The Highs and Lows of a Cash-Free Business Model

Cash-free transactions come with a host of benefits for both businesses and consumers alike– but what if refusing cash transactions signals a more sinister behavior?

New York City Council Member Ritchie J. Torres plans to introduce a law that would exact fines on local businesses that refuse to accept cash payments. Torres believes the cashless business model unfairly targets the poor, who have less access to digital payment methods. “I started coming across coffee shops and cafés that were exclusively cashless and I thought: But what if I was a low-income New Yorker who has no access to a card?” he said in an interview. Torres noted that although refusing cash transactions seem neutral on the surface, it can be used to “gentrify the market”, or, lockout disadvantaged, often nonwhite, people. 

Two sides to the story

The cashless model excludes those who have no access to a bank account or are unable to afford a smartphone to complete digital payments through services like PayPal or Apple Pay. According to the FDIC, around 22 million Americans did not have bank accounts in 2017, with 6% of all households being completely unbanked. Less access to banking seems to disproportionately affect Black and Hispanic people, with 10% lacking a bank account while the number sits at just 5% for white people.

Tracking the effect of a cashless model on underbanked people can be a difficult task, however; having no access to a traditional bank account doesn’t necessarily prevent someone from making digital payments. Mobile banking is being used to give unbanked people in emerging markets access to digital funds. And in the U.S., cash usage has been falling steadily over the past few years, declining from 36% of all transactions in 2011 to 24% in 2016. Twelve percent of Americans exclusively make digital payments, while 10 percent exclusively pay with cash. 

Other considerations

Whether or not a cashless model is discriminatory is largely dependent on a business’s customer base. For some small enterprises, only a tiny percentage of its customers pay using cash, and incurring costs related to handling cash may not be worth it in the long run. Cashless transactions also provide cleaner and quicker transactions, as well as happier customers. 

That is not to say that the cashless model is free of classism and racism. While the U.S. is moving increasingly towards a cashless society, right now may not be the best time to embrace fully cash-free environments. Currently, these cashless businesses are few and far between and are mostly non-essential services. However, if the cashless model becomes a wider trend accepted by franchises or corporations, they would essentially be locking out the most vulnerable from their services, legally. Perhaps it’s time to nip this in the bud before something more sinister blooms. 


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