The War on Cash is on. The opening salvos were launched months ago, and now we are getting into the meat of the campaign which is being driven by central banks, governments, and by industry. They all want to kill cash.
The central banks hate cash particularly because it limits their power. There is real concern that in the event another significant recession rolls around central banks will have a hard time pushing down interest rates, which would likely go negative, if people have access to cash. Instead of putting cash in the bank, where people would have to pay for warehousing (because of negative rates), or just spending the cash to get rid of it (which is what central banks want), people might (likely) just start saving physical cash outside of the traditional banking system. Cash under the mattress would in a negative interest rate environment create a relative yield to non-physical “cash.” This really sticks in the Fed’s craw.
Governments don’t like cash for all the reasons the central banks don’t (the central banks are essentially parts of government), and also because cash is impossible to track. Millions of cash transactions happen that aren’t taxed. That is revenue left off the table in the eyes of the bureaucrats. Just think about how much money could be extracted if every single transaction could be tracked.
Of course the government dresses its hatred of cash up in “anti-crime” garb, but it’s really all about revenue streams.
Some in industry, and Apple is one company, also see the elimination of cash as a money maker. If for instance every iPhone user were to do all their business with Apple Pay, and Apple currently gets a .15% fee on every transaction done through Apple Pay, consider what that would mean for the company. It would take Apple to another level. It might be even be more important than the Apple Car efforts currently in the works. (It almost certainly would be more important.)
Cash isn’t always useful. Sometimes it’s a pain. But it’s a nice option to have. The push to kill it off would be a net negative (in multiple ways) for most people but a real boon to the powers that be. The powers that be have enough power.
Who thought using cash would ever be a political statement?
Apple CEO Tim Cook has an idea for the future—eliminating cash.
Apple Pay could be the “catalyst” that ultimately gets the world to switch from cash to digital payments, he told the Japanese news service Nikkei in an interview published on Monday,
“We would like to be a catalyst for taking cash out of the system,” Cook said. “We don’t think the consumer particularly likes cash.”
Apple AAPL 0.38% released Apple Pay, a digital payment service, in 2014. Users who store their credit cards, debit cards, and gift cards with the service can pay at checkout in stores by waving their iPhones near a terminal.