Cashed out – stripped of Lady Godiva

By Joe Mellor, In house Reporter 

The London Economic

The future for notes and coins looks bleak. One country is already planning a cashless economy. There was a time when the size of the wad in your pocket was a sign of social status or perhaps something more sinister.

But those days are gone and cashless technology is already among us and here to stay, or so says Dave Birch – director of Consult Hyperion, which advises governments and large companies on electronic identity and electronic money.

Dave Birch says,

“I think in the future it is possible we will have a society with no paper money. To be honest it is used less every day. So many of us use chip and pin and now we have contactless technology.

“I believe in the future we will not even have bank cards, all payment will be from our mobile handsets.”

But what is the benefit of a cashless society, and would it bring any financial gains to our society?

Dave Birch says,

“Currently shop owners often prefer cash, as they have to pay a handling charge for card payments. But I think that is backwards thinking.

“Shop owners are fixed in their ways. They don’t see the cost of storing money, handling money, productivity hours wasted cashing up and the cost of transporting it to a depository. It is so ingrained but I think it will change slowly.”

This issue is especially problematic for small and medium-sized enterprises (SME’s) who struggle to easily recoup their income from sales, essential to cash flow. But new technology is helping to overcome this issue.

The recently launched Zapper Scan-to-Pay service helps to reconcile the £36.4 billion currently owed to UK SMEs in late payments.

European managing director Bradley Duke says:

“As long as customers have their smartphones with them, they can make payment with the same guarantee of safety and security that they have with a normal credit card payment.”

“We wanted to create a system that was of great benefit to customers and businesses of all sizes, leveraging the powerful technology that we all already carry around in our pockets.”

However, it is not just a quicker and easy way to pay for things, a cashless economy could also be a way to reduce crime and boost the economy.

Dave Birch says,

“I am dead against people taking payments in cash ‘off the books’. It is tax evasion simple as that.

“It isn’t just a little fiddle it is fraud. I pay my taxes and so should everyone else. If everything was electronic then it would be very difficult to pay for goods without paying tax.”

Mr Birch’s views are among a growing voice of people who believe electronic payments create a fairer society

On the 17th September 2013 the Israeli Cabinet established a committee to propose ways of reducing cash transactions and increasing electronic payment methods to combat the underground economy and tax evasion. It could become the world’s first cashless economy.

Alongside that, a recent report by Visa on Europe’s “shadow economy” (an estimated $2.8 trillion), suggests nearly 19 per cent of Israel’s GDP is off the books, the equivalent of about $50 billion.

One of the reasons the Greek economy slid into a financial crisis is because of the country’s low tax base, due to undeclared monetary exchanges.

But it isn’t just the crime of tax avoidance that would be curtailed in a paperless economy, so could pretty crime.

Dave Birch says,

“If you stole my personal possessions in the street, you would have no cash in my wallet, I would cancel the cards and the phone would be blocked.

“The thief could sell the wallet, but would need an electronic payment system themselves.

“Criminals would be reduced to barter as a form of exchange, which would not stop crime, but make it more expensive and frustrating than using notes and coins.”

It appears to make perfect sense to push towards an electronic money system, but recently there have been some major computer malfunctions – including the sever crash on the Nasdaq stock exchange, halting trading for three hours – which has asked questions of the stability of electronic systems.

Dave Birch says,

“There will always be glitches. How often are cash machines down? We can cope with these problems easily. Nothing is ever fool proof. If there was a serious power blackout, the last thing we would worry about was payments, we would have a lot worse things to worry about.”

In the future we can envisage a world where we pay the window cleaner using our watch, but one issue Dave has been asked numerous times is how would we pay strippers?

Dave Birch says,

“I’m sure we would find an easy way around it. I don’t think society will collapse if we don’t concentrate on sorting out this problem first.”

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