In God We Trust, All Others (Don't) Pay Cash

I was intrigued by a recent Wall Street Journal article about how some retail establishments won't accept cash as a form of payment, citing Drybar, Sweetgreen, and at least one Starbucks location.  Cashless is touted as faster, safer, easier to administer, and in line with most customers' preference.

Indeed, a new study from the Pew Research Center found that 29% of all U.S. adults don't use cash at all in their typical week, up from 24% in 2015.  The higher the household income, the less cash was used.

Credit: The Policy Times

Alistair Johnson writes in Forbes that, hey, if we're going to a cashless society, we should make it a cardless one as well, not simply replace our cash with those pieces of plastic we use for debit/credit.  I think he's on to something there, and both discussions made me think about how we change the constructs of our everyday lives -- including in healthcare.

First, let's get this out of the way: we're not going cashless anytime soon.  The WSJ reported that 30% of all transitions, and 55% of those under $10, still use cash.   There is more cash than ever -- about $1.7 trillion -- in circulation (the vast majority of which is in $100 bills).

Still, some countries -- notably, Sweden and China -- are racing towards a cashless future.  Cash in Sweden is less than 1% of GDP, and its central bank is seriously considering only issuing "e-krona."  As its central bank governor told The New York Times,

When you are where we are, it would be wrong to sit back with our arms crossed, doing nothing, and then just take note of the fact that cash has disappeared.  You can’t turn back time, but you do have to find a way to deal with change

In China, consumers are skipping the credit/debit phase and using their mobile devices.  Ninety-two percent of people in its major cities already use WeChat Pay or AliPay as their primary payment method.

Not everyone is sanguine about this possibility.  In the U.K., a new "Access to Cash" study warned that 17% of its population (eight million people) thought that cash remained a economic necessity.  The poor, people without access to fast internet connectivity, and people with physical/mental impairments were cited as being at high risk.

The report's great quote: "if we sleepwalk our way to a cashless society, we'll leave millions behind."

There have been similar concerns raised in Sweden, such as for the poor and the elderly. with the president of the National Pensioners Organization cautioning: "We aren’t against the digital movement, but we think it’s going a bit too fast."

Many critics point out to the increased loss of anonymity in a digital currency world, as well as the increased potential impact of cyberattacks, but it's not clear whether we've already crossed those thresholds.

Swedish microchip.  Credit: ZeroHedge

Mr. Johnson's central argument for cashless/cardless future is that we should be moving to "people's funded decentralized digital identities," using smartphones or smartwatches/fitness trackers.

He doesn't mention it, but Sweden already has thousands of people who have had microchips implanted that serve the same purpose. Jowan Osterlund, the founder of the leading microchip company there, told NPR:

Having different cards and tokens verifying your identity to a bunch of different systems just doesn't make sense.  Using a chip means that the hyper-connected surroundings that you live in every day can be streamlined.

If you've ever juggled to give your health care provider your drivers license, insurance card(s) and credit cards, or struggled to fill out (again) your medicine history, allergies, and medication list, you might appreciate his point.

We used to carry coins that had actual economic value, such as gold or silver, and over time those coins became of only symbolic value.  When we started using paper money, the promise was that it was at least backed by reserves of such actual things, but it has been a long time since most economies even pretended that was true for any of is currency.   When we started using credit cards, the premise was that merchants could trust the credit card companies about your ability to pay.

Money is a construct, and, at this point, most of it is simply notational.  It exists mostly virtually.

Our healthcare system is a lot like that.  Our various identification cards, payment cards, and even biometric measurements are based on an outdated model, one in which most information is assumed not to be available real-time.   Our insurance system is built on information asymmetries and cash flow barriers.

What might a healthcare system based on your "funded digital identity" look like?

Credit: Wearable Technologies

When you have an encounter with the healthcare system -- virtual, in an office, in a facility -- your chip/phone/watch/etc. is registered and:

• it knows who you are;
• it knows your health history, including any readings from biometric data you track;
• it has detail from your previous (applicable) encounters, even from other clinicians;
• it knows your various payment sources, including insurance/credit card/bank information;
• it "negotiates" in real time the price of the service you're going to have, as well as how that will be funded and under what terms (perhaps using smart contracts);
• it triggers immediate payment upon satisfaction of the promised service;
• it schedules any follow-up visits or treatments.

No paper is generated.  No cash is exchanged.  No surprises about the bill.  No phone calls to any customer service.  Less reliance on insurance and more on a broader concept of funding.  

It sounds impossible, or at least like something from a far-off future.  Then, again, through the 1950's the idea of using credit cards for most purchases was something most people would have never considered, and here we are talking about a cashless society. 

It can be done, and it could be done by 2030.  Not 2130, not 2080, but 2030.  We just have to change our construct about how the healthcare system works. 

Or we can keeping paying the way we do now.