WASHINGTON, Oct 28, 2018 (BSS/AFP) – As the US capital traded stifling
summer heat for cool autumn breezes, signs began appearing at bus stops,
asking Washington commuters: what do you think about buses going cash-free?
Salad lunch spot Sweetgreen doesn’t take greenbacks. Neither do certain
vendors at Nationals Park like Ben’s Chili Bowl, a local eatery popular with
baseball fans.
Slowly, DC businesses are ditching paper money for plastic, embracing a
trend gaining traction nationwide.
“I’m all for the cash-free system” on buses, Rogers Ferguson, a 52-year-
old Washington native and Navy veteran, told AFP.
“I do a lot of travelling abroad so I’m very acclimated to not carrying
cash.”
The 2018 World Payments Report, released this month by consultancy
Capgemini and banking giant BNP Paribas, indicates a global cash-free boom.
In 2015-2016, 483 billion transactions were cashless. That number is
expected to rise at a 13 percent compound annual rate through 2021, according
to the report.
Though the United States has often been a laggard in terms of payments
innovations, businesses in Washington are adopting the cash-free model.
Bus operator WMATA told AFP it is exploring the concept for efficiency
reasons: accepting cash can waste lots of time when customers are boarding.
But cost and security are also key factors, says James Angel, a professor
at Georgetown University’s McDonough School of Business.
Cash is “expensive to transport, you’ve got to count it, you’ve got to
worry about it disappearing and you also have to worry about the safety of
your employees,” he explained.
– ‘Kind of wrong’ –
There is no federal law forcing businesses to accept cash. Some states
such as Massachusetts have statutes on the books, but they do not appear to
be widely enforced.
But while businesses can reap the benefits of ditching real dollars, is
there a hidden cost for consumers?
“There’s no free lunch here,” Angel says.
Of course, consumers absorb the literal expenses, such as processing fees
and technology infrastructure. Angel also warns of ethical considerations
about leaving people behind in a cash-free world.
Tony Boomer, a 33-year-old laborer in the capital, says he is wary of
cash-free businesses due to security concerns, and argues that some people
just like paying in cash.
“It’s kind of wrong,” Boomer told AFP. “It’s like you’re separating the
people that don’t have credit cards.”
– The ‘underbanked’ –
In a country of more than 325 million people, 13 million Americans don’t
have a bank account, according to Federal Reserve figures.
Another 18 percent are what is known as “underbanked” — meaning they have
an account, but still use alternative financial services such as check
cashers and money orders.
In Washington, that translates to 37,000 unbanked and 72,000 underbanked
households, officials say — meaning a whole segment of the population could
be cut out of the new retail economy.
“Unfortunately a lot of the unbanked are primarily poor people, or people
of color,” says Stephen Taylor, commissioner of Washington’s city Department
of Insurance, Securities and Banking.
A lack of education, distrust of institutions and high banking fees all
play a role, explains Taylor, who manages Bank on DC, a program connecting
financial institutions and underserved communities.
Ferguson says a cash-free Washington could leave behind longtime residents
who are senior citizens, as well as young teens and people who struggle to
set budgets.
“Folks don’t really know how to manage money,” argued Ferguson, the father
of a 13-year-old son.
“The businesses who don’t accept cash really hinder their lifestyle
because they can’t manage it unless they physically see it.”
– Bumps in the road –
Joseph Leitmann-Santa Cruz, an associate director at financial education
non-profit Capital Area Asset Builders, said he doubts cash-free businesses
deliberately exclude certain consumers.
But he notes: “Those policies are pretty much saying, ‘If you are low-
income and don’t have a bank account or credit card, then we don’t want your
business.'”
For Land of Kush, a vegan soul food restaurant in nearby Baltimore, going
cash-free proved a mistake for that exact reason.
Earlier this year, owners Naijha Wright-Brown and her husband Gregory
Brown won $10,000 in a “Cashless Challenge” set by VISA.
They were motivated to enter and pledge to go cash-free after an armed
robbery last Thanksgiving.
But the experiment barely lasted a week.
“We’re a black business, so we serve a diverse customer base… including
people who just don’t have bank accounts,” Wright-Brown explained.
“So there was a population that was very upset with this and we couldn’t
really afford to lose that third of transactions that we get.”
– Getting people into banks –
In Washington, several city council members in June introduced a bill
seeking to require retail food establishments to accept cash.
But for Taylor, the solution is not putting a stop to cash-free.
“Say you force them to take cash — that doesn’t solve the problem of the
unbanked,” he said.
“The best thing that we can actually do is really work hard to redouble
our efforts … and actually get people into bank accounts.”
Angel suggests extending cashless payment options, such as mobile transfer
systems, to the unbanked could work — if the US, where chip-and-pin card
payments only recently became the norm, can get up to speed.
“Other countries have managed to do it — places like China, places like
Sweden. Other places have figured it out,” Angel said.
“But our country is really backwards in payments.”