Appeared in MorningConsult

CASH AS A DEFENSE TO CYBERTERRORISM

Posted on January 13, 2020

As a result of the killing of Quds Force leader Qassem Soleimani, the United States faces a tangible threat that Iran may employ its cyberwarfare prowess in retaliation. A cyber response is especially worrisome, as Iran has previously demonstrated its ability to conduct cyberattacks crashing US bank’s websites in 2011, 2012 and 2013. Following the imposition of economic sanctions, customers of 46 large banks were unable to view their accounts or make transactions after being targeted with denial of service attacks linked to the Iranian government. The current cyberterrorism threat highlights vulnerabilities of the US banking and payment system.

Often lost in the discussion about monetary technologies is the fact that the majority of payments worldwide are still made in cash. According to the Federal Reserve, while online shopping continues to grow, 77% of payments in the US are still made in person. For these in-person payments, cash accounted for 39% of the volume. Indeed, cash’s “low tech” useability and capacity to function off the grid make it a safe backup plan in the face of threats to our banking system, including cyberattacks. Cash’s security and reliability reminds us of the importance of cash remaining a payment option.

Cash ensures economic stability. Digital payment systems are vulnerable to blackouts, technical glitches, and cyber-attacks. These vulnerabilities endanger individuals and society to the risk of immediate economic collapse.  Cash cannot be hacked. Cash also serves as a fallback solution in times of financial calamity. These advantages illustrate why we should not lose the infrastructure supporting the economic stability of cash.

It is increasingly difficult in some European countries for consumers to access their own cash. For example, Sweden is virtually a cashless country, with fewer than 20% of payment transactions made in cash. Half of the country’s 1,400 bank branches no longer accept cash deposits, according to the European Consumer Organization. The country relies heavily on Visa and MasterCard to process its transactions. As the number of ATMs and bank branches steadily decrease, countries run the risk of losing their cash infrastructure, thus making them even more vulnerable to economic disruption from technology glitches, system power failure and cyberattacks.

Cash acts as a public good. Cash is accessible to all. A move to cashless payments means financial and social exclusion for those who are excluded from a digital society, particularly the young, elderly and minorities who use cash more frequently than individuals with higher incomes. About 25% of US households are either “unbanked” or “underbanked,” typically those with low incomes who lack the minimum balance to open checking and savings accounts. Moves to cashless retail limits the places where the poor and communities of color can access goods and services. Strong concerns about restaurants and other businesses refusing to accept cash has led to bipartisan legislation in the US Congress, H.R. 2650, the Payment Choice Act.  This bill recognizes that cash is a public good and the importance of ensuring its continued existence alongside electronic and innovative payment options.

Cash safeguards our privacy. All electronic payment transactions are traceable. Placing control of our currency in the hands of digital payment companies threatens individuals’ privacy as information about one’s political and religious affiliation, sexual orientation, health conditions and personal relationships is available. Without cash as a payment option, credit card and other private companies could eventually come to decide what constitutes a socially acceptable or allowable purchase. Better is a country where cash remains legal tender for all purchases.

Cash is convenient, private and free to use. Cash is also the safest payment method, which is why cash demand skyrockets during crises, be it man-made or a natural disaster. Cash is our most resilient and reliable payment option, and current international tensions remind us that maintaining our cash infrastructure is imperative.