The safety benefits which were announced with the slow recession of cash transactions among financial operations were unfortunately short-lived. With less cash walking around in pockets, theft rates were promised to fall, along with the violence which usually comes with it. But after a short adaptation period, theft followed the money where it went.
With new opportunities come new risks, as always. Recent payment solutions have opened tremendous new possibilities in terms of payments, be they between citizens, or to stores and shops. While today’s adults were born in a world where payments were made mostly in cash, cards and smartphones have led the share of transactions carried out with physical currency to recede, year after year. In 2008, the European Central Bank had already identified the trend, and was publishing its economic studies on the new phenomenon: “The number of cashless payment transactions (by non-monetary financial institutions) in the EU rose by an average of 7% per annum between 2000 and 2007, while the value of these transactions rose by 6% per annum. Moreover, the use of cards and direct debits also increased steadily between 2000 and 2007, an average annual rates of 12% and 8% respectively. Over the same period, the use of credit transfers rose at an average rate of 8% per annum.”
8 years later, the American Federal Reserve published: “U.S. non cash payments, including debit card, credit card, ACH, and check payments, are estimated to have totaled over 144 billion with a value of almost $178 trillion in 2015, up almost 21 billion payments or about $17 trillion since 2012”, indicating the tendency to resort to cashless payment solutions was not only a European trend but worldwide, although Europe is quite advanced in the cashless move. As wallets get slimmer every year, on both sides of the Atlantic, is theft disappearing with the banknotes they targeted?
Cybercrime has followed the cashless trend and is no longer a niche speciality for nerdy geniuses. With a few years of lag, online fraud has quickly built and has now reached levels surpassing any other kind of offense. Following a KPMG Cybercrime report, Jill Treanor reported: “The value of fraud committed in the UK last year topped £1bn for the first time since 2011, prompting a warning about increasing cybercrime and the risk of more large-scale scams as the economy comes under pressure.” And the trend is promised to a bright future, as online and smartphone payments continue mounting. Forensic economist Hitesh Patel predicts: “The figures for 2016 tell us two things. Firstly, that we can expect more of these super frauds as challenging economic circumstances place pressures on businesses and individuals and as technology becomes more sophisticated. Secondly, that this is going to put even more strain on law enforcement agencies who don’t have the resources to investigate every report of fraud that they receive: getting the large, often cross-border and complex frauds to court is extremely time-consuming and resource intensive.”
This comes as somewhat of a surprise: online payments had until now been announced as a more secure way of making purchases than using banknotes or even credit cards. In 2011, tech reporter Dominic Basulto was trusting in this new theft-free world in which smartphones were bringing: “We already live in a cashless society where nobody carries around cash in their wallet. The natural evolution is toward a cardless society as well, where nobody carries around wallets anymore — all the payment information is stored, safe and sound, on your mobile device.” So, have governments changed their minds about cash being dangerous?
Not in the least. If anything, governments keep pushing for cashless societies and economies, still associating cash to crime. Lately, the Indian government lashed out violently at paper currency, blaming it for all the crimes and corruption in the country, and withdrawing its validity overnight, leaving the nation scrambling into a major economic crisis. During the announcement, the prime minister pounded cash: ”High circulation of cash also strengthens the hawala trade which is directly connected to black money and illegal trade in weapons […] To break the grip of corruption and black money, we have decided that the 500 rupee and 1,000 rupee currency notes presently in use will no longer be legal tender from midnight tonight, that is 8th November 2016 […] The 500 and 1,000 rupee notes hoarded by anti-national and anti-social elements will become just worthless pieces of paper.” And this war on cash is in no way limited to India, and the EU is quietly launching slow and steady anti-cash measures.
With the increased computerization of the world, in smartphone sales soaring even in developing countries, the chances are cybercrime will continue to push theft beyond the records levels they are at now. Statista forecasts: “The number of smartphone users is forecast to grow from 2.1 billion in 2016 to around 2.5 billion in 2019, with smartphone penetration rates increasing as well. Just over 36 percent of the world’s population is projected to use a smartphone by 2018, up from about 10 percent in 2011”, promising an even larger playground to fraudsters. It seems, contrary to what was announced a few years ago when cyber-money promised to end theft, keeping one’s cash on oneself is the new way to be safe.