Germans rallied behind their cash; we must take note

Personally, I try to go cashless as far as possible. From paying for coffee using my card to net banking to recharge my prepaid phones, and using m-pesa as much as I can, I must be a model ‘digital’ citizen. It’s a different matter that my data (digital footprint) is strewn all over the internet, freely available for anyone to use/misuse/abuse if they wanted (oops!).

Yet, I get the resistance to being ‘forced’ to go cashless. My parents for example, ardently prefer cash. They are highly educated and have no black money hoarded away (to my knowledge, at least!). But they are not tech savvy, and in India at least, that is not contradictory in the least.

So when Modi and co try to sell us this ‘cashless utopia’, we need to stop and ask: “but why?”, just like the Germans do. In Germany, 79% of payments are made in cash, and they have a good reason for they prefer their payments in cash:

In addition to the nation’s economic trauma between the two world wars, Germans who lived under the communist surveillance state in East Germany until reunification in 1989 tended to use only cash so they would leave as few traces of their financial dealings as possible. Recent revelations of controversies over snooping by the National Security Agency and domestic spy scandals have fueled distrust of keeping electronic financial records.

Those concerns explain why Germany’s privacy laws are among the strictest in the world.

“The main reason people give for preferring cash is anonymity compared to card payments. People are just more cautious in Germany,” said Helmut Hammes, head of the German Central Bank’s cash department.

Savelsberg said he doesn’t trust credit card companies or other middlemen to keep his transactions private. “Germans are much more private and cautious of technology,” he said.

In addition to the above, there is also apparently an aversion to debt.

But yes, some of these reasons are peculiar to Germans, and more and more people are beginning to opt for cashless modes of payment. But for regular (and mostly small transactions) this matters in India. And we certainly should not be going cashless to satisfy someone’s whim. Foremost, is the question of choice. We cannot claim to be a modern society if we are literally coercing people to adopt cashless methods. Then there is the issue of privacy. On one hand, you have Germans demanding to reserve their right to use cash in order to protect their privacy, but on the other, countries like say, Sweden are genuinely a cashless utopia. But I don’t have to tell you the differences between Sweden and a poor country like India in terms of physical, financial and digital infrastructure, as well as the legal framework, that enable cashless transactions, and protect consumers.

It should be obvious that we cannot have one without the other. In India, security of online transactions remains weak. Our debit cards get hacked. Mobile wallets misbehave with little (or long-drawn) grievance redressal processes. And all this, only in places that have internet coverage in the first place. So technological advances are great, and they matter. But they are no substitute for either basic human capability, or intent. Digital payment apps for instance, require a fair degree of financial and tech literacy. Not just to operate those apps, but to be able to decide when to use the app and when not to. For instance, when I make payments and have to choose between using my credit card, debit card, and a mobile wallet, I need to know the costs associated with each to identify the appropriate one to use. I believe I am not being patronising when I say that a large section of our population lack the skills, at the moment, to make those decisions. Also, the information isn’t all there in a clear and digestible format either.

Then there is the question of state capability and intent. That’s where the legal framework comes in. States can electronically transmit welfare payments to people’s bank accounts, and in the absence of robust legal protection, can as easily deny them their rights. But we did all switch to Electronic Voting Machines, didn’t we? Yes, we did, and for that reason, I am not beginning this with a blanket distrust of the state (as compelling an argument that might be, with state power currently in the hands of the the insidious RSS and their cronies). But that does not mean we walk into this without a watertight regulatory framework.

Then there is convenience – which links back to the issue of ‘choice’. Those who find it convenient, should be free to go cashless. And those who don’t, should be free to remain as they are. The same holds for privacy. Sounds simple enough to me!


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