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Is It Time for a Cashless Society in the US?
Are you ready to live in a cashless society? CBS News reports that a Los Angeles councilwoman introduced a motion this month that aims to ban any retail business that refuses to take cash payments. The councilwoman’s concern is that cashless businesses will create a non-inclusive economy for the people of LA and make it difficult for people to purchase necessities.
But LA is not the only location that would be affected, as this practice can have widespread ramifications, leading to a cashless society.
Those without bank accounts or credit cards will be at an even further disadvantage. According to the councilwoman, cashless payments can exclude people of color, low-income communities, young people not yet old enough for the credit age limit, and senior citizens who have not adapted to digital payments.
However, there are numerous potential benefits to cashless payment systems. These systems continue to see more benefits from the constant advancements in technology that flood every aspect of modern society. According to a report by Money Crashers, the advantages include:
- Fewer germs
- Reduced risk of robbery
- No counterfeit bills
- Less employee theft
- Faster service
- Less complicated cash deposits, armored car pickups, etc.
- Fewer banking hassles
- Simpler equipment
- Simplified bookkeeping
- More storage space
- Less human error
To help alleviate cashless payment complications, the FDIC explains that consumers can opt for prepaid cards and other alternative methods. Though everything in retail seems better going cashless, there is still divisiveness among consumers.
As an example, sweetgreen, which has been leading the way for completely autonomous fast-food locations, “experimented with going cashless in 2016 and reported that those stores recorded up to 15 percent more transactions an hour than its stores that took cash. Those locations also saved about two hours per day on cash management work, such as balancing register drawers and making bank deposits. This prompted the company to implement cashless operations at all stores, although it backed away from that after some customer backlash”, as reported by AARP.
In response to customers’ outcries, sweetgreen released the statement, “Everyone in the community needs to have access to real food.”
Even though there’s often backlash against stores with these policies, it is perfectly legal for retailers to go completely cashless if they wish, according to federal law 31 USC Section 5103. Money Crashers also cites how “the Treasury Department confirms this interpretation of the law on its website, saying, ‘Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.’”
Discussion Questions
DISCUSSION QUESTIONS: Should all retail businesses be required to have at least one operating cash register or payment system? Are there are other ways to transition into a fully cashless society without excluding any type of consumer?
Poll
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David Spear
VP, Professional Services, Retail, NCR
Bob Amster
Principal, Retail Technology Group
I don’t think it’s up to politicians to tell retailers that they need to accept cash. What the Treasury Department says is right – it’s up to individual retailers to determine their policies. All that said, many retailers will continue to offer a variety of options to cater for everyone.
As usual, I agree!
We are not there yet. I believe it will be another generation before we go to a cashless society because of how were brought up to trust (or not trust) financial institutions but ultimately, it will be up to the businesses to make that change.
Our economy and culture will evolve to a cashless society (that’s a prediction). However, this evolution will have to be a natural one, not legislated. While there is reason to believe that not accepting cash TODAY, hurts some socio-economic groups, the market will eventually find solutions for this potential inequality. People who are paid only in cash (until they’re not), will have a way to convert cash into a form of stored value instrument that will be widely accepted, or even backed by a banking institution. Some hurdles remain, such as tipping in parking garage, carwash, or gasoline station. Again, the markets will come up with solutions for this need also. With technology so available today (95% of the population has a mobile or smartphone, Pew Research) and kiosks are ubiquitous. It’s a matter of time.
Great points Bob! For my personal payment choices, I am comfortable eliminating cash options. However, it is not all about me. The vast majority of consumers that don’t have a credit or debit card are in the lowest economic segments. Until we have a solution, like you mentioned, where nobody is paid in cash, we should still offer consumers a choice.
Here is a good Forbes article on the status of credit vs. debit vs. cash: Credit Card Statistics And Trends 2023.
I am good with going completely cashless, because I have been for at least 5 years. Technology is making it easier and easier for me to live this way. HOWEVER, for government, (State, Local, Federal) to intervene in any way is completely wrong. If a retailer caters to a customer base that prefers cash, it should take cash. Why that is so difficult for non-retailers to understand or accept is way beyond my ability to comprehend.
