It’s difficult, if not impossible, to predict how a cashless financial system would work on a large scale. Consumers may expose themselves to unnecessary inconvenience and complications, which are more likely in the early stages of any new technology.

1. Hackers
Google swears that the Google Wallet system is more secure than cash and credit cards, but it did recently have to do a temporary shutdown of a feature that allows users to load prepaid card information onto smartphones for spending. The reason for the shutdown was due to a security vulnerability that was exposed by a Zvelo Labs researcher at a technology convention.

To demonstrate, the researcher showed how easy it is to use software to crack someone’s PIN and access their virtual wallet once you have their phone in your possession. This means that if you want the convenience of Google Wallet, you’d better not lose your phone. Forget about questioning the security of the network Google Wallet is using – the phones themselves don’t appear to have reliable encryption capabilities.

This is only one example. Unfortunately, it is likely that there are other would-be thieves who are working on similar hacks in anticipation of a cashless, cardless future.

2. Failure Rates
Another potential problem is the failure rate of biometric ID systems. These systems may be convenient, but they are far from perfect. In fact, if you research “failure rate of biometric data systems” via a search engine or academic database, you will find some disheartening information.

For example, according to a test by the National Physical Laboratory’s Centre for Mathematics and Scientific Computing in the UK, the failure to enroll rate of the fingerprint biometric system is 1%. This means some people might not even be able to enroll in a biometric system using their fingerprints. Glitches such as this cast a doubt on whether biometrics are as reliable as their sales and marketing pitches make them out to be.

To many, 1% seems like a small number and not worth worrying about. However, let’s imagine that there are 100 million people wanting to use a biometric system to safeguard their digital wallets. If the failure to enroll rate is 1%, 1 million people would not be able to even use the system – that’s pretty significant...