Could COVID spell the end of cash?

As the pandemic shifts businesses away from cash, some lose a lifeline

Sep 28, 2020 | Editorial | Spending Habits | Government | Business
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Maggie Simpson... the original cashless payment?

When was the last time you opened your wallet...

And reached for cash? With the growing prevalence of debit cards, credit cards, apps, and mobile payments, it’s never been easier to pay your bills sans dollar bills. This gradual trend has accelerated recently as the ongoing pandemic leads businesses to veer toward the safety of cashless payments. But a cashless society could also discriminate against millions of the US’s most disadvantaged people. Could COVID have cash at a tipping point? The Post is here to break it down.

Why businesses want to go cashless

Cashless payments have long been quicker and easier to track for businesses. But the pandemic and the risk of virus transmission have shifted contactless payment from a preference to a necessity in some cases. Restaurants and retailers who want to take advantage of non-contact pickup or events that have moved from in-person to virtual have no choice but to abandon cash. Even businesses that have the option to take cash may opt to keep customers safe by removing a potential point-of-contact that comes with a cash payment. Factor in an ongoing coin shortage and the shift toward a cashless world feels downright logical.

But for many, cash is the only option

While it may seem like everyone has gone cashless, as many as a quarter of American adults are considered unbanked or underbanked. These people either don’t have access to a bank account or use an alternative service, like check cashing, to turn their paydays into cash. The argument from legislators and advocacy groups is that cashless businesses effectively discriminate against these unbanked individuals, who are more likely to be ethnic minorities, be less educated, and have lower incomes — all of which add up to fewer advantages during a financially tumultuous time. And across all groups, the issue with eliminating cash as a payment method is that it robs consumers of a choice some groups believe they should have. “Cash or Credit?” certainly has a friendlier ring to it than “Put your card here.”

And everyone’s favorite birthday gift isn’t going down without a fight

Although there’s no federal requirement that businesses accept cash, a growing number of cities and states are adopting rules of their own. Starting November 19th, New York City will require businesses to accept cash. The Big Apple will follow in the footsteps of cities like Philadelphia and San Francisco, which banned cashless establishments in 2019, and states like Massachusetts, which has required cash options for decades. Many advocacy and privacy rights groups are backing legislation to spread the rule to other states, with California considering a state-wide measure that would ensure over 30 million adults retain the right to pay cash.

Even so, are we still headed for a cashless future?

If we are, it’s a long way off. Today, cash still makes up a quarter of all payments and nearly half of all transactions under $10. A Fed survey from this spring revealed 70% of Americans weren’t avoiding cash due to COVID-related concerns, indicating fear of contamination might be a niche issue. Cash is a longstanding part of day-to-day life in the US, and eliminating it could mean turning away business from not just the millions of Americans who rely on it, but also the hundreds of millions who are accustomed to it. Even in a post-COVID world where contactless payments are the norm, cash may always have a place in how we pay, especially if legislation can secure its status as a consumer right.