So, let’s assume for a moment that we could overcome the accessibility issue — that we could provide banking services to everyone. This is a big assumption, given that we’ve largely failed to do it up to this point. But, let’s assume we could eliminate the poor’s reliance on cash. Immediately it becomes clear that the biggest winner of all these new banking customers would be the banks themselves. But, let’s make another assumption: we can overcome any moral objection to banks profiting from consumer demand that is mandated by the government. So, for the time being, let’s be satisfied that we’ve eliminated the need for cash without further disenfranchising the poorest populations.
Now we’re left with the crime issue. Ideally, cash would be phased out over a decade or so. There would certainly be missteps, but hypothetically criminals would eventually no longer have access to the near perfect fungibility of cash. Now we find ourselves having to embrace another major assumption: in the absence of cash, criminals will not develop alternate means to conduct their “discrete” business dealings. Furthermore, even if they do develop new means, these would be inferior to cash in terms of “discreteness” and fungibility.
It seems fair to assume that any new currencies used for shady dealings would be electronic, for example like Bitcoin. This presents a whole new slew of complications for law enforcement. Hard cash can be traced and is increasingly hard to counterfeit. Electronic transactions, however, do not necessarily abide by the relatively rigid rules of the analogue world. Digital spaces harbor far more possibilities for “hacking” the system. It seems reasonable to assume that the code for a digital currency could be counterfeited in far more ways than the layout of paper currency. Furthermore, if social media use is any indication, financial transactions in the digital realm have the potential to become increasing anonymous and thus harder to trace (unless we take the authoritarian step of requiring real-name internet registration).
In the end, becoming a cash-less society might have some short-term impact on criminal activity. But, these effects would be hard-fought and by no means guaranteed. In fact, forcing criminals to innovate may make them harder to catch. It is far more likely that eliminating cash will have an immediate and lasting impact on the poor. Moreover, cash is useful for daily, non-criminal exchanges. For example, whenever possible I tip in cash. It’s more personal, and goes directly to the other person, rather than on a circuitous route through banks and management. Even as we continue to embrace the convenience of digital payment methods, we should not undervalue the social importance and impacts of cash.