Cashless, but at What Cost?

In 2023, data breaches affected over 343 million victims, more than the entire population of the United States.1 Every single one of these victims had one thing in common — their money existed not in their hands, but in the government's. We were never asked if we wanted a cashless society. We were simply handed one. The card replaced the coin, UPI replaced the receipt, and the smartphone replaced the wallet. And with each replacement, we placed our money and our freedom into the hands of governments and corporations.

The world tells us that change is inevitable. That cash is outdated and inefficient. Governments celebrate it, corporations profit from it, and citizens, excited at the prospect of payment with a tap and a beep, largely accept it. But ease should not replace freedom. John Locke once said that the money earned through one's own labour is an extension of personal liberty itself; the state has no right to surveil it without permission.2 A cashless society does not just digitise money, it surveils it, tracks it and traces it without our consent. It hands governments a tool of control that no authoritarian regime in history has ever possessed, excludes the most vulnerable members of society from economic life entirely, and builds a financial infrastructure so fragile that a single software update can bring it to its knees. We should fear a cashless society not because progress is dangerous, but because progress at the cost of personal freedom is threatening.

The Question of Legitimacy

Before asking whether a cashless society is practical, we must first ask if it is legitimate. John Locke argued that governments are not here to grant rights, but to protect a citizen's rights.2 Property, in Locke's view, exists before the state itself. This raises a question. If money is an extension of property, and if property is an extension of freedom and liberty, then can property truly remain private when every transaction is observable and traceable? This essay argues that it cannot.

The Financial Panopticon

In an era where every swipe of a card leaves behind a digital footprint, a cashless society does not modernise our economy and way of life; it simply destroys financial privacy and hands governments and corporations a surveillance tool. George Orwell imagined such a world in 1984, where every action is recorded, where every transaction is noted, and every citizen no longer has the right to privacy.3 We dismissed the scenario as fiction, unaware that this is where our future is headed. Michel Foucault, in Discipline and Punish (1975), gave this a name — the Panopticon, a system where people modify their actions and behaviour simply because they know they could be watched.4 A cashless society is the financial Panopticon come to life. The idea that every action is permanently recorded is enough to completely alter the way a person lives.

Evidence of this already exists in the way governments operate. China's Social Credit System regulates the behaviour and actions of each citizen by tracking and monitoring their financial, social and digital activity.5 It links digital behaviour to citizen scores. If a person's citizen score drops, they may be banned from purchasing flight tickets, attending private schools, blocked from purchasing luxurious items and may be subject to slower internet speeds. This is the present reality of 1.4 billion people. In 2022, the Canadian government froze the bank accounts of truck protestors, without any trial or any notice.6 They were not criminals or terrorists, but simply citizens exercising their rights. The most shocking of all is that Agustin Carstens, the head of the Bank of International Settlements, publicly admitted that a central bank digital currency would give governments “absolute control over the rules and regulations of money” and the “technology to enforce it”.7

The impact of this monitoring extends beyond state control. For victims of domestic violence, cash is not just a convenience; it is a lifeline. It allows victims to secretly accumulate money without their abuser's knowledge. Every digital purchase records time, location and transaction detail, one which can be accessed by not just governments and corporations, but also by abusers, stalkers and anyone with sufficient access. John Locke, in the Second Treatise of Government (1689), established through his Labour Theory of Property that the money earned through one's own labour is an extension of personal liberty itself, and the state has no right to surveil it without permission.2 By Locke's own definition, a government which tracks spending without consent crosses from governance to tyranny. A cashless society tracks people by tracking their spending. The kind of financial surveillance that Locke warned against is becoming increasingly possible.

Exclusion of the Most Vulnerable

A cashless society excludes the weaker sections of the population. For the poor, the marginalised and the elderly, a cashless society is not progress; it is exclusion. The World Bank's Global Findex Report (2021) documented that 1.4 billion adults worldwide remain unbanked.8 In India itself, despite UPI's expansion, the Reserve Bank of India confirmed that over 190 million Indians do not have a bank account.9 In the United States, 5.6 million households were completely unbanked in 2023, with a further 14.2% underbanked.10 Check-cashing services, the only option available for unbanked people to access money, charge between 1% to 5% of a cheque's value to access money already earned.11 These people are not just excluded from cashless societies; they are charged for the privilege of being excluded from it.

