Five years ago I was uncharacteristically intolerant of credit card payments for trifling amounts, grumpy individual that I was. I would fume at the Starbucks counter as a customer offered a credit card for a £2.50 cappuccino. Card declined, try another. Why, oh why, I thought to myself, don’t they carry some cash. Negative judgments passed through my mind. There is no doubt that paying by credit card for small purchases was once something of a stigma, at least to my mind. No longer.
Now I’ve joined electronic payment party. I’m a fully paid up, card carrying member. I carry cash for emergency, of course, but the moths gather sociably in my wallet. My right-hand trouser pocked is mercifully bereft of small change, freeing up room for other essentials.
It’s the Apple Watch wot dunnit. Apple Pay and other similar systems have brought a sea change in payment habits. No amount is too small for the Watch, and payment is quicker than using cash, or, even, extricating a card and swiping it.
The result is that I no longer feel embarrassed using electronic payments. On the contrary. I am now intolerant of people who offer a £20 note for a cappuccino. Cash transactions take longer than touching a Watch on the card reader. The tables have turned.
Some businesses now make a virtue out of not accepting cash, and no doubt this trend will continue. Yet while I anticipate the imminent arrival of the cashless society, there are dangers. Many regard the primary problem lies in allowing governments to know where and when we spend our money. Without too much imagination it is easy to envisage a link between our spending patterns (and total outgoings) and our income, as recorded at the tax office.
This is not ideal, I admit, and has Orwellian aspects. But since I spend only money that is mine already and has been taxed heavily, I don’t really worry about having all my purchases recorded. It’s difficult to hide these days and there are many other ways of keeping a check on us. From a fiscal policy point of view, however, the increasing prevalence of electronic payments and reduced opportunity to pay in cash will help quell the black economy.
I probably would feel otherwise if I worked in that black economy and habitually stuffed my pockets with dirty £50 notes. In this country, that’s the only option for the shady customer — a miserable £50. It’s the biggest note we have.
£20, that’ll do nicely
While it was once a large sum of money, this is no longer so. Strangely, however, and despite £50 being of relatively low value, here in the UK most people seldom see a £50 note. The banks don’t dispense them through ATMs — as far as I am aware — and they are an inconvenience to use. In common with most Britons, £20 is the biggest denomination I’m happy with.
Below: How can an advanced economy function with a maximum-denomination note of £50/$65/€55? Britain does, and with the burgeoning use of electronic payments and cashless transactions, this country is well on the road to become a cashless society
In the Euro zone, by contrast, there are €100, €200 and even €500 bills — a recipe for tax jiggerypokery if ever there were one. The €500 note is banned in the UK, and rightly so, since it is largely the currency of choice for criminals.
It is said that when the euro was planned, it had been agreed that €200 would be the largest denomination. The Germans, who at the time operated one of the most cash-intensive economies in the world — with relatively low acceptance of cards — objected and insisted on a €500 note to match the DM 1,000 bill which was still widely used. This was a mistake. The USA, like Britain, takes a more pragmatic view, with $100 as the largest denomination bill in circulation.
Taxman likes the cashless
As inflation bites and smaller-denomination paper becomes more unwieldy, there is an incentive to adopt electronic forms of payment. Electronic payments are extremely good for state treasuries and for maximising tax income. And, of course, many see that as a problem. There are other problems, nevertheless.
By far the biggest danger inherent in cashless trading is the reliability of the underlying technology. A few months ago I was sipping coffee in a London cafe when the lights went out. It was an area-wide outage, something that almost never happens in this city, and it continued for a couple of hours.
The cafe couldn’t process my Apple Pay(ment). I had to use cash! It was a now-rare moment of deja vu. Nor could I buy anything elsewhere in the High Street as I realised that many stores and cafes had had to close because they couldn’t even open their tills, never mind accept electronic payments. This one small example shows how we are now almost wholly dependent on the internet and electricity in our daily lives. I hate to contemplate how we would survive in a future major crisis.
Fire and dependency
In my lifetime we have gone from a relative simple existence, where everyone could kindle a fire and cook without electricity or gas if needs be, to a total dependence on electricity and the internet. Even our gas boilers won’t work without electricity. Cashless payments only increase that dependency.
However, provided I can have a few pounds, dollars or euros stuffed in my back pocket, I can happily manage in the expanding cashless society. Where I used to withdraw a couple of hundred at a time and it would last me a week or two, I now content myself with two tenners (for emergency) and even then they can stay in my wallet for weeks. Good that they are now plastic or the rot would set in.
About the only airing my wallet gets is when I have a haircut, as I did this morning. My local barber takes only cash. It’s a small irritant. But in general, thanks to detailed reporting, I now have a much smaller “miscellaneous” account in my annual budget. I feel more in control.
I also exist in a semi paperless state — not the rather optimistic totally paperless office that was vaunted 20 years ago, but in a sensible environment were I keep only the most essential documents in paper form. Everything else is scanned and shredded. I intend to write about that change in attitude since I have just bought a new document scanner to replace my 10-year-old stalwart. The improvement is stunning.
All this said, I am aware that the readership profile of Macfilos is pretty mature, judging by many of the comments, and not everyone is open to radical change. I wonder how many readers have yet embraced the paperless home office or the cashless society.