A cashless society — dream or reality? - video Dailymotion

DW (English)

Many governments are planning to abolish cash – including India. But what will the consequences be? Would digital money also be able to survive global crises? And what about the security of personal data?

Transcript

00:00Digital payments have gone global. In many countries, cash is slowly on its way out.

00:06Various governments are developing plans to further limit cash payments, like India.

00:12But what are the implications? Could digital money withstand a global crisis?

00:17And what about data protection and privacy concerns?

00:21When credit cards were first introduced, transactions were recorded using a manual credit card imprinter.

00:32One carbon copy went to the customer, one to the merchant, and the third went to the credit card company.

00:38A few days later, an electronic credit was issued, and a change appeared in the customer's account.

00:46In the 1970s, credit cards took off as a convenient alternative to carrying around cash.

01:00The use of cash is continuing to decline in India as well.

01:04In November 2016, the government announced a program to tackle money laundering.

01:17As of now, all the old 500 and 1000 rupee banknotes are merely pieces of paper.

01:27The move took some 80% of the country's banknotes out of circulation.

01:31Millions lined up at banks to exchange the banned notes.

01:35But many hundreds of millions of Indians had no access to a bank account.

01:41I can't get any money. The government is killing us with this program.

01:46I haven't slept for three days. You can't imagine the pressure I'm under.

01:52The government initiative was intended to tackle corruption,

01:56but it also pushed many Indians to begin using credit cards and mobile payment apps.

02:02In many other countries, like the Netherlands, stores are no longer accepting cash.

02:08They've gone to cards only.

02:11In Sweden, too, many businesses no longer accept cash payments.

02:16In India, about half of the population do still use cash.

02:20But it's now among the top countries in the world when it comes to mobile-based real-time payments.

02:26With these systems, the payment reaches the merchant's account instantly.

02:32India is the global leader in real-time transactions, which makes up some 81% of payments.

02:38Next is Thailand, at 64%.

02:42In Hong Kong, the figure is about 25%,

02:45followed by South Korea and Singapore and Britain at 11.7%.

02:52Banks and credit card companies charge high fees for digital payments,

02:56so for them it's a good business.

02:59Worldwide, the amount of cash in circulation is declining.

03:03Most governments are now working on plans for a digital currency.

03:08Like here at the European Central Bank, which is laying the foundations for a possible digital euro.

03:14Does that mean cash will be abolished?

03:18The idea is to provide a digital complement to cash.

03:22So the ECB will provide the citizens with both the traditional banknotes and coins that you are familiar with,

03:31the material ones, and with a new means of payment, the digital euro.

03:36But they will be complemented, not substituted.

03:41Would digital currencies be able to weather a crisis, like a global computing outage?

03:46That's one reason why many economists say cash shouldn't be abolished.

03:53So you can see that if digital or biometric becomes the only source of doing your transactions,

04:02then it is susceptible to these kinds of vulnerabilities that you just talked about,

04:08because then it becomes a single point of failure.

04:11And there are other risks.

04:13Even today, social media companies are storing every post their users make.

04:17They're collecting photos and subjecting them to AI analysis.

04:21Then there's the financial data being scooped up through digital payments.

04:25Digital currencies would make data privacy even more difficult.

04:29India has passed data protection legislation,

04:32but critics say the laws do more to benefit corporations than to protect citizens.

04:38So it's a very bizarre kind of digital data protection regimen that we have now,

04:44where the concern is not with the vulnerabilities that I expose myself to

04:50when I use digital apps or digital payments,

04:54but rather to allow and to make it legal for entities to have access to my data

05:01and to use it in particular kinds of ways.

05:05The digital currency revolution is well underway.

05:09But so far there are no international standards that would reliably safeguard our privacy.

05:15So in this respect, cash is still king.

A cashless society — dream or reality?

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