The Case for a Cashless Society

How many times have you been ready to make a purchase where the merchant has told you, “Sorry, cash only!”? Have you heard yourself replying, “Well I’m sorry, I don’t carry cash with me anymore!”? It happens more and more. I keep a little cash handy if I think far enough in advance, as in the event I may plan to use a parking lot at a sporting event or to buy an ice cream cone. Otherwise, it’s always been my experience that most everywhere, one can easily get by with only a generally  accepted debit and/or credit card. We truly are moving toward being a “cashless society”…but is that a good thing? As with everything, there are pros and cons.

The Pros

Aside from the obvious concerns about carrying around too much cash on one’s person, there are benefits to elimination of cash from your life. Some of them are rather intuitive, and I am sure you have noticed these:

• • Lower crime rates – Almost all of the unrecoverable losses in fraud engagements we have been associated with have involved misappropriated cash. The anonymity is a clear risk. Less cash transactions presumably imply reduced risk in this regard.
  • Illegal transactions – Gambling, the drug trade, money laundering benefitting from lack of a transactional paper trail. Lack of an audit trail in these instances presents a risk to society on a number of levels.
  • Time spent handling storing and depositing currency – Do you really want to go to the bank these days for personal or business purposes if you can avoid it? Does anything more need be said on that subject?
  • Simplify exchange transactions during foreign travel – Even reduce the cost, as well, by not having to exchange currency at a commercial currency exchange, which carries a commission domestically, but most often even more steep internationally. Reduce it by executing transactions in foreign currencies with your credit card instead.

The Cons

As always, there are trade-offs to eliminating cash from your life, and only you can decide if the benefits outweigh the detractions:

• • Privacy concerns, breach of personal information – I, for one, believe there are many more personal credit information breaches than we hear about in the news. Otherwise, how do you explain someone using my ATM card to purchase Long Island Railway tickets? My number got out there somewhere, but I will forever be wondering how.
  • Hacked personal bank accounts – Sorry, but this is the world we live in today: if you have any kind of online account, it seems as if it is only a matter of time before it’s your turn to be hacked. The best you can do is (please!) look regularly at your account activity online on all of your accounts. It takes very little time to do and, though they are reasonable, there are time limits within which you must report fraudulent activity to the bank or credit card company to retain your indemnification for loss.
  • Segments of society struggling to keep up with technology and economic inequality issues – Not everyone has access to online accounts. Those less fortunate in our society often may not be able to afford smartphones, for example, on which many cashless transactions are executed today. Many at all socioeconomic levels in our society prefer not to maintain bank accounts. (I think we call this the “mattress economy”!)
  • Difficulty controlling spending without reinforcement of cash in hand – It reminds me of the tale I was once told as to why transactions in casinos occur with chips rather than with currency (aside from the obvious security risks). Gambling with a chip desensitizes one to the fact that real money is going out of your pocket. You feel differently about giving one away than you might feel about giving away a large denomination bill of the same value. This can also represent a negative in a cashless society, as the tendency to overspend for some is that much easier. Even more so when using credit cards, where we often find ourselves spending not only the cash we have, but that we don’t as well.

The Cash Free World Today

Zelle, PayPal, Venmo, mobile payment services such as Apple Pay, cryptocurrencies, such as Bitcoin are all available to use. Some of these services are more mature than others, each carrying its own risk and reward. Use them wisely, meaning monitor your transaction activity regularly. My experience in our fraud and forensic practice has demonstrated over and over again that the risks are realized, and losses are incurred by those of us who do not follow a regular practice of looking in on our account transaction activity. If you bring fraudulent activity to the attention of the bank or credit provider, most always your mishap will be rapidly addressed and rectified. Someone can always pick your pocket and your cash could disappear just as easily, so risk is everywhere! And wait…my credit cards are in there too!

Extra Fun With Cash

Those of you that still cling to your cash may want to visit the site Where’s George just for fun.  Enter the serial numbers for the currency you have in your possession into the site’s database, put the currency in circulation and then track its movement all over the country (or the world) through this free site that also provides all kinds of interesting information and links about money and currency. I have some 100’s that I picked up at a currency exchange in London in 2004 that are still out there floating around reporting results today, sixteen years later…Enjoy!

 

Contributing author: Brian W. Johnson, CPA, CFE, CCIFP, is an audit partner at Dannible & McKee, LLP.  Brian has over 35 combined years of experience providing audit and accounting services to both private and publicly-held domestic and foreign companies. He has extensive experience providing fraud and forensic examinations, as well as SOC audits, internal audit outsourcing and internal controls evaluation and consulting. For more information on this topic, you may contact Brian at bjohnson@dmcpas.com or (315) 472-9127.