As is often the case I agree with Neil!
This is an interesting topic. I don’t see us moving to cashless any time soon, but i do see it eventually happening. I also do believe accessibility is extremely important, and I’m not sure the prepaid card solution would completely solve for the accessibility piece. As the shift eventually happens though, retailers will likely benefit from leveraging learnings surrounding gift cards and the universal gift card that used to be a relatively popular gift.
Know your customer. Offer the payment options that work best for them. Cashless requires bank accounts, credit and/or devices that are not in the realm of every consumer either by necessity or by choice.
Personally, I’m 99% cashless in my everyday transactions. I also recognize it’s a privilege to have access to the banking and financial resources that allow me to live this way. For many, that’s not a real option in how our current financial systems operate today. I don’t like the idea of pre-paid cards for the unbanked in our society. In my opinion, that sounds like we’re bringing back the “company store” concept.
I also think that while interactions with retailers using cards is relatively easy, interpersonal transactions, which a lot of these folks rely on for basic goods and services, will be really difficult without cash unless we can come up with a way to facilitate these transactions that doesn’t involve a specific retailer or financial institution.
I rarely use cash, but still wonder some days why I am charging a $3.00 purchase to a credit card…..knowing that the poor local merchant is going to lose a not insignificant amount of money to the credit card processor.
Solving this issue is complicated because it means creating a solution for the still significant number of people in the U.S. who can’t or don’t use banks. Until we have a better path for things like immigration status, I.D. Documentation access, lower banking fees and more then cash will still be necessary. Add to this the fact that paying cash is an important way for small businesses to survive in the face of high credit and debit card merchant fees. Too often what seems like a small charge to the merchant or the bank account holder is the difference in making it through until the next paycheck. In the push to eliminate cash, too many of our most challenged consumers and business owners will be left behind, which is a price we can’t afford to pay.
Retailers should offer what makes sense for their customers and their businesses. It’s a business operating decision, not a political one. I use a mix of cash and cards and don’t see this going away any time soon.
Will paper money and coins cease to be legal tender? There will always be a segment of the population that is un-banked. I don’t predict a cashless society any time soon, if ever.
it is up to individual retailers, however I can see the issue if it becomes a redlining issue where certain neighborhoods have no access to services because no one accepts cash. There is still a significant number of unbanked people in the US, and each do it for their own reason.
For me right now the perception is that cash less benefits banks and credit card processors because of the fees charged to the retailers, that’s why I pay cash to small business in exact change (and yes, I carry small bills and actually get them at the bank on regular basis) especially in farmers markets or family stores.
Some consumers don’t have a credit or debit card. Their only option is cash. That presents a problem for them and a dilemma for the retailer that doesn’t accept cash. But the question is if all retail businesses should be required to accept cash (at least one cash register/payment system). The word “requirement” is bothersome. It’s really a short-term problem. We will be cashless in the near future (maybe as soon as several years).
The short answer to this question is, “Yes.” Not everyone has access to credit cards or even debit cards. Going cashless puts an undue burden on those Americans who can least afford it. That said, there seems to be little question – at least at this point – that sooner or later we will evolve into a cashless society. This will undoubtedly be better for many retailers, but let’s be realistic. The jury is still out on whether or not this really would be good for consumers in the long run,
Anticipating a cashless future, it shouldn’t be forced but allowed to develop. Going completely cashless can make it hard for some people to buy things. It’s important to balance the advantages of modern payments with including everyone.
The commentariat seems to have pretty well covered the bases, altho, curiously, no one so far seems to have come right out and said why many use cash: this is – to some people anyway – very much a control issue…a cashless > all electronic transaction society is one where every purchase can potentially be monitored. (Government meddling on the front end vs. government snooping on the rear…what’s a dedicated Libertarian to do?)
Forcing everyone to give up using cash is extreme, and it also means spending money, new tax dollars, and incentives to build an infrastructure so everyone participate in it. We’ve got many other issues to solve in society, this one is not a top priority.
If it happens over time, let it happen naturally.
I am afraid that the credit card transaction fee will be passed along to customers. In some places already is an extra $3-5