The big question: Cash or cashless?

Saying there might be a problem with humanitarian cash transfers is like saying that you don’t think Baby Yoda is that cute; but somebody has to risk becoming a pariah in the aid community, and it might as well be me, since I’m already a pariah in the Star Wars community. The problem is not with cash transfers per se, but with the financial technology we rely on to implement those transfers, and which makes possible and monetises surveillance on a scale never seen before.

One argument for cash transfers is that they cut out intermediaries – the UN agencies and NGOs who are currently pretending not to scuffle over market share in the cash space – but as the financial activist Brett Scott points out, the cashless society places a new set of intermediaries between individuals seeking to transact: payment service providers.

This is because “cash” isn’t what most people think it is. Most humanitarian cash distributions don’t involve notes and coins; they’re digital, which is to say, cashless. Most people – not just in the humanitarian sector, but in general – simply don’t understand the implications of this financial digitisation.

While it can be more convenient and secure for aid recipients, most of the benefits of going cashless accrue to the service providers providing the technology – and promoting the idea. Unlike notes and coins, digitised finance equals profits for service providers since they can charge for their services and gather valuable data at the same time.

Whether it’s in India, China, or Sweden, this is not something people have been clamouring for, but something that has been engineered on their behalf.

In the immortal words of the Wu-Tang Clan, “Cash Rules Everything Around Me”, including the future of humanitarian assistance. But cash isn’t just for Staten Island hip-hop supergroups any more; in 2019, around 18 percent of formal humanitarian assistance came in the form of cash or vouchers – twice as much as it had been four years previously.

Beyond the narrowly-defined humanitarian sector, the 2020 Covid-19 crisis has accelerated use of cash assistance globally, as social assistance schemes reached 1.1 billion new recipients in attempts to mitigate the impact of the pandemic.

It’s almost impossible to resist the rise of cash over commodities, and the demands on humanitarian organisations are only ever for more and sooner. The 2015 High Level Panel on Humanitarian Cash Transfers made the case strongly – cash transfers: align the system with what people need; improve transparency and accountability; reduce costs and increase speed; “increase financial inclusion by linking people with payment systems; and most importantly, provide affected populations with choice and more control over their own lives”.

But the High Level Panel’s claim that cash transfers “provide affected populations with choice and more control” is less convincing once you realise that your choices are limited to those presented by the payment provider, and your control can be removed without warning under their Terms of Service, which nobody ever reads.

This is unlike good old-fashioned notes and coins, which can’t be monitored. This concerns governments who feel that lack of control creates space for crime and corruption, and that, in turn, creates a convergence of interests between those governments and payment providers. The desire for control and the drive for profit are the foundation of our political and economic systems, which means this is baked into our business models, legal frameworks, and technology stacks.

Scott goes as far as to argue that this is a War on Cash, a propaganda war in which the World Economic Forum posts encomiums to the cashless society, books are published like The Curse of Cash, and the UN hosts its very own hip-hop supergroup, the Better than Cash Alliance. The cashless society is simultaneously a technology trend, a policy direction, and a conspiracy theory, but that just means that it’s 2021 and everything is collapsing into a singularity.

That singularity is the broader phenomenon of surveillance capitalism, under which service providers “monitor the behaviour of [their] users in astonishing detail – often without their explicit consent”. Customers are transformed into commodities as financial institutions and their partners harvest this data and use it as the basis for behavioural analysis that shapes future services. The “cashless society” is critical to this model; financial data is the most valuable type of data, which makes “financial inclusion” as much about privacy as it is about payments. I’m still a fan of cash transfers – I rate them below the Wu Tang Clan but above Baby Yoda – and I fully believe that people should have access to financial services.

In the rush to embrace this approach, however, those who are most vulnerable are most at risk, particularly when the financial regulators charged with protecting us all haven’t yet caught up with this new reality. So while discussions about humanitarian data responsibility focus on obvious risks (such as data breaches), the digitisation of cash transfers also exposes affected communities to the much less obvious risks of increased surveillance.

Aid organisation staff who work on data issues are aware of these risks; in this Cash Learning Partnership podcast about informed consent, the participants are clearly uncomfortable with the fact that cash transfers guarantee increased risks for affected populations, and that the only strategy available is mitigation. Yet all the ethical data policies in the world won’t make a difference because this is happening at a level above the day-to-day business of cash transfers.

As the pandemic accelerates moves towards the cashless society – at one point forcing the World Health Organization to clarify that you’re unlikely to catch SARS-COV-2 from a banknote unless you’ve blown your nose on it – now might be a good time for the aid industry to collectively pause to consider what our role should be.

Such a pause is not impossible; in 2016 Oxfam showed the way when they imposed a two-year moratorium on their use of biometrics for similar reasons, to give the organisation time to consider the ethical issues involved. Their guidance now is not to use biometrics without a very strong case.

Perhaps we need something similar with cash transfers, to listen to voices from outside the sector, not just from private sector actors with financial interests, state actors with control issues, and vulnerable communities with little choice?

While working on this column, one of my editors suggested I might be a touch paternalistic, denying poor communities access to technologies I already enjoy, such as mobile money and contactless payments. In fact, I avoid these technologies unless I have no other choice, but they’re increasingly hard to avoid – and because of the incentives built in by service providers, expensive to avoid as well. I can afford to make that choice, but those on lower incomes have less choice, and those in desperate need have the least choice of all.

Maybe cash rules everything around me, but cash shouldn’t rule me; and the only way to achieve that is to change the business model of surveillance capitalism. This might seem to be a task far beyond the scope of humanitarian organisations; but who better to ring the alarm about the dangers of extending permanent surveillance to vulnerable communities than those organisations who claim to work on their behalf?