Cashless societies seem convenient, but Hong Kong should think it through first
Peter Kammerer says we need a debate over going cashless, which benefits shoppers, stores and governments, but also has some worrisome implications for privacy, individual financial security and also government debt
Fintech Week in Hong Kong may not seem the right occasion to raise questions about rushing headlong into a cashless future. But there are as many downsides for all the benefits of ditching banknotes and coins. They involve privacy, choice, security and, for financially troubled governments, survival. As much as we should embrace a hi-tech way of life, there’s also a need to debate what’s best.
Not being able to see makes me a natural convert to electronic payments. Give me an app or a card over a handful of notes of uncertain denomination any day. The Octopus card was a blessing when introduced in 1997 and the day of the shop that Amazon envisages, with no checkouts and apps linked to bank accounts, and where sensors deal with transactions, can’t come soon enough for some of us.
Tech giants like Alibaba and Apple see their apps driving such a future and a visit to the mainland or Sweden, where cash accounts for 2 per cent of transactions, shows just how willing some are to embrace the idea. Try to use cash in some Shenzhen restaurants and you’ll get a worried frown; some no longer accept it. It’s all about convenience and there is a concerted push for Hong Kong to follow, in order to – as Jack Ma, the founder of Alibaba, said recently – be “more fashionable, modern and efficient”. (Alibaba owns The South China Morning Post). Hong Kong’s government has embarked on a course of promoting innovation, science and technology.
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Credit card companies, and now those involved in electronic payment systems, portray cash as backward and inefficient. It’s difficult to argue against industries that aim to make life easier and create jobs. But as the cashless supermarkets Amazon is trying out in the US show, it’s as much about job creation as making jobs redundant.
Governments may see such losses as inevitable or negligible when compared to the advantages. Going cashless eradicates money-laundering. Their most effective tools to crack down at present are resource-heavy monitoring of currency and bank accounts or scrapping the high-denomination banknotes criminals favour. They can also track transactions by having access to records and more easily shut down money supplies, as in Uganda in February last year to keep funds out of the hands of the opposition during elections.
It’s why the Swiss have been so worried about the introduction of an equivalent of the Octopus card for trains; they fear authorities will spy on their travel patterns. Many shops in Switzerland also prefer cash to credit cards and there have even been pushes by lawmakers to make the use of banknotes and coins permanent, the thinking being, as Swiss people’s party member Manuel Brandenberg put it to Bloomberg last year, “cash is property and cash is freedom. It empowers the individual because it’s tangible wealth.”
There’s another matter that the wealthy Swiss government doesn’t have to worry about, but others may fear; a cashless society will prevent a government from printing banknotes to get out of debt or induce inflation. Robust security systems are also needed to lock hackers out.
Such discussions aren’t taking place on the mainland in the scramble to be modern. Nor have we heard much in Hong Kong, although the idea that cash is king also has firm adherents here, as in Japan, where credit card use is low, too.
That reticence is still seen at bank counters, among taxi drivers who prefer tips in cash and in the surprising number of shops and restaurants that demand cash only. Such restraint offers hope for those worried about the drive to go cashless, and space for a much-needed debate of the issues.
Peter Kammerer is a senior writer at the Post