Picture: 123RF/ Pop Nukoonrat
Picture: 123RF/ Pop Nukoonrat

As on every other continent, Africa is experiencing the rise of the cashless economy. The race to consolidate positions in Africa’s budding fintech space sees the top four telecoms companies battling it out for market share.

African cashlessness is predominantly driven by mobile payments services — provided by the likes of Orange, Vodafone, Airtel Africa and SA’s MTN. In SA, cashlessness is nascent but being brought about through a “cash-lite” rationale, probably because of the 11-million or so unbanked or underbanked citizens in the country. More broadly, the shift in African spending habits reflects changes occurring elsewhere in the world, from Sweden to China.

Despite the cries of progress, however, the rise in cashless societies poses a grave threat to personal freedoms. With customers motivated by perceived convenience and companies driven by rising profits, considerations about civil liberties have fallen by the wayside.

The anonymity that cash provides is extremely valuable to free and fair societies. Cash safeguards the independence of individuals by facilitating transactions without the need for third parties. Digital currency and electronic payments cannot do this as they require technologies, digital infrastructure, service providers and regulators.

This empowering dependence from third parties makes cash an anonymising form of payment. As a consequence, cash payments offer societies resistance to surveillance and rights abuses by authorities.

Marta Belcher is a lawyer who has spoken out on this issue at length. She recalls the images of Hong Kong protesters forming long lines at subway stations as they waited to pay for their tickets in cash. The protesters were concerned that using their bank cards would place them at the scene of the protest and open them up to reprisal from authorities. “For me, this underscores that a cashless society is a surveillance society, and shows the importance of anonymous transactions,” Belcher explains.

In Myanmar, junta authorities recently commandeered local telecoms infrastructure to spy on their own people. The ease with which this private technological apparatus was used to suppress civil liberties by the state was a startling reminder of the fragility of prevailing norms and freedoms.

This episode demonstrates that all structures, including the financial system, need to be protected from unjust capture by authorities. Economies based on purely digital currencies would unfortunately be highly susceptible to subversion by the state.

Another angle on the issue that must be understood is the link between physical currency and the empowerment of underprivileged citizens. The Court of Justice of the EU recently passed an opinion underlining the need to protect cash as a means of payment for the settling of all debts, public and private, because without it sections of the unbanked and underbanked could lose their ability to participate in the economy.

The nonbinding advisory opinion from advocate-general Giovanni Pitruzzella stated that companies in the EU must accept euro notes because people who do not use banks may struggle to pay with other methods. By extension, the opinion suggests removing cash from the economy completely would impinge on the rights of these people to transact in their day-to-day lives.

Despite such concerns, many people continue to push for a cashless society. In the US the Federal Reserve has been discussing the possibility of a digital dollar — a notion being considered by a number of other central banks. Nowhere is this trend more concerning and demonstrative than in China, where the digital yuan is gaining traction. Analysts have already said the primary driver for the Chinese government to roll out the digital yuan is the “absolute power” over the wealth and income of its citizens that it will provide.

The US Fed was forced to admit in a recent report that “the close linkage between [digital] money and data contrasts with physical bank notes, which do not carry with them transaction data that can be connected to a specific person.” For many pro-cash individuals this is the crux of the issue. A cashless society creates a situation in which the potential for the state to dominate, monitor and sanction against certain financial activities is acute.

When we consider the ways in which financial sanctions are used to punish detractors of the US, such as Russia or Iran, there is already precedent for financial punishment at the interstate level. Digital currencies can also be coded to block payments for products the government does not want. In a cashless society citizens would have little recourse to these perverse directives by the state.

A cashless economy essentially cedes people’s personal payments records over to state scrutiny, granting unprecedented powers of surveillance. For many people this can seem like a faraway problem: in their democratic nations they believe such risks do not exist. But this is patently untrue.

And controls over the usage of cash by private citizens are already being considered, even in Western democracies. In Australia, a law making it illegal to pay more than $10,000 in cash, under penalty of a two-year jail sentence, almost became law in 2020. It was abandoned after a public outcry, but there is evident interest from the government to secure these types of controls over its citizens.

A recent report by Money Transfers indicates that despite the ongoing shift to digital payments many people understandably do not want to see a cashless society. When asked if it would be a positive or negative if their country became cashless, meaning only electronic forms of money would be accepted, only 18% of people asked in France saw it as a positive. In both the US and Sweden, one of Europe’s most cashless economies, fewer than one in four people thought it would be a positive.

For many people this aversion is entirely rational. The prospect of a society without cash and, therefore, with only digital forms of payment, could be genuinely dystopian.

• Harris is a UK-based freelance journalist.

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