Digital payments are steadily becoming the preferred payment choice for the majority of people. Most online businesses rely on digital payments; for example, many online casinos in the UK accept PayPal, among other digital payment methods, and this also applies to online shops, streaming platforms and even government agencies.
Researchers predict that the UK is going to become cashless by 2043, and while this prediction is applauded by some, others fear that a purely cashless society may lead to deeper class and social divisions.
Today we will explore the issue of increased social and financial inequality posed by the use of digital payments.
Why Does Society Transition to Cashless Payments
Before we delve deeper into the discussion of digital payments and how they can worsen inequality, it’s important to explore why digital payments are preferred and why many advocate for a completely cashless society.
To respond to the first question we posed, digital payments are preferred by many mainly due to the convenience they offer. Nowadays, if you forget your wallet at home, you need not worry, because you can use digital payment services such as Apple Pay to make any type of purchase.
In reality, all payment methods you use can be contained in one device, your mobile phone, and payment services like PayPal and Google Pay also have many built-in security measures, including two-factor authentication and a digitally-created chip hiding your true card chip (talking about Google Pay and Apple Pay) to avoid misuse by third parties in the case of theft.
Additionally, digital payments can be used for both online and in-person transactions, so they have more practical applications than cash.
Many governments promote the transition to a cashless society for security and tax purposes. All digital payments leave a footprint, so the state can find wrongdoers who are trying to evade the law.
The Issue with Digital Payments and Inequality
While there are many advantages to using digital payments, the complete transition to a cashless society can be damaging to the most vulnerable social groups.
To begin with, one of the main issues associated with digital payments is accessibility, or more accurately, the lack thereof. In order to make a digital payment, you need a device able to connect to the Internet and a stable Internet connection.
It goes without saying that not everyone can afford these devices or at least not for every member of their household. Internet access is still a hot topic as many places around the world lack stable Internet connection and/or cannot afford it, which is necessary for digital payments. That issue is present even in wealthy countries like the UK and the US.
There is also the problem of technological literacy which affects low-income groups and the elderly. Not everyone knows how to make digital payments and thus education on the topic should be prioritised before society decides to go completely cashless.
In connection to low-income individuals, it should be noted that some of them are paid in cash for a variety of reasons. Immigrants and refugees are the most affected in this respect. If they lack the proper documents and work permits, they might be unable to open a bank account or use digital payment services. Many such people rely on cash pay slips.
There is also the concern of surveillance. We mentioned that many governments worldwide welcome the transition to cashless society and some already prepare legislative policies to implement it. Politicians claim that this would not only be convenient to consumers, but that it would help the state find wrongdoers who evade taxes, or partake in illegal activities such as drug trafficking.
However, should only wrongdoers be worried?
Many fear that a truly cashless society would fuel the surveillance state and limit individual liberty. Privacy is a big concern and again, the most vulnerable people in society like low-income citizens or immigrants and refugees would be most affected as they tend to use cash more; increased surveillance can lead to more arrests/imprisonments for non-violent financial crimes and/or mass deportations.
What Can be Done
Now that we outlined the main concerns regarding digital payments, what can be done to curb the inequality they create?
For starters, free education on the use of digital payments should be offered to people of all ages to ensure that they can navigate this new digital world. This should be a global initiative to ensure that everyone around the world can easily travel and access job opportunities in any country they desire.
In terms of accessibility, there should also be initiatives to expand Internet access worldwide and governments should invest in such programs. The same applies to the procurement of mobile and computer devices to low-income groups to make sure that everyone is on equal footing; various charities already try to achieve that goal.
As for surveillance, legislators should provide measures to limit the state’s access to sensitive financial data and its handling to avoid misuse. However, nobody can guarantee that even if the government adopts such measures, it would abide to them.
Overall, this article showed how digital payments can worsen social and financial inequality and while we attempted to provide solutions to the posed issues, there is still much to be done to ensure fairness and equality for all.