and inaccessible registration process of financial institutions. In Kenya, 72 percent of the population have a mobile money account, the most popular being M-PESA, through which 59 percent of the nation’s GDP flows. Like other mobile payment services, M-PESA has risen dramatically in users: from 29.5 million users in 2017 to 66.2 million as of 2024. It can be taken as an example of how governments, if they wish to do so, can still promote cashlessness without exclusivity. And, if a cashless shift is inevitable, a system like M-PESA’s would be optimal.
The payment app systems that do include a requisite of documentation then work harmfully twofold, not only increasing state control over who has access to financial mechanisms in the nation but also increasing the possibility of state surveillance through these mechanisms. WeChat Pay is estimated to have 1.225 billion active users in 2024. Given that WeChat adheres to Chinese surveillance laws, every single piece of information or documentation uploaded to the app is subject to government oversight. Far more frighteningly, every single payment authorized by these billions of users is open to government surveillance. Thus, the Adelaide study’s findings—of consumers having an inherently reduced consideration of the gravity of their actions within cashless transactions—takes on new implications: consumers are also unable to fully register their loss of privacy. Every payment—its recipient, time, and location—is being converted into government-accessible data. China’s digital payments revolution also raises questions as it reduces the role of banks in payment transactions, redistributing national financial power in an unprecedented shift of control away from the banking system and toward the tech sphere.
The possibility of invasive surveillance is not confined solely to cashless apps in autocratic nations. The digital sphere is highly susceptible to hacking. Indeed, recent concerns about digital security have prompted a trend in governments rapidly backpedaling on their cashless goals. In Norway, legislation ensuring the continued right to payments in cash was proposed in June and passed in October. The Norwegian Ministry of Justice and Public recommended that everyone keep some cash on hand given “increasing global instability” and the threat of cyber attacks to digital payment systems. Physical cash carries an unbeatable quality of resilience: it cannot be annihilated by the crashing or hacking of a singular system. As of late October this year, Sweden has newly announced plans to follow suit. Out of fear of crisis or war, the Ministry of Defense is now advising people to use cash regularly and to have at least a week’s supply on hand at all times.
What once seemed like a goal for countries trying to boast their technological superiority and modernism has become a source of great apprehension. Between the barriers to access and the threat of local government surveillance or foreign government cyberespionage, the ease and convenience of cashless transactions is not all it is cracked up to be. Nations who have made a pullback from the global cashless shift are more than valid in their concerns, and, as global distrust has begun to proliferate, any proponents of revitalizing the cashless movement must propose a digital payment system that addresses both accessibility and security concerns. Convenience cannot come at the cost of individual or national safety.