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Give me your money

Banks are shutting down cash machines and branches. They are forcing you to use their digital payments and digital banking infrastructure. Google wants everyone to access and navigate the broader internet via its privately controlled search portal and financial institutions want everyone to access and navigate the day-to-day economy through their systems.

They want to cut costs in order to boost profits. Branches require staff. Replacing them with standardised self-service apps allows the senior managers of financial institutions to directly control and monitor interactions with customers.

Banks, of course, tell us a different story about why they do this. They are shutting down local branches because “customers are turning to digital”, and they are thus “responding to changing customer preferences”. Nobody asked them to close down their local branches.

There is a feedback loop going on here. In closing down their branches, or withdrawing their cash machines, they make it harder for us to use those services. We are much more likely to “choose” a digital option if the banks deliberately make it harder to choose a non-digital option.

In behavioural economics this is referred to as “nudging”. If a powerful institution wants to make people choose a certain thing, the best strategy is to make it difficult to choose the alternative.

An example of this is self-checkout tills at supermarkets. The underlying agenda is to replace checkout staff with self-service machines to cut costs. But supermarkets have to convince their customers. They thus initially present self-checkout as a convenient alternative. When some people then use that alternative, the supermarket can cite that as evidence of a change in customer behaviour, which they then use to justify a reduction in checkout employees. This in turn makes it more inconvenient to use the checkout staff, which in turn makes customers more likely to use the machines. They slowly wean you off staff, and “nudge” you towards self-service.

Financial institutions, likewise, are trying to nudge us towards a cashless society and digital banking. The true motive is corporate profit. Payments companies such as Visa and Mastercard want to increase the volume of digital payments services they sell, while banks want to cut costs. The nudge requires two parts. First, they must increase the inconvenience of cash, ATMs and branches. Second, they must vigorously promote the alternative. They seek to make people “learn” that they want digital, and then “choose” it.

You can get people to internalise beliefs by addressing them as if they already had those beliefs. Twenty years ago nobody believed that cash was “inconvenient”, but every time you walk into London Underground there are adverts that address you as if you believe cash is inconvenient.

However, a cashless society is not in your interest. It is in the interest of banks and payments companies. Their job is to make you believe that it is in your interest too, and they are succeeding in doing that.

The recent Visa chaos, during which millions of people who have become dependent on digital payment suddenly found themselves stranded when the monopolistic payment network crashed, was a temporary setback.

Digital systems may be “convenient”, but they often come with central points of failure. Cash, on the other hand, does not crash. It does not rely on external data centres, and is not subject to remote control or remote monitoring. The cash system allows for an unmonitored “off the grid” space. This is also the reason why financial institutions and financial technology companies want to get rid of it. Cash transactions are outside the net that such institutions cast to harvest fees and data.

A cashless society brings dangers. People without bank accounts will find themselves further marginalised, disenfranchised from the cash infrastructure that previously supported them. There are also poorly understood psychological implications about cash encouraging self-control while paying by card or a mobile phone can encourage spending. And a cashless society has major surveillance implications.

Despite this, we see an alignment between government and financial institutions. The Treasury recently held a public consultation on cash and digital payments in the new economy. It presented itself as attempting to strike a balance, noting that cash was still important. But years of subtle lobbying by the financial industry have clearly paid off. The call for evidence repeatedly notes the negative elements of cash – associating it with crime and tax evasion – but barely mentions the negative implications of digital payments.

The UK government has chosen to champion the digital financial services industry. This is irresponsible and predictable. We need to stop accepting stories about the cashless society and hyper-digital banking being “natural progress”. We must recognise every cash machine that is shut down as another step in financial institutions’ campaign to nudge you into their digital enclosures.


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