When credit cards were first introduced in 1946, we were sent deeper down the rabbit hole of representative money. Piles of cash no longer represented our wealth, but value was placed in bank balance digits, accessible via a plastic card instead.
Now the Fourth Industrial Revolution is blurring the lines between physical, digital and biological spheres through mobile devices and emerging technology, changing how we live fundamentally. A tangible change we are experiencing today is the evolution of our medium of trade into the abstract e-money. A form of money that’s accessible through smartphones with no physical form yet highly traceable – a key feature loved by governments and banks, paving the way for the gold rush’s hipster cousin – a cashless society.
The rush for cashless.
Sweden, the first European country to issue official banknotes in 1661, is leading the way towards a cashless society with only 2% of cash transactions made in 2018. Meanwhile, India is aggressively ditching cash by banning the highest denomination of 500 and 1,000 rupee notes in a bid to cripple the black market. China, where paper money was first used during the Tang dynasty, recorded US$12.8 trillion in mobile payment transactions in 2017 thanks to Alipay and WeChat Pay.
Within Southeast Asia where economies are cash-dominated, governments are gunning hard for a cashless society to finally account for money flow, especially within the informal economy. Governments are eagerly setting up policies and plans to encourage the fintech boom and digitalisation.
Bank Negara Malaysia has approved 44 e-money issuers of which 39 are non-banks. According to Tech In Asia, Singapore and Vietnam are reported to have 27 and 28 e-wallet providers respectively. Malaysia has also announced a US$720 million Industry Digitalization Transformation Fund in 2019 to prepare for a digital economy. Meanwhile, Vietnam has committed to an ambitious plan of reducing cash transactions to less than 10% by 2020, according to kr-asia.com.
ASEAN nations are the most “mobile-first” Internet region globally, according to Google. Its 630 million population has over 350 million Internet users of which 90% log on through smartphones. The region’s Internet economy is estimated to be worth US$240 billion by 2025, a market size large enough to convince telecommunication providers, device manufacturers, ride-hailing services and anyone who wants a slice of this scrumptious pie to launch an e-wallet. This creates the perfect platform for going cashless and e-wallets have the potential to push us over the edge.
In addition to enthusiastic fintechs, governments are working hard to make going cashless a reality. Singapore and Thailand have each launched a peer-to-peer e-transaction system, PayNow and PromptPay respectively. These apps allow fund transfer via identification numbers or mobile phone numbers and will soon facilitate cross-border transactions between these 2 countries. The Bank of Thailand has also initiated a cross-border fund transfer with Cambodia, Laos, Myanmar and Vietnam (CLMV) by scanning a QR code to lower transfer cost within the CLMV for migrant workers.
But is it worth the risks?
The gleaming promises of going cashless seem to unlock a better world, cleaned of crime and corruption, while bringing financial services to the unbanked and underbanked.
As we enjoy sci-fi moviesque technological advances sending voice commands to Alexa like a scene out of Iron Man, Silicon Valley meanwhile is harvesting huge volumes of data and piecing them together to create individual profiles of us. While playing Tony Stark in our living rooms, we are being studied, analysed and listened to. Ever wondered how Facebook manages to serve you an advertisement about something you were just talking about on WhatsApp? Speaking of which, how quickly did we forget the Cambridge Analytica scandal that exposed major foul play within the tech industry?
Despite inquests spurred by the Cambridge Analytica scandal, many of us have pretty much accepted Facebook eavesdropping on us as part of life. However, e-wallets expose us on a whole new level. Setting up an e-wallet requires identity proof which involves submission of identity cards or passports. The removal of anonymity allows every online activity to be traced back to a person.
While this is great for holding online trolls accountable, it also allows service providers to monitor users on a greater scale. Digital money also means your wallet is dependent on network connectivity because no network equals no money. Even if all telecommunication towers stay working and reaches every corner of this planet, a cashless society assumes that system glitches are a thing of the past.
In June 2018, Visa’s payment system experienced an outage due to ‘‘hardware failure’’ causing payment chaos across the United Kingdom and Europe, forcing consumers to resort to cash. Another major IT failure left millions of Royal Bank of Scotland and Barclays users in the UK locked out of their accounts last September. Technologically, we are clearly a long way from outage-proof. Also, what happens when you accidentally leave your phone at home or worse, lose it altogether?
This article is an excerpt from UNRESERVED’s May 2019 issue from the article DETHRONING CASH.
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