The Value of Cash
Cash is an important method of payment for all citizens, it is the legal tender that facilitates the financial inclusion of all collectives and segments of the population on an equal basis.
Cash is a symbol of freedom, and it guarantees privacy from organizations or corporations accessing personal information. Cash is also the only payment option in cases of natural disasters, cyber attacks or other technological mishaps, a secure reserve of value in the face of scams or cybercrimes.
All advanced societies should preserve access to cash money as a bulwark of fundamental rights and freedoms against the risks of financial exclusion, neglect of vulnerable collectives or in emergency situations.
PLATAFORMA DENARIA - Ideals and proposals
the most widely used
Cash money continues to be the most common form of payment, both in terms of transaction volume and in monetary value, according to the Bank of Spain.
Cash is the most used method of payment by the population, used in more than 80% of commercial transactions.
Despite the pandemic and the noticeable digitalization of payments, cash in Spain is being used at the same levels as 2 years ago.
According to the Institutional Report of the Bank of Spain, in 2020 this institution provided credit entities with 2.761 billion cash bills for a value of 87.395 billion euros, 6.5% less than in 2019 but similar to 2018 and far above the amount of 2016.
Cash is a symbol of privacy, anonymity, and personal freedom in an increasingly controlled environment.
Many of the initiatives against the circulation and use of cash are aimed at increasing authority and control over the economy and individuals through data that is generated by transactions.
The war against cash is definitively a war against fundamental rights and freedom of choice. Therefore, all methods of payment should have a place in society so that individuals may freely choose the most convenient option for their personal circumstances because the economic and social realities of different countries are diverse and complex and require varied alternatives of choice.
Any limits on the use of cash are, in effect, a reduction in the freedom of choice for all citizens.
In fact, a recent report issued by the UN already warns of the dangers of certain negative tendencies of digitalization that act as obstacles to human rights and fundamental freedoms.
Without cash the rights of citizens are seriously compromised since putting limits on cash money greatly affects individual privacy.
Infringement of privacy rights is a growing concern in today’s society and paying in cash offers consumers many more guarantees of privacy than electronic payment methods.
A tool of financial inclusion
Spain is a country with extremely high bank services usage but despite this fact, more and more citizens have problems obtaining bank accounts due to high fees. Without cash, these people are kept out of the system. Social and economic problems derived from the lack of access to cash in large swaths of the population are becoming more prevalent and the consequences on inequality will be very impactful.
In the last ten years, the number of bank offices in Spain has fallen almost 44%, with close to 20,000 less bank branches. The efforts of bank entities to offer mobile ATMs, mobile offices and other solutions have not been able to solve the growing problem of access to cash in the primarily rural population.
According to a report by the Bank of Spain, there are currently 1.3 million citizens that find themselves in a vulnerable situation because of the lack of access to cash due to bank branch closures. Among its conclusions the Bank calls for promoting solutions to guarantee access to cash to the population as a whole.
For its part, according to an analysis by the Coordinated Institute of Governance and Applied Economics, in 2025 approximately 6.5% of the Spanish population will have great difficulties in accessing cash and almost 3 million people are at serious risk of financial exclusion.
Therefore, cash guarantees financial inclusion in an equitable manner, especially among the most vulnerable groups that don’t have access to bank services or segments of the population that cannot use digital or electronic payment methods.
Guaranteeing access to cash helps to encourage commercial activity, especially in local neighborhoods.
Spanish businesses pay more than 500 million euros annually in credit card commissions and small business bears the brunt of this amount. Small and local businesses such as food and beverage, supermarkets or pharmacies must pay fees to accept card payments that are more than the average discount rate.
In addition to these fees, businesses must also pay Point of Sale Terminal fees that in most cases have an annual average cost of approximately 100 euros per unit, not to mention the significant increase in fees for other financial services.
In fact, associations in the Spanish commercial sector have recently coordinated efforts to call attention to the risks of limiting cash in the recovery of the economy and in the sectors most affected by the crisis.
Without cash, many businesses, bars, and restaurants are being deprived of tips that for many, are an important source of income. For example, a taxi driver that earns 50,000 euros annually will pay roughly 300 euros in fees each year if only accepting card payments. Not to mention the loss of tips, which may vary between 500 and 1,000 euros annually. This would represent a reduction of about 2% of earnings.
