Electronic Money and the Possibility of a Cashless Society

Abstract

The falling use of cash and the advent of digital technologies support the possibility of reconfiguration of monetary transactions without any intermediation of physical monetary tokens. The introduction of electronic money, especially in the guise card-based technologies but also as pre-charged software enhanced the optimism for a quick passage to a cashless, even a moneyless society. Nonetheless the prognoses for the elimination of cash have proved wrong so far and it is rather electronic money that struggles for survival. This paper explains why the initial enthusiasm about electronic money is running of steam. After defining what electronic money is and analyzing the data about its penetration in different countries a series of reasons for its failure are offered; even in the case where e-money is considered a success, the success story is contested. The small importance of e-money in retail payments today suggests the possibility of a society with minimal use of cash but without e-money. This is a more appropriate context for engaging with the projects of Singapore's Electronic Legal Tender and of the Single Euro Payment Area.