In an article published on June 3, 2019, entitled “Hitting the Brakes on the Cashless Society,” payments risk expert Claire Greene analyzes the pushback against cashless systems taking place in various states and municipalities throughout the country. Greene builds off of the research of Oz Shy, who drew his conclusions from the 2017 Diary of Consumer Payment Choice. The research uncovered about consumers who do not have access to credit and debit cards showed that they tend to make the majority of their payments in cash and that they are more likely to be on the lower end of total household income. Interested in looking for cashless alternatives for individuals who do not have access to credit or debit cards, Shy examined the possible usage of prepaid cards. However, Shy’s eventual conclusion did not change even after factoring in the usage of prepaid cards:
A complete transition to cashless stores imposes a measureable burden on consumers who do not have credit or [nonprepaid] debit cards.
In recent months, cities such as Philadelphia and San Francisco have introduced or will soon introduce legislation that bans cashless stores or requires brick-and-mortar stores to accept cash as a form of payment. Greene points out that her home state of Massachusetts has made it illegal for businesses to not accept cash since 1978, while the state of New Jersey banned cashless restaurants and stores recently in March 2019. This current trend of legislative proposals protecting the use of cash is, according to Greene, “predicated on the idea that people without access to payment cards or digital payments are harmed when they cannot make purchases using their payment instrument of choice: Cash.” However, it should be noted that businesses are also harmed when their customers are not able to pay in the way that they wish to, because having a customer that is not able to pay in the way that they choose is almost as bad as not having a customer at all. Cashless businesses are losing potential revenue by limiting their market only to those who have credit or debit cards.
Green concludes that cash is still very important to certain consumers and that the idea of implementing a cashless society “could be on a collision course with reality.”
To read Claire Greene’s entire article on the website of the Federal Reserve Bank of Atlanta, please click here.