In the UK, 2.2 million people are entirely dependent on cash, and 1.3 million hold no active bank account, in a country that could be functionally cashless by 2026.12 The elderly struggle with interfaces designed by and for the youth. For some elderly people, even buying bread or medicine can become humiliating when they cannot navigate digital payment systems. Refugees and undocumented immigrants, among the most vulnerable people in the world, cannot open or access bank accounts and are hence excluded from financial and economic life entirely, unable to sell or buy. These are not hypothetical victims; they are real people being pushed to the margins.

John Rawls, in A Theory of Justice (1971), gave us the most powerful test to determine if a system is just.13 He put forth the concept of the Difference Principle, which states that a system is only legitimate if it benefits the least advantaged in society. It calls for us to design systems behind a Veil of Ignorance, stripped of our knowledge of age, social class and financial status. From behind this veil, no rational person would ever design a system which requires a smartphone to buy food, which excludes the most vulnerable of our society, in which losing access to your phone means losing access to financial freedom. Rawls would never call a cashless society progress; he would call it a system designed for the comfortable, by the comfortable.

A Fragile Infrastructure

When an entire economy runs on digital infrastructure, it does not merely become dependent on technology; it becomes a hostage to it. In July 2024, a single faulty software update from the cybersecurity firm CrowdStrike crashed banks, airlines and hospitals simultaneously across 8.5 million devices worldwide.14 It was not a strike or a cybersecurity war. It was a single update. In a cashless economic system, an outage is not an inconvenience; it is a shutdown.

This is what Charles Perrow warned of in Normal Accidents (1984) through his Normal Accident Theory.15 When we build a system so complex that everything is interconnected, accidents do not just happen; they are woven into the system. One incorrect step and all the systems come crashing down. Nassim Taleb, in The Black Swan (2007), deepened this warning; he said that systems designed for the highest efficiency in normal conditions are most catastrophically fragile when high-impact events strike.16

The evidence is already out there in the real world. Cybersecurity Ventures documented that cybercrime costs the economy $8 trillion annually.17 In 2016, $81 million was stolen from the Bangladesh Bank through the SWIFT international banking network, not by breaking a bank or a vault but simply by exploiting a digital system.18 Most strikingly, Sweden has reversed course. The Riksbank, the central bank of Sweden, now actively advises Swedish citizens to keep physical cash as an emergency backup, thus acknowledging the fragility of digital financial systems and the state's inability to prevent such an event from happening.19

What the CrowdStrike outage, the Bangladesh Bank heist and Sweden's reversal have in common is that when a system fails, it fails completely. Unlike a stolen wallet or a broken ATM, these outages have a global impact. This is precisely what makes a cashless economy so dangerous — it takes the ordinary fragility of technology and scales it to an entire nation's financial life. Sweden, the most cashless society in the world, has admitted that going cashless has exposed citizens in ways it cannot fix.19 We should fear a cashless society not because technology fails occasionally, but because when it fails in a world with no cash left, there is no fallback, no safety net, and no opt-out. Every citizen, rich or poor, becomes vulnerable at once. So the greatest danger of a cashless society is not that machines may fail, but that when they do, human beings fail with them.

The Counter-Argument

Supporters argue that cashless societies are safer and more transparent. The key argument is the direct reduction in crime. Physical bills are anonymous, untraceable and portable, making them the preferred medium for tax evasion, money laundering, corruption and theft. By digitising money, governments and corporations choke the financial lifeline of launderers and terrorist organisations. Furthermore, digitising money has also helped in seamless transactions. Payments which earlier required troublesome trips to the bank and physical counting of money are now possible with the click of a button. Sweden, the pioneer of this transition, demonstrates how convenient and efficient a cashless society can be. The widespread use of digital banking systems such as Swish has reduced reliance on cash, made transactions faster and more traceable, and simplified everyday commerce. From this perspective, going cashless is the ultimate tool for public safety, convenience, and civic accountability.

While digital systems reduce street theft and streamline daily commerce, efficiency alone cannot justify a system that fundamentally compromises human rights. Cashless societies do not eliminate crime; they often shift it from physical theft to cybercrime, fraud and digital financial abuse. Moreover, compromising the user's privacy, excluding the vulnerable sections of society and centralising financial power simply for speed and tax compliance is not justified.