88% of cybercrimes correspond to electronic scams linked to digital payments. These criminal tendencies are increasingly linked to the different methods of digital payment and to e-commerce.
Although digital technology is becoming more refined, technological mechanisms that are capable of destroying and overriding security systems are more sophisticated, making risks for the user inevitable.
Alternative in emergency situations
Without cash, there is no alternative to possible cyberattacks, to the failure of computer systems or to network crashes. We cannot be solely dependent on the digital world, without any safety nets. “When the elevator was invented, stairs did not disappear”.
Recent technological incidents that have affected large online platforms have revealed the risks of the lack of alternatives. When system crashes disrupt security and ongoing operations of numerous websites, e-commerce and a wide array of digital businesses, solutions that ensure the continuity of economic activity are sorely needed.
Cash is a secure asset in situations of natural disasters, cyberattacks or any technological incident that blocks access to the internet and therefore, to digital forms of payment.
Cash is the most important method of payment in contingency situations, an important value asset for citizens. The perception of cash as a safe haven becomes especially relevant in moments of crisis, disaster, or times of uncertainty, as seen during the pandemic, which led to increasing circulation of cash throughout the economic system.
Cash is the most secure asset against fraud and the most resistant to falsification.
Even AEAT (The Spanish Tax Agency) and other institutions recognize that at this moment, cash is not the main risk when it comes to fraud, especially when compared to cryptocurrency or other transaction methods.
Countries such as Germany show that a high use of cash can be associated with a low level of fiscal fraud. Conversely, examples such as Sweden demonstrate that a “cashless” society does not necessarily mean less fraud. In fact, in other countries like Norway, where digital payments are widely used, the black market economy is similar in size to that of Spain, according to figures from the World Bank Group.
of power in large card companies
We are currently seeing a worldwide movement against cash, started by large tech and credit card companies (all of them American or Asian), whose goal is to commodify and commercialize the information and data obtained through commercial transactions.
Data is the new oil and the foundation of the business of these companies, becoming even more relevant than their financial aspect.
A recent example is the use of the Covid-19 pandemic to spread baseless fears about contamination by touching cash. These attempts to take advantage of the situation were repeatedly refuted by international organizations such as the WHO or banks of reference such as the European Central Bank, the Bundesbank, the Bank of Canada, etc.
Cash is a public good to be protected and not to be placed in the hands of large private enterprises that lack proper control or oversight. We can look to the measures recently adopted by the US Administration to avoid the merging of large tech companies. The privatization of money must be avoided.
THE DENARIA MANIFESTO
The large European institutions have taken up positions in the defense of cash, of its values and its benefits for society. Notably, the European Central Bank, in its plans for the development of the digital euro, underscores that it should be a used in addition to cash and that both systems should be maintained and made available.
This same organization notes that cash is enormously important for social inclusion and for access to basic services and calls for legislation that aligns the acceptance of cash at the European level.
The Social and Economic Council of the EU has also unanimously approved the petition to preserve access to cash and to guarantee its acceptance as a form of payment across the entire European territory.
In countries such as the US, there are numerous judgements and legislation in various states that are finding in favor of the obligation to accept cash in all commercial establishments.
These measures arrive after aggressive digitalization of payment methods that create fears of financial and economic exclusion among large segments of the population.
In view of the above, it is necessary to alert public institutions to the risks and irreversible consequences for society and the economy of limiting the use of cash:
- Social risks of growing financial exclusion, as well as risks of territorial dislocation especially prevalent in rural areas.
- Security risks leading to unprotected industries or areas in cases of cyberattacks or system crashes.
- A lack of alternative payment methods in emergency situations.
- Economic risks, in those cases, sectors and zones where cash is fundamental for the development of commercial and business activity.
We at Plataforma Denaria, and in representation of our associated collectives, organizations, and entities, would like to use this manifesto to make an appeal for the establishment of the necessary legal framework that stipulates the requirement to accept cash as a form of payment with the aim to avert the social, economic and security risks associated with its limitation.
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From the denaria platform we want to gather all the voices, organizations, associations, public or private entities that want to join the movement in the Cash defense.
We listen to all groups, their needs and interests, to build a common movement that brings together the different voices in favor of cash.
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