Sleepwalking on the Money

Inequality, Surveillance and the Cashless Society

Photo credit: Jason Leung

Like all new frontiers touted as necessary and worthwhile, the cashless society is advertised as a supremely convenient way to facilitate financial transactions while avoiding such silly inconveniences as carrying cash and scouting for a money dispenser. A cashless society also facilitates inequality, manifests a pattern of conduct easily monitored by both private companies and State agencies, and repudiates the notion of valid tender. It also subordinates its users to a digital ecosystem that can, at any given moment, fail.

The literature on the problems of a cashless cosmos is only growing, though it has done little to stem what has been decided as inevitable by the policy wonks. While it is exceptionally zealous in this regard, Sweden remains a good example of this push, a country which has done much to remove the infrastructure that enables cash payments over the counter. Businesses have the right to waive the use of cash payments under the principle of “freedom of contract.” Those impelled to use cash are condemned to hermetic “cash bubbles,” isolated from much of the economy.

Payment systems operate on a logic different from such financial areas as asset management or investment. The authors of a most useful article in the Social-Economic Review from April 2025 make the point that cash is fundamentally inclusive, as it can be used by all under the same conditions. The infrastructure of the cashless society is distinctly not inclusive, being “typically provided by profit-seeking private players, who pass on the costs to merchants and consumers under varying conditions.” It is also an industry that has seen the replacement of public infrastructure with that of private providers. “Crucially, this substitution has significant consequences for social inequality,” benefiting those on higher incomes who can avail themselves of “easy and frictionless payments and access to short-term credit,” while those with lower incomes find themselves “increasingly dependent on financial services for which they pay disproportionately high fees.” Add to this the problems of digital literacy, poor internet connectivity in rural communities and the continued existence of the unbanked, and the picture gets bleaker.

A cashless society is also, by definition, hostile to privacy and a great handmaiden to the surveillance state. Payments become traceable; transactions leave patterns of data. The far-sighted computing technology pioneer, Paul Armer, was one who was already anticipating the issues of using an electronic funds transfer system (EFTS) in 1975 as a fellow of the Center for Advanced Study in Behavioral Sciences at Stanford University. In testimony given in June that year at hearings held jointly by the Subcommittee on Constitutional Rights of the US Senate Judiciary Committee and the Subcommittee on Science and Technology of the Senate Committee on Commerce, the issue is sharply illuminated. “The dimensions of the final form of EFTS which are of importance to its potential surveillance capability are things such as the percentage of transactions recorded; the degree of centralization of the data; and the speed of information in the system.”

Armer already warned that those wanting privacy but still using cash from the EPT system would be compromised in doing so, making that transaction “stand out like a sore thumb.” He also reminded Congress that a group of “experts in computers, communication, and surveillance” were given the task in 1971 of pretending to advise the chief of the Soviet Union’s KGB secret service on “designing a system for the surveillance of all citizens and visitors within the boundaries of the USSR.” The system was to be neither obtrusive nor obvious. The decision by the group was unequivocal: “build an EFTS system.” Such a surveillance system would operate unobtrusively while handling “all the financial accounting and provide the statistics crucial for a centrally planned economy.”

There are signs of resistance against the cult of the cashless. Laws are being passed in countries making some businesses accept cash as legal tender. Concerns about crippling cyberattacks on digital infrastructure, the problems posed by power outages, and the absence of a cash option, have started to bite. Last year, the Swedish Ministry of Finance’s Cash Inquiry proposed an obligation for certain vendors and businesses to accept cash, notably those proffering essential goods and charging fees under public law. This change of heart from the cashless dogmatism that, till then, had been all conquering, had the support of the Governor of Sweden’s Riksbank, Erik Thedéen. “People should always be able to pay for food, healthcare and medicines both digitally and with cash. The increasingly turbulent global situation, increased cyber attacks and also the major power outages in southern Europe show the importance of being able to make payments even when the internet is down.”

Spending habits using cash in such economies as the United States also remains stable. The Federal Reserve’s 2025 Diary of Consumer Payment Choice found that over 90% of US consumers intend resorting to cash either as a means of payment or store of value for the foreseeable future, while almost 80% held cash in their pockets, purses or wallets for least one day per month for each Diary survey conducted since 2018.

The recent findings from a survey of 5,570 residents across the US by the Siena Research Institute in partnership with the Payment Choice Coalition (PCC) are also instructive. Over 85% of Americans favour laws making it mandatory for businesses to accept cash, while 84% oppose the notion of a fully cashless society. Cash may not be the mighty sovereign it once was but it still holds court with stubborn appeal.