Cash or cashless?

My wallet never contains any cash and I almost never use an automated teller machine (ATM) in Norway.

My life revolves around paying for services using mobile apps for bus and train tickets and parking and debit cards for groceries, fuel and all other household purchases.

Even my children receive their weekly pocket money through their mobile phones. And as we prepare for the festive season, most gifts are being ordered and paid for electronically. But in Malawi, as in large parts of the world, cash is still king.

I returned to Malawi last week after a prolonged absence to teach civil servants enrolled for the Masters Programme in Public Administration and Management jointly offered by Chancellor College and the University of Oslo.

One of the first things I did upon arrival in Blantyre, as on numerous prior visits, was to visit an ATM machine. While there is definitely an increase in digital payments at restaurants, hotels and shopping malls, cash, for good reason, remains the preferred mode of payment in Malawi. And one indication of the popularity of cash is the perennial queue at most ATMs in Blantyre at all times of the day.

In Scandinavia, we are rapidly moving away from cash transactions, and virtually every day a bank branch is closing or an ATM machine is being removed due to a lack of demand. Indeed, Norway has virtually become a cashless society and currently less than 10 percent of all transactions involve bank notes and coins.

Recent studies by Norway’s central bank have explored the possibility of establishing a digital currency (a so-called e-krone) that would better serve the needs of the population.

Such digital currencies can be held either in a bank (account-based) or stored locally on a plastic card or mobile phone app (value-based).

Similar measures are also being discussed in neighbouring Sweden, where recent reports have concluded that the value of cash in circulation is around one percent of the country’s GDP. Many retailers are also refusing to accept cash payments.

Avoiding cash certainly has its advantages. Apart from the ease of paying for goods and services and no risk of robbery, counterfeit or damaged bank notes, there is greater transparency as all transactions leave a digital footprint. Thus, it is easier for the authorities to claim taxes while customers can conveniently document their purchases.

However, no system is foolproof and supporters of cash argue that digital technology is vulnerable to hackers, pointing to serious data breaches in recent years, which have also affected banks.

They also correctly highlight the plight of the elderly who, even in Norway, are not always comfortable using digital solutions and thus risk alienation once societies go fully cashless.

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