(Photo: Mint)
(Photo: Mint)

Opinion | 'Cashless' and the politics of innovation

There is a huge machinery to make us believe that ‘cashless-ness’ is in our interest

The term interpellation was introduced by Louis Althusser to explain the way in which ideas get into our heads and have an effect on our lives, so much so we believe they are our own. Althusser sees interpellation as a mediator between systems of power and individuals. He argued that the process of interpellation works best when it is invisible, when individuals accept cultural notions as though they are obvious, or natural, when it seems natural.

Such interpellation could not be more relevant in our relationship with cash. Just about ten years back, none thought that cash is inconvenient, but now there is a growing mindset that it is.

“… ‘Faceless, Paperless, Cashless’ is one of the professed roles of Digital India," says the official website on ‘cashless’ economy—an instance of the constant nudge to go cashless. Just to fathom the shift in recent years—UPI and digital wallets annually manage 26 trillion, more than two times the currency in circulation.

This shift is a global phenomenon. G-10 countries will stop using cash by 2035, said a recent Bloomberg survey. There is a huge machinery to reverse engineer a belief that cash is inconvenient, and ‘cashless-ness’ is in our interest. But whose interest?

Big corporations, ranging from tech giants such as Google and Facebook to fintech behemoths such as Visa and Mastercard, increase the volume of digital payments services they sell and have mobilized massive propaganda to declare a war on cash. Companies big and small—GooglePay and Paytm—are using baits such as cashbacks and there are taglines such as ‘India Ka Naya Cash’. Just as Google wants all internet access to go through its portal, it appears fintech corporations want people to access and navigate broader economic decisions via their privately controlled platforms. “Cashlessness" has spawned upon a startup economy in itself. Outfits such as ‘Challenger’ and ‘Neo’ banks are giving a whole new meaning to digitisation of financial services, leveraging advancements of artificial technology and machine learning and further catapulting us to a ‘cashless economy.’

There is no denying the benefits to go cashless—less violent robberies, thwarting terror funding, avoiding tax evasion etc. Technology exhilarates but we must never lose sight of the human. And there is real human cost to cash being suddenly deleted from our lives.

According to a Guardian report, last year, there was a chaos in the UK in which millions found themselves stranded when the Visa payment network crashed. The event highlighted that while digital systems may be “convenient", they often come with central points of failure. Cash, however, does not crash or rely on external data centres. Second, studies show that while cash can encourage self-control, paying by card or a mobile phone can encourage spending. Further, the report citing American Psychological Association said that when paying with cash, “there is a tight coupling of the consumption and the payment, thereby accentuating the pain of paying. In the case of credit card purchases, actual parting of the money occurs after the purchase decision, thereby dulling the pain of paying." Third, digital proponents often argue that digitization can reduce violent robberies. True – our digital cash is less exposed to threat from the run of the mill burglar. But a more sophisticated breed of criminals have emerged – some of whom can bring down the entire financial system, keep you hostage without a weapon and siphon off your entire savings, sitting in a different continent. In 2017, cyber-crimes accounted for Rs. 700 crores of fraud in India.

While the push towards ‘cashless society’ comes on the backdrop of a number of socio-economic benefits, it can also allow a greater control to monitor and manipulate our personal choices. Economist Kenneth Rogoff in his book The Curse of Cash hypothesizes one such possible manipulation. In the absence of cash, central banks could be able to implement low/negative interest rates forcing people to spend more at times of economic downturn, shaping the when and how we should use our wealth.

Also, how well prepared are we to go cashless? Many economists believe that most countries are ill-prepared to go cashless and once we do achieve that, to bring back cash if the experiment fails will be hard. While the intent is to deepen financial inclusion, there exists another view that people without bank accounts can find themselves further marginalized, disenfranchised from the cash infrastructure that previously supported them. More critically, Rogoff writes, “it is essential that poor and unbanked individuals have access to free basic debit accounts… and possibly also basic smartphones."

Brett Scott, a campaigner for cash, and the author of The Heretic’s Guide to Global Finance: Hacking the Future of Money, whom I met during my recent fellowship in London, exposed me to this line of thinking around politics of innovation. He writes, “the digital payments industry tries to cast cash as the horse-drawn carriage of payments; but cash is the bicycle, more flexible, resilient and convenient in certain settings, especially informal ones." While we have the cars (digital payments) and very soon flying cars (digital currency), it is important to strike a balance. Cars are good, but in times of contingencies, a good old bicycle will come handy. Are startups listening?

Shrija Agrawal is Mint’s associate editor. Due Diligence will cover issues in India’s venture capital, private equity, deals and startups space.

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