Designing Money in a Cashless Society
By: Jonas Hedman, Lektor, Ph. D., CBS
The idea of a society without cash has emerged and been discussed over the past decades. Our traditional coins and bills will be replaced by virtual and digital money flowing in seamless digital infrastructure. We have already begun this path with the invention of new payment techniques, such as checks, plastic cards, electronic transfer of funds, SMS payments, and cashless cards.
A cashless society is deeply dependent on information technology and gives rise to a number of opportunities that will affect society, business and people on a daily bases. One of those opportunities is to design money for specific purposes, such as buying nutritious food or not to buy alcohol or tobacco. The idea of having money for specific purposes is not new - it is actually common. People save money for vacations, travel, buying houses, and education. States and organizations also have money for specific purposes, e.g. pensions and taxes. However, the opportunity to design money with specific purposes is novel.
Senario: Lene and Leif, two loving parents, have decided to restrict Kasper's (15 year-old son) use of his weekly allowance. Kasper used his lunch money to buy soda and snacks, so his parents decided to control and govern his spending behavior of his lunch money. The transfer of the weekly allowance goes from Lene and Leif's bank account to Kasper's m-wallet, which also entails his identification cards and debit card. On the balance page he can see how much money he has in his m-wallet and on his bank accounts. The amount of virtual cash is displayed in a pie chart diagram (green, red, and black) with the amount on. The green pie is money to be used for school lunch. Red money is for clothes. The black money is to be used for any purpose. The green and red money are the designed money from his parents to buy lunch at school and new pair of jeans and cannot be used for anything else. So, now Kasper cannot buy soda and chips for lunch. Instead he has to buy the regular school lunch. Kasper is of course outrageous and think that his privacy is hampered, but his parents who pays for it are pleased.
Is this likely or is this just fiction? It will of course create a huge debate conserving privacy and integrity issues. Different stakeholders, such as merchants, consumer agencies, politicians, health organizations, human rights organizations among others will take different positions from their perspectives. But this is a consequence (opportunity or threat) with the new emerging digital infrastructures, which the financial system is part of.