Cloudmoney — making the case for cash

Paying in cash, for those living in metropolises, is often treated as an anachronism, akin to filing a story with a typewriter or using a payphone. Notes or coins are treated as an inconvenient and dirty product of the past, fit only for tooth fairies and low-level tax avoidance (or in some cases, rather unsophisticated money laundering).

Instead, you could pay with a debit or credit card — perhaps with chip and pin, but more likely today with a contactless tap. Even that is looking old hat — you’re more likely to simply hold your phone or watch up and double click. More futuristic avenues, such as paying with a wave or a smile, are growing, with an underlying narrative that a shinier, more frictionless, and more convenient payment system is what we all desire.

Journalist and author Brett Scott, who previously wrote The Heretic’s Guide to Global Finance (2013), takes a rather different line: “We must vigorously assert our right to use cash, and to see that as a political act,” he writes.

Cash is not stopping human progress. Rather, it is a roadblock against a greater concentration of data collection and power within Big Tech and Big Finance companies — a combination of players that is pushing us to adopt its own “cloudmoney”.

Cloudmoney does well to map out how the switch away from cash is being spun as natural progress. Credit cards and newer digital payment methods have advantages such as portability, but Scott points out the considerable efforts made to position cash as defective.

Visa’s “cash free and proud” campaign from 2016 stands out for the baldness of its effort to make cash “peculiar” by 2020 (a goal it achieved with help from the pandemic).

All of this contributes to an increasingly illusory choice. “If you live in a major city, you might be able to choose your brand of smartphone, but you cannot really ‘choose’ whether to use a phone,” writes Scott, in much the same way that many stores may accept different forms of digital payments but they are all of the same kind.

Cash is the fuel of capitalism but is also a useful source of friction, writes Scott. It remains popular in areas of deprivation because it is an effective budgeting tool, its very physicality a barrier to overspending. By contrast, payment innovations such as buy now, pay later have proved so enticing to retailers because they promise to increase the amount customers spend.

Without being able to cash out, Scott argues, we also find ourselves at the combined whims of Big Tech, Big Finance and the liminal zone of fintechs, with data open to private parties and states alike. Our eyes may have been focused on social media companies and their use of our information; who can see our transactions and how it’s used has received less attention.

Access is only one part of the equation. Being able to withdraw a £10 note does not guarantee that merchants will accept them

Scott’s argument is supported by cases such as Diem, the Facebook digital money project formerly known as Libra. Its failure to launch could reflect the limits of Big Tech’s power — but perhaps is simply the distrust engendered by the big blue social network. Scott also attacks the hubris of the project, whose message of convenience for emerging markets seemed to miss the desire to not be yoked to the mighty dollar.

The section on cryptocurrencies, and their failures to break the orbit of traditional business, feels especially timely as prices hover at the lowest levels for years. The revolutionary fervour of the cypherpunks has been replaced by a desire to be a part of mainstream institutions, whether banks or Big Tech.

Scott rightly also touches on the co-opting of the call to arms for cash by conspiracy theorists, noting his own words have been twisted to seemingly support those who believe that Bill Gates is behind all the woes of the world. Such arguments should not tar the importance of the case for cash.

Cash, in the UK at least, is a part of the government’s plans. In May, it was revealed that the Financial Conduct Authority will gain new powers to ensure that banks and building societies continue to provide access to it, under legislation announced in the Queen’s Speech.

But access is only one part of the equation. Being able to withdraw a £10 note does not guarantee that merchants will accept them; in many places, you may well instead simply find a sign saying that it is purely contactless. Scott has struck an important vein, that is vital in a digital age.

Cloudmoney: Cash, Cards, Crypto and the War for Our Wallets by Brett Scott, Penguin Books £20, 287 pages

Siddharth Venkataramakrishnan is the FT’s banking and fintech correspondent

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