Phillipian Commentary: How the Cashless Shuts More Doors

A couple of weeks ago, I visited Boston with some friends. Intrigued by the Sweetgreen shops on every corner, we visited one for a bowl of salad. Once I had finished ordering, I casually glanced at the register on the counter. “17.29 dollars” the lady there said as I handed her a twenty. A second later, the bill still in my hand, I looked up inquisitively.

“We don’t accept cash.” 

They don’t take BlueCard either. (Who could have guessed?) Fortunately, though, she exchanged a sympathetic smile and I was let off the hook. A free salad this time, but for me, there wouldn’t be another time — at least not until I can be trusted by my parents to hold a credit card. While a salad dilemma for a fifteen-year-old is trivial, the elimination of cash as a method of purchase has the potential to disregard and marginalize millions of people.

Fundamentally, the idea of cashless payments is not hard to understand. Applications such as Alipay, Apple Pay, or Venmo digitally transfer money from an individual’s bank account to another. They were designed to provide retailers and customers with trackable receipts, avoiding counterfeit cash and reducing the involvement of criminal activity with physical bills. They were not designed, however, with the objective to remove cash transfers; rather, the initial goal was to increase efficiency and ease of use. Having to rummage around your pockets for change, after all, takes longer than tapping your Visa on the card reader.

Going cashless, as large companies such as Planet Fitness and Amazon Go have done, means handicapping families and individuals who don’t have access to credit cards or digital means of payment. The New York Times reports that 25 percent of American households have neither checking nor savings accounts, meaning that an entire quartile of our society are denied access to the goods and services cashless companies provide. By refusing to serve those without a credit card, such companies promote the message that they don’t value people without debit or credit cards. 

On a more practical level, businesses like Planet Fitness are often relied on by the impoverished or homeless for showers and other sanitation needs; by going cashless, it refuses to offer services to these people even when they have the cash to purchase memberships. Such businesses essentially only cater to those with access to online transfers, which is both blatantly discriminatory towards those without them and fundamentally elitist. 

Virtual banking, moreover, poses an array of security risks. This July, a software engineer obtained the personal data of as many as 100 million people at Capital One Bank. In 2016, third party hackers stole 81 million dollars from a Bangladeshi Bank. Breaches of websites have become commonplace, and cyberattacks on bank accounts will likewise ramp up with time. When TSB bank changed its online banking system last year in May, problems in the system left millions without any access to their online banking. Weeks later, a Visa outage across Europe led to a further 5.2 million transactions that either processed incorrectly or failed to process altogether. A cashless society would be one fraught with security risks and outages — a far cry from the ease of access its advocates claimed. 

For a case study of what not to do, look no further than India. In a 2016 bid to fight corruption and increase e-transfers that can be monitored by banks, the government voided the value of all 500 and 1000 rupee notes (the two highest denomination bills). Long queues were formed throughout the country at ATMs as people tried frantically to deposit or exchange their banknotes; year on year GDP growth shrank by an entire 1 percent. 

In fact, even from a personal finance point of view, conventional modes of payment help the consumer; with cash, buyers are likely to be more conservative with their spending. Consumers have to physically hand over the money to the cashier, leading to a greater feeling of loss than, say, a mechanical beep notifying you that your online transaction has gone through. Besides, it’s easy to rack up credit card debt if you don’t pay off your purchases every month. By being able to simply peer inside your wallet from time to time, you can plan out your finances and purchases much more efficiently. 

Nobody is here to boycott stores who no longer accept cash or to ask for a new form of payment to revolutionize currency and banking. But, if nothing else, let’s reintroduce cash as a means of payment. If not for the sake of a fifteen-year-old who only wants to be able to buy his salad, then for people all around the world who are limited by their circumstances and depend on cash.