Title: Cashless Societies and Inequality

The rise of financial technology (FinTech) and mobile banking in the last ten years has changed the landscape of the financial sector and spurred a wave of innovation in finance. The advent of electronic payments, in particular, is considered one of the most revolutionary changes in modern finance, and it has led some commentators to predict a very quick transition from a cash-based to a cash-less society. A future where all financial transactions will be operated electronically without the need of coins and banknotes. Given their transparency and operability through mobile devices, electronic payments (and electronic money, to an extent) are believed to offer a solution to a range of diverse problems affecting the financial sector, from money laundering to financial exclusion. For these reasons, a few governments around the world are considering reducing the reliance on cash and moving progressively towards a full electronic payment system.

Yet, very little has been said of the impact of this seismic change on inequality. Recent studies suggest that cash is still the payment method of choice for the poorest and most disadvantaged parts of society. How then, can a cashless economy be structured to guarantee e-payments and e-money to retain the same benefits offered by cash? The goal of this essay is to discuss the implications of this monetary transition on inequality, property rights, and financial architecture. At present, the digital financial ecosystem is somehow detached from mainstream monetary and financial channels, as very few FinTech players operate as banks, and with minimal regulatory and policy intervention from central banks. Yet, in a cashless society, the state must play a very different and more active role. On the one hand, it must guarantee that the social costs of e-payments do not fall disproportionately on those who have less or no access to payment technology. On the other hand, it must guide the full integration of e-payments into the monetary system.