The All or Nothing Cashless Downside

Following the recent devastating floods in Kyushu, Kyodo News posted a short story noting that people complained about cashless payments because nothing works without electricity and mobile service. Hard cash they said, ‘really feels safer.’ The article also noted that the Japanese government has allocated funds to investigate the issue and will test disaster relief cashless strategies later this year.

The piece stirred up some online discussion between Japanese IT journalists who cover mobile payments. With natural disasters happening every year in Japan, disaster relief is a very important issue. The journalists questioned the cashless ‘all or nothing’ downside in disaster situations. Junya Suzuki posted a new installment in his long running ‘Pay Attention’ series that addresses some of the issues the Kyodo piece raised.

While it is true that hard cash is an excellent last resort, that’s only true if you have it on you when disaster strikes. If you loose your possessions and local area infrastructure is heavily damaged, getting access to your cash via ATM is just as problematic as finding a cashless checkout that works. What’s the fastest way for people in a disaster situation to get access to their money? Mobile ATM bank trucks in Kyushu provided some relief but as Suzuki san explains, there are multiple weak links in the payments chain, from local ATMs to bank servers, when electricity and mobile service is knocked out over a wide area for long period.

Some people will roll their eyes and moan about Japan being so behind the times, but in addition to testing electronic backup methods the government tests will include paper list checks of credit cards, just like the good old days of credit card carbon paper slips. This is plain old visual number checks by real people. Will the tests take into account that latest issue bank cards have removed card numbers á la Apple Card? I hope so. No doubt the paper lists will be faxed and require a hanko seal or thumb print for verification, but hey, in a disaster anything that works is good.