It seems Visa has become tired of waiting. After years of slow but steady decline of cash payments, and more years of lobbying to get governments to end the circulation of cash to no avail, Visa has decided to change strategies. From now on, small businesses which accept to go completely cashless and stop accepting cash from their customers may be selected for a financial reward. But is it legal? Is it ethical?
Visa has found a new way to speed up the slow but steady disappearance of cash from the American market. For years, cashless payments have been rising, as more and more people resort to mobile and smartphone systems. Barbara Bennett wrote in her report to the Federal Reserve bank of San Francisco: “with rapid growth in online commerce, it may not be too far-fetched to assume that consumers won’t even be able to use a physical payment instrument in the future.” This perspective is very attractive to Visa, which sees an opportunity to increase its revenue. In last July, the financial firm therefore announced the launching of its cashless challenge, which will financially reward shops and stores which pledge to refuse cash from their customers. According to Jaime Toplin, “Such a move doubles down on the idea that Visa sees cash as its biggest competitor.” Visa knows there is still room for progress and hopes to push America to levels reached by a handful of countries in the world, such as Sweden, where cash has virtually disappeared. The main purpose of the campaign is, naturally, economic. Every payment made in cash escapes Visa’s network and represents a loss. Visa hopes not only to increase its revenues by waging a war on cash, but also to reach the threshold of a completely cashless economy, which would amount to a complete game-changer.
Two main implications can be seen at the end of this trail. The first one is the effect which a completely cashless economy would have on our society – which is, in the end, the goal of Visa and other similar companies. Banks work in close collaboration with government agencies, which perform investigations, monitoring and data mining in banking networks. A cashless economy will therefore place the totality of citizen’s lives under the scrutiny of their government. In recent years, especially since the 2013 revelations on State surveillance, citizens have expressed increased concern over respect of their privacy. But the main risk is economic.
The second is the slanting of the economy in favor of the upper half. Cashless systems, such as debit card terminals and RFID readers cost money and add to the investment necessary to the opening of a sales point. A cashless society would therefore constitute a form of unfair competition, where little investors attempting to open a “Mom-and-Pop store” would be economically prevented from doing so, for lack of sufficient capital, and some of those already existing would be forced out of business if they were unable to put up the funds to acquire the new payment systems. This latter risk would be greatly increased once the cashless transformation of the economy were achieved, by the likely increase of rates applied by financial companies such as Visa: once all business units are trapped in the cashless economy, credit card operators will be sorely tempted to push up the rates. When that happens, humble shops and stores will close, and the larger business units which were able to acquire the equipment will absorb their market shares. Stephen McGrath writes for the Independant and makes no mystery of the looming threat : “Technology is moving fast, and small businesses are starting to lag behind dramatically. They need educating on how best to adapt to new payment systems, or they will lose out to competitors – probably big corporations who have everything in place to deal with the demands of 21st Century lifestyles.” If Visa’s goals are met, and cash disappears, it will fuel one of the largest economic risks: a world where the rich always get richer and the poor always get poorer.
For these reasons, activists and civil rights defenders have been applying increasing resistance to the cashless shift. Although they are virtually unrepresented in the media and politically, many people live outside the banking system, and they would be hit very hard. Vinod Kumar writes that “the rich may be better equipped with use the advance technology and can best use alternative means of cash, but the poor cannot use the alternative means at all. For poorer people, cashless transactions just aren’t practical. There are many people who are unbanked and cannot receive lines of credit for a whole range of reasons.” In the United States, almost 10% of the population is unbanked, according to figures from the 2013 FDIC national survey. The role of the government is to maintain and protect fundamental liberties, one of which being free trade. It is contrary to the spirit of the State’s mission to enable citizens to start business only if they have signed a contract with Visa, or some such financial company, and agreed to give them part of their income.
The legality of the move is in the grey area, and large businesses such as Visa can afford the kind of lawyers who will make the grey a dark grey, pure white or even translucid. Legal opposition – which will surely occur – will therefore probably not be the main stumping stone. Social and popular resistance, as activists raise citizen awareness on the political and economic risk of going cashless, is likely to be a far trickier problem for payment systems providers.
Categories: Economy & Finance