The Cashless Trend Doesn’t Benefit Everyone

In a recent article for news site Voice of San Diego, journalist Jesse Marx observes that, while there are benefits to cashless payments, these are not universal, and if the option to pay cash is lost, people may be affected in unforeseen ways.

Marx highlights cyber security breaches, which can expose people’s financial information, as being a concern with cashless payments. Even legal uses of customer data—building profiles for sale to third parties or to serve targeted advertising—might give people pause, but many are unaware of the extent of where and how their data is being used. Marx feels ‘privacy and surveillance considerations are often downplayed in the cashless debate’.

Cash is well known as an excellent aid to budgeting, since its physical nature means people can see at a glance how much they have, and easily allot money for essentials. The psychological ‘loss’ of handing notes and coins over to someone else also helps make spending more tangible and can be valuable for those looking to manage their budget. Additionally, a number of studies have explored why people are more likely to overspend with cashless payments.

Marx notes that paying with cards also increases the overall cost of doing business, meaning it’s not only consumers who are not keen on a cashless future. Miley Knab, a San Diego restaurateur, explains that credit card processors take a cut of every purchase, which results in higher costs to business owners (typically passed on to customers) and strongly incentivises these providers—who are often major banks—to push card payments over other options.

Citing a 2019 survey by the Federal Deposit Insurance Corporation, Marx says nearly six percent of households in California do not have a checking or savings account. People of colour are disproportionately represented among this group, with Black and Latino residents between five and seven times more likely to be unbanked than White ones. The key reason for not having a bank account is being unable to meet minimum balance requirements. For all these people, cash is essential for them to meet their daily needs.

While many states and major cities have banned cashless stores, Marx says a similar bill failed to pass in California in 2020. While it may be revisited in future—with Sen. Pat Bates, a Republican who voted down the original bill saying she is now open to the idea—for the time being, Californians enjoy no protection of their right to choose how to pay.