The way we buy our morning coffee in Starbucks by touching the pad with our credit card, and the way that Uber allows us to call for a taxi and pay for it electronically, tells us that we are moving ever closer to a cashless society, one without note and coin.
The way we buy our morning coffee in Starbucks by touching the pad with our credit card, and the way that Uber allows us to call for a taxi and pay for it electronically, tells us that we are moving ever closer to a cashless society, one without note and coin.
However, what would happen if we forced this progression and moved to a totally cashless society?
Once one has recovered from the very suggestion, it can be seen that there might be some rather substantial benefits. First, tax evasion emanating from insisting on payment in cash would be destroyed. Estimates are that this might be costing the Treasury anywhere between £10bn and £40bn pa. Second, much crime including counterfeiting, theft and drug dealing survives on payment in cash; this would be very substantially reduced.
Third, as illegal immigrants cannot obtain bank accounts, they only survive in the UK by working for cash. Without the prospect of work, they may be less likely to want to come here. Add to this the enormous cost of printing, minting, handling and transporting cash and we are beginning to understand just how substantial the benefits of a cashless society could be. Of course, there would be much to consider. How would this affect the economy? How would the 'unbanked' cope and what social inconvenience would it cause? Do we have the technology and how much would it cost to roll it out across the entire country?
The benefits could be large but so too the costs to society. Who better than actuaries to consider and assess the cost/benefit balances? The enormous potential benefits do suggest that research should be done and perhaps actuaries could take the lead through a new IFoA working party.
Anyone interested?
Ian Collier
14 July 2016