Conclusion

The debate over a cashless society is not a dispute over technology, but a fundamental question of values. Cashless systems have revolutionised trade, payments and tax compliance, and this is the triumph of modern technology. However, history and philosophy tell us that a system which requires the total surrender of privacy is inherently flawed. A truly just society cannot be built on an infrastructure that locks out the unbanked, leaves domestic abuse victims trackable, and risks total paralysis from a single software glitch. Even Sweden has recognised this peril by urging citizens and institutions to preserve access to cash as part of national resilience.19

Progress should expand human capabilities and rights, not restrict them. To safeguard citizens' rights, physical cash should not be treated as an outdated instrument, but as an essential tool for protecting individual freedom. We need to preserve a mixed economy of finance — digital payments for those who want them, while physical cash remains available as an option. Only if countries adopt this can our economy remain a tool for human flourishing and not a mechanism of absolute control.

Bibliography

1. Identity Theft Resource Center. 2023 Annual Data Breach Report. ITRC, 25 Jan. 2024, www.idtheftcenter.org/post/2023-annual-data-breach-report-reveals-record-number-of-compromises-72-percent-increase-over-previous-high/.

2. Locke, John. Second Treatise of Government. 1689, Chapter V: “Of Property.” www.gutenberg.org/ebooks/7370.

3. Orwell, George. Nineteen Eighty-Four. Secker & Warburg, 1949.

4. Foucault, Michel. Discipline and Punish: The Birth of the Prison. Translated by Alan Sheridan, Pantheon Books, 1977. Original French: Surveiller et Punir, Gallimard, 1975.

5. Meissner, Mirjam. China's Social Credit System: A Big-Data Enabled Approach to Market Regulation with Broad Implications for Doing Business in China. MERICS China Monitor, Nr. 39, Mercator Institute for China Studies, 24 May 2017, merics.org/en/report/chinas-social-credit-system.

6. “Banks Are Moving to Freeze Accounts Linked to Convoy Protests.” CBC News, 16–17 Feb. 2022. See also: “Banks Have Begun Freezing Accounts Linked to Trucker Protest.” Newsweek, 18 Feb. 2022.

7. Carstens, Agustín. Remarks at Cross-Border Payments: A Vision for the Future. IMF Annual Meetings Seminar, International Monetary Fund, 19 Oct. 2020, www.imf.org/en/videos/view/6202707790001.

8. Demirgüç-Kunt, Asli, et al. The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19. World Bank Group, 2022, www.worldbank.org/en/publication/globalfindex.

9. World Bank. Global Findex Database 2017. World Bank Group, 2018, www.worldbank.org/en/publication/globalfindex.

10. Federal Deposit Insurance Corporation. 2023 National Survey of Unbanked and Underbanked Households. FDIC, Nov. 2024, www.fdic.gov/household-survey.

11. Consumer Financial Protection Bureau. Reports and data on check-cashing fees. CFPB, www.consumerfinance.gov/data-research/research-reports/.

12. House of Commons Treasury Committee. Consumers' Access to Financial Services. HC 1642, 13 May 2019. See also: Financial Conduct Authority. Financial Lives Survey 2020. FCA, 2020.

13. Rawls, John. A Theory of Justice. Harvard University Press, 1971.

14. Microsoft. “Helping Our Customers through the CrowdStrike Outage.” Microsoft On the Issues, 20 Jul. 2024. See also: IBM Think. “Recent CrowdStrike Outage: What You Should Know.” IBM, 2024.

15. Perrow, Charles. Normal Accidents: Living with High-Risk Technologies. Basic Books, 1984.

16. Taleb, Nassim Nicholas. The Black Swan: The Impact of the Highly Improbable. Random House, 2007.

17. Cybersecurity Ventures. 2022 Official Cybercrime Report. Sponsored by eSentire, Dec. 2022, cybersecurityventures.com/cybercrime-to-cost-the-world-8-trillion-annually-in-2023/.

18. BAE Systems Applied Intelligence. “Two Bytes to $951M.” BAE Systems, Apr. 2016. Widely reported by Reuters, BBC and Fortune, Feb.–May 2016.

19. Sveriges Riksbank. “New Recommendations for Public Payment Preparedness.” Press Release, 4 Mar. 2026, www.riksbank.se/en-gb/press-and-published/notices-and-press-releases/press-releases/2026/new-recommendations-for-public-payment-preparedness/.