Lack of privacy In a digitized economy, payment made will be recorded digitally (cash payments are also typically recorded). With digitally-recorded transactions, certain institutions such as the seller may have potential access to this information (though the record is likely to be anonymous to the seller). Such transactions could allow businesses a way to build an understanding of their customers based on observed spending patterns. The issue of
data mining also comes into place as countries head towards a cashless society. Cashless transactions leave a record in the database of the company as one makes a payment, and this information becomes a way for the prediction of future events. Through a large number of records, data mining then allows the organization to compile a profile of an individual through its records in the database. Going all-digital, these data retrieved from transactions lead to widespread surveillance where individuals can be tracked by both corporations and the government. These records might also be available to hackers and could be made public after a
data breach.
Transmission of disease via cash and PIN pads Cash provides a good home for disease-causing organisms (i.e.
Staphylococcus aureus,
Salmonella species,
Escherichia coli,
COVID-19, etc.). However, cash has been found to be less likely to transmit disease than commonly touched items such as credit card terminals and
PIN pads. Such concerns prompted the German central bank, , to state that "Cash poses no particular risk of infection for the public".
Problems for the unbanked Cashless systems can be problematic for people who currently rely on cash, who are concentrated in certain populations such as the poor, disabled, elderly,
undocumented immigrants, and youth. Many people in impoverished areas are
underbanked or
unbanked. In the United States, almost one-third of the population lacked the full range of basic financial services in 2012. In 2011, an FDIC survey found that approximately one-quarter of households whose annual income was less than $15,000 had no bank account. Nationwide, 7.7% of people in United States did not have bank accounts, with levels over 20% in some cities and rural counties, and over 40% in some
census tracts, as of 2016. As part of its
Smart Nation initiative, Singapore has been moving towards a cashless economy. In 2017, 14.4% of the country's population was over 65 years old, and the majority of seniors still used cash as their only method of payment. Not used to digital payment methods, troubleshooting issues such as managing lost cards or passwords and managing their expenses can create potential trouble for anyone transitioning from cash.
Digital fraud When payment transactions are stored in servers, it increases the risks of unauthorized breaches by hackers. Financial cyber attacks and digital crime also form a greater risks when going cashless. Electronic accounts are vulnerable to unauthorized access and transfer of funds to another account or unauthorized purchases.
Coordination problems Thus far, cashless electronic payment systems have been predominately provided by a variety of different private sector companies. With so many different cashless payment options, there can be
coordination problems as to which payment methods buyers and sellers will adopt and accept. If buyers prefer to use one type of payment method while sellers prefer another, the volume of transactions can be affected due to miscoordination. Such concerns are part of the debate as to whether the government should get involved with the issuance of
central bank digital currency (CBDC).
Centralised control If governments were to monopolize cashless payment systems, e.g. by the issuance of CBDC, then in addition to tracking all transactions, the government would also be able to: • Enforce a
transaction tax on every person-to-person payment • Eliminate the storage of cash as a means to escape nominal negative
interest rates, which are used to fight
deflation by discouraging savings (most effective if combined with bans on barter,
private currencies like
bitcoin, and storage of
precious metals like gold). Certain types of money could be set to "expire" and be worthless if not spent in specific ways or by specific times. • Restrict the type of consumer goods that can be purchased with a certain amount of money (and parents might be able to do the same with allowance money)
Reliance on Telecommunications Infrastructure Digital transactions generally require a connection via
internet or other
telecommunications network, preventing the use of digital payment in remote areas without connection to such networks. Commerce can also come to a halt when economies relying such networks go down, as happened in
Belet Hawo,
Somalia during battles in July 2025.
Criticism in Sweden Sweden is exceptional in that the amount of cash in circulation has reduced substantially. Swedish society changed profoundly from 2000 to 2017 due to attempts to replace all cash with digital payment methods. The concept of cash-free bank branches began in Sweden between 2000 and 2005, with a cashless branch being a step towards an upcoming closure of that branch. From around 2008, Swedish banks began giving special hardware to their customers that could be used to process financial transactions (like digital payments of invoices) from home. People still had the choice to use cash, however, and those who wished to do so could still do business in cash at the bank offices that remained. This trend began around 2008, and peaked in connection with the 2015–17 exchange of all Swedish coins and banknotes (except for the 10 kronor coin). According to the banks' head offices, cash was no longer required as withdrawals and deposits were possible (in limited amounts) through machines. But for "safety regulations", the maximum amount a bank customer could withdraw was about 5,000 to 10,000
SEK per week, and similar "security rules" for deposits were established as well. Later, all the major regular banks with branches began an enforced process of either closing down branches or making them "cash-free". Today very few cash handling bank branches still exist. The limited availability of cash in Sweden has caused difficulties for smaller boutiques, shops, and convenience stores, which depend on cash, as they can no longer deposit their daily takings or obtain any change. Non-profit organisations, which are very common in Sweden, have also experienced an outsized impact. When they organise events and want to take entrance fees or sell items or snacks, many do not carry cash, often there are problems depositing larger amounts of cash into bank accounts, and card reader agreements in banks are expensive. In response, Swedish banks have introduced a mobile telephone payment system known as
Swish. But this system has suffered from many problems. The banks (and initially media as well) have dismissed complaints about the change as "a problem for elderly people" only, essentially claiming that some were only struggling to learn new technology, rather than being unhappy with a totally new transaction method. Opponents of the change, however, contend that the technological excitement has changed too much too fast, saying that many dangers lurk in the reeds. Concerns have been expressed about a rising number of fraudulent transactions, and the fast development of
quantum computers contributes to fears of hacking within the system. The debate about a cashless Sweden became more complicated when the Swedish authority
Myndigheten för Samhällsskydd och Beredskap—MSB or "the Authority for Community Protection and Preparedness" in their writing "
Om Kriget Eller Krisen Kommer" ("If war or crisis comes") contained a list of items to store permanently at home to be prepared, which includes "cash in small denominations". A wave of negative criticism followed in Sweden from experts outside the banking sphere expressing their concerns. The former head of police,
Björn Eriksson, started a movement in the spring of 2016 known as
Kontantupproret or "The Cash Petition". This movement has quickly grown to a considerable size, with many contributors describing troubles caused by the increasingly hostile attitude expressed by banks against cash. The range of complaints covers a wide variety of issues. , professor of mathematics and
Centre Party candidate, said that "the discontinuation of cash undermines our democracy, freedom and security". A billiard club in
Malmö was almost forced to close after their bank of 20 years refused to acknowledge them as a customer after the billiard club refused any other payments but cash (the bank claimed that the cash is not traceable in their crime investigation activities). A traditional summer market in northern
Lycksele went into bankruptcy after a computer error. Because people had been required to pay with phones (Swish) and cards, there was not enough money available for them to conduct business in their market. In general, new
money laundering laws require evidence of the sources for higher amounts of cash. The banks in Sweden blame EU laws, but the EU laws allow transactions of below €15,000, while Swedish banks require evidence and can refuse to accept or confiscate cash without a lower limit and have high requirements of documentation. == See also ==