If the U.S. Became a Cashless Society in 2040
NEW YORK — It is the year 2040. The United States finally joins the ranks of cashless countries. As cash fades from use, the government issues a complete ban on banknotes, saving the $200 billion it costs annually to maintain cash in the economy. Now every transaction happens through payment apps like Venmo, leaving a digital record of its amount, time and location. While some embrace the convenience of a cashless world, others struggle or resist. In New York City, the lives of three women show that the transformation also comes with unexpected drawbacks and even new threats.
Emily, a 35-year-old wealth management adviser at a Swiss bank, enjoys the elimination of cash. Living in midtown Manhattan, she got the first hint of it years ago at Sweetgreen, a salad bar chain where she is a frequent patron. Since 2017, Sweetgreen has no longer accepted cash. The transformation has been a global trend. In Sweden, Denmark and Norway, the government pushed for reforms that brought a cashless society. In China, mobile payments accounted for over 70 percent of all e-commerce transactions by 2016. In Kenya, where banks and ATMs were out of reach for most people, mobile payments now reign.
Emily didn’t expect the trend would hit the United States so soon. But she loves the new convenience. No more last-minute running to ATMs before visiting her favorite ramen spot, which ended its cash-only policy. She used to ask herself, Do I have enough cash? Now the question is obsolete, and she orders more. Every morning, she enjoys her purse-free jog in Central Park, where she buys water from a street vendor by scanning a QR code on her iPhone. Still, she constantly worries that her phone may get stolen or its battery will run out.
Intellectually, Emily understands that money is nothing more than a symbol, a representation of wealth, so it doesn’t matter if it’s physical or not. But some of her clients are concerned. Coming from countries with negative interest rates, they lack the option to hoard cash at home. In response, they pay their rent, electricity bills and children’s college tuition years in advance. Some pour their money into gold or land purchases. But bank runs never happen again.
Nevertheless, Emily notices that her email inbox is now flooded with ads tailored to her needs. She suspects that one of the mobile apps has sold her payment history to businesses, but it doesn’t bother her. “Even before a cashless society, Amazon traced my browsing history and sent me ads all the time,” she says. “I don’t have that much privacy anyway.”
While Emily has adapted to a cash-free society without a hitch, Martan, a 52-year-old undocumented immigrant, says her life has become tougher. It’s true that she feels safer walking back home alone at night in a low-income neighborhood in the South Bronx. Robberies have declined, as no one carries cash around. That drop in street crime was one of the quickest consequences of going cashless. Researchers say that in Missouri, after the government decided to deliver welfare benefits through debit cards instead of cash, robbery cases declined. In 2012 in Sweden, where 80 percent of transactions were already electronic, only five bank robberies occurred. A year later, one robber left a Stockholm bank empty-handed after realizing the bank was cashless.
But Martan sees no benefit otherwise. A month ago, she lost her job as a cashier in a local grocery store after it became checkout-free. Amazon pioneered the model, launching its first brick-and-mortar grocery store in 2017 in Seattle, where consumers could tap their phones at the entrance, pick up items and walk out. A sensor detects what they put in their shopping bags and bills them accordingly online. Today, such grocery stores are everywhere.
Martan had hoped to open a food truck. She had noticed that the price of chicken over rice went up. Without cash transactions, street vendors can no longer dodge taxes, so they raise prices. In 2016, the Internal Revenue Services estimated that tax evasion amounted to $460 billion a year. Digital records of every transaction solved that problem.
But Martan’s plan fell through. To adopt mobile payment, she needed to link her phone with a bank account. And to register a bank account she needed to present a government ID. She has neither. Martan used to live in a cash-only world. A study by the Federal Reserve Bank of San Francisco showed that Americans with annual incomes under $25,000 were more likely to rely on cash than those with higher incomes. In 2015, 7 percent of American households were unbanked. In Martan’s neighborhood in the South Bronx, more than half of residents didn’t have a bank account in 2013.Unable to afford account fees and fearful of overdraft costs, they chose to stay away from mainstream retail banks and resorted to check cashers and payday loans.
Wary of large institutions and technology that take records, Martan resists the cashless concept fundamentally. Having cash in her pocket gives her a sense of security that nothing else compared with. Now she feels neglected by society. She can’t apply for a bank account to deposit her leftover cash because she may be expelled from the country due to her immigration history. In desperation, Martan paid a legal citizen to deposit her cash on her behalf and transfer the money to an anonymous payment app, where she registered an account. After logging in, however, she was disappointed to find out that most national chain stores do not accept payments from the app.
Belle, a 27-year-old prostitute in New York, survives in an underground economy. Cash allowed her to hide her business from government oversight. For her clients, cash meant anonymity. Initially, they stopped visiting her because they were afraid of getting tracked through digital records, even via anonymous payment apps. But after her boss registered a massage-and-spa brand as a front company, clients came back.
Proponents of the cashless society believe that elimination of cash will curb illegal activities such as corruption, terrorism, the drug trade and trafficking. A 2012 report quoted British police as saying that only 10 percent of 500-euro banknotes were used for legal purposes. Yet the benefit may be overstated. In 2015, the U.K. government found that cash ranked as only №3 in the methods used for money laundering, terrorist financing and other illicit means of holding or moving funds.The top two were banks and accountants.
A human trafficker, Belle’s boss still worries that the FBI may break into his payment system, so he turned to a crime group for help. The all-purpose gang has created an alternative form of cash, a type of cryptographic code, to facilitate gun trades and drug deals. Throughout human history, money has been reinvented repeatedly in various forms, from shells to bitcoins. Because Belle relies on the alternative cash, which comes with no credit history, she is slipping away from the mainstream economy.
The experiences of these three women show how the arrival of a cashless economy is solidifying older divisions in American society. For the middle class, the post-cash world is a natural development in the 21st century, part of a steady march toward greater convenience. Criminals also find ways to adapt. But for the poor, it mostly makes life harder again.
