Tuesday, April 16, 2024

Cashless is King? Time to Think Again

Nations all across the globe have been making moves to migrate to a cashless world over the years. Currently, 98 percent of Norway’s population owns a debit card, while 95 percent use mobile payment apps. Almost the exact same statistics can be applied to Sweden as well, with 98 percent of its population owning a debit card. Other countries are making similar progress, effectively raising the question of whether cash is still relevant or not. These nations include China, South Korea, the United Kingdom, Canada, the Netherlands, Australia, Finland, and the list goes on.

With such rapid developments in mind, International Business Review explores the concerns of cashless payment options and their viability. What can people do if they fall victim to identity theft or data breaches?

It Sounds Insane, Doesn’t It?

The effort to make cash redundant will take a lot of convincing for a large group of people, especially elderly folk. The uncertainty of making cashless payments understandably turns heads from choosing it as a be-all-end-all method for transactions. Making online purchases and blindly trusting e-commerce websites with sensitive data can be risky. The sharing of personal information being a prerequisite before making any sort of transactions online provides a looming threat of unscrupulous use of said information. The entire order of business that concerns online payments sounds riddled with privacy risks. Yet, why are so many countries making this change?

How Does It Actually Work?

The convenience that it gives certainly makes going cashless a no-brainer decision. Cashless payments are mainly done through credit or debit cards, e-wallets, bank transfers, or mobile payment apps. In-person cashless transactions like paying the bill at a restaurant or checking out at the supermarket involve a point-of-sale (POS) station and either of the methods mentioned previously.

Using a mobile app, like Apple Pay or Google Pay, to execute purchases involves a system called tokenisation. This system generates a random ID token in place of the app user’s private account number (PAN) to be saved into the database of the establishment with the POS. This token ensures that a random value is being recorded rather than personal information, making the process more secure because the token itself holds no implicative meaning that other people could use for their own gain.

Credit or debit cards utilise near-field communication (NFC) to accept and make payments. This technology entails using the EMV chip embedded in a credit card which sends a wireless signal to NFC-enabled receivers to complete purchases. This method of payment makes the process secure by creating a temporary transaction code to be keyed in when a card is scanned at a POS station. Mobile payment apps also use NFC technology.

Despite all of these features, cashless or contactless payment methods aren’t completely exempt from safety issues. Breaches in security are occurrences that can still happen. In fact, it’s more prevalent than one would think.

Even Massive Corporations Aren’t Safe

Digital platforms that handle personal information are primary targets for cyber-related attacks because of the sheer amount of sensitive information under their management.

Western Digital, a Californian data storage provider and computer drive manufacturer, recently experienced a breach in its network which led to a temporary stoppage of its MyCloud information storage service. Facebook, on the other hand, had a massive personal information leak of over 500 million of its users. The individual behind such a feat was merely a single hacker. If large corporations like Facebook are also vulnerable to security risks, it shouldn’t surprise anyone when 2.1 million credit card details were exposed at once on the dark web.

SOCRadar, a cyber-security company, discovered a forum on the forbidden recesses of the internet that had a post leaking the credentials of millions of credit cards. Posted by an account called BidenCash, SOCRadar stated that their investigation into the post revealed that credit card information originating from Turkey, France, USA, Mexico, Canada, Italy, UK, and other countries was present. The cyber-security company said the leak included information such as credit card numbers, CVV codes, expiration dates, names, email addresses, physical addresses, and phone numbers. In a society where all of one’s money is contained in a digital space, such a breach would be nothing short of devastating.

There’s More Than Meets the Eye

At a glance, shifting to a fully cash-free lifestyle is a good change because the benefits it brings are talked about far more than its disadvantages. People cling to positivity very quickly and strongly, but many don’t realise the more sinister and some would even say dystopian possibilities that going cashless entails.

Large corporations being in control of a person’s entire life’s savings should automatically bring up red flags. When people stop to think how much control they are giving away to these massive companies by making such a move, they’d begin to see that planting at least one foot in the physical realm is probably the safest monetary decision of their lives.

To paint a better picture of this potential dystopia, China makes it very easy for anyone to rethink the decision of eliminating physical money. The nation with the largest population in the world had major protests in one of its provinces, Henan, in late April last year. The heart of the issue was that several regional banks halted withdrawals from their services, effectively freezing CNY10 billion worth of its citizen’s earnings across at least three local banks. Banking app accounts were locked under the guise of a “system update”, but what it really meant was that over a million people lost access to almost all their money — at least until some of them protested.

Protesting in front of the People’s Bank of China became the only choice that the victims could resort to as a last-ditch effort for justice. Unfortunately, China’s social credit system and questionable authorities’ decision-making led to a swift and violent stoppage of protests. It wasn’t all for naught though, as the citizens of Henan with deposits of CNY50,000 and below would be repaid five days after the protest, according to the province’s banking regulator, while repayment for other citizens will be made separately.

Going back to China’s social credit system, it essentially functions to box citizens within an arbitrary set of behavioural standards. Failure to maintain an “upstanding attitude” in society leads to penalties such as being banned from renting or purchasing property, taking out loans, or even buying plane tickets. A parallel can be made with the abrupt freezing of bank accounts by the Henan authorities. Large companies have the power to enforce rules and employ tactics that shield them from any repercussions. If people face no justice when banks are taking captive their money, the only other option is to make sure that one’s money is in one’s own hands.

Is Cashless Truly the Way?

The truth of the matter is this: storing all of one’s earnings in a digital space — that is fully controlled by a huge company or bank — is a major detriment. Yet, it is a very real change that is actively happening all across the globe at an alarming rate. Not only are they susceptible to hacker attacks, but the corporations themselves are a threat.

There’s no better assurance for the safety of one’s money than physically looking at it in one’s wallet or holding it in one’s hand. People’s minds can be more at ease when their valuables are tangible because it’s within their control to keep them safe, and having a sense of control over one’s life undoubtedly gives peace of mind. If more people were aware of the aforementioned concerns, a fully cashless society will definitely be held back for a few more years at least.

A congregation of Henan protestors in front of the People’s Bank of China became the end result of the authorities’ aggressive methods to justify a suspicious “system update”. It’s important for nations and its netizens to take caution when approaching the cashless agenda so that incidents like this can be avoided.

The amount of time saved when foregoing actions like withdrawing money from the bank or ATM lets people be more productive with their days. On the surface, going cashless is a great idea that needs no second thought. Upon further inspection, it’s a lifestyle that requires major shifts in thinking and some degree of adapting for a portion of the population. The enticing fruit of convenience has its drawbacks which, if overlooked, can lead to literal life-changing disasters.

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