The national coin shortage is one of many inconveniences presented by the COVID-19 pandemic. Many businesses have posted signs requiring either exact change or electronic form of payment. This is a preview to the seemingly inevitable future: a cashless society.
According to CNN Business, the coin shortage began months ago when many businesses temporarily closed at the start of the pandemic. People now spend less cash in stores and rely primarily on electronic payment methods. This cash flow disruption resulted in the current shortage, as reported by Federal Reserve Chair Jerome Powell during a June 17 virtual hearing.
We have adapted to become less cash-reliant. The transition has been easy for some, as many of us rarely use cash and instead use debit cards or online payment systems like Apple Pay. This is a privilege.
Homeless populations and low-income individuals may not have bank accounts or cellphones that allow them to make electronic payments. As a result, society’s most vulnerable are struggling to purchase basic necessities.
According to a 2017 survey by the Federal Deposit Insurance Corporation, 6.5% of households in the United States did not have access to a checking or savings account. These families, many struggling with poverty or homelessness, cannot simply pull out a debit card when a business requests electronic payment.
A cashless society would neglect the needs of those who do not have access to the resources needed to open a bank account. Bank of America, for example, requires proof of residence and a minimum deposit during the application process. Most banks have similar requirements that exclude those who do not have permanent housing and may not be able to afford banking fees.
As a result, low-income citizens cannot easily obtain debit cards. As we move toward electronic-only payment, it is important to acknowledge the transition will primarily benefit the wealthy and middle-class.
I hope those pushing for a cashless society are also pushing for resources that will aid low-income individuals in the transition. Otherwise, a cashless society will devastate those without the means to a bank account.
We already have many examples of what a cashless society would look like. In addition to the U.S. coin shortage, some countries are testing out the idea through trials. According to Business Insider, China’s Luohu District issued 50,000 virtual red envelopes containing $30 worth of digital currency. Participants are required to make transactions through the government’s digital currency app between Oct. 12 and Oct. 16. The results of this move toward digital currency will be recorded upon completion of the trial.
If this approach to a cashless society proves to be successful, other countries may do the same. I understand why China and other countries advocate for the switch. There are benefits to a cashless society. According to a Forbes article, some theorize that elimination of cash handling could result in lower crime rates and less money laundering. It would also be easier to manage and track expenses, as every single transaction would be documented.
These benefits do not justify the harmful effects a cashless society will have on the homeless and the elderly. The article also cites that low-income and older individuals often have limited access to technology that would place them at a disadvantage when attempting to make purchases.
Homeless populations’ struggles during the current coin shortage show these individuals rely on the use of cash. If businesses and local governments fail to accommodate these citizens during a pandemic, I think it is safe to assume that circumstances will only worsen when society abandons cash completely.
Small towns like Flagstaff will likely be among the most impacted by the transition. Flagstaff’s many small businesses will be forced to cope with an increase in credit and debit card processing fees. Additionally, the city’s large homeless population will struggle to adapt.
Coconino County’s annual Point-in-Time count records the number of individuals experiencing homelessness on a given night. According to Arizona Daily Sun, a 2018 count found that 415 citizens did not have permanent shelter. This is at least 415 people who likely do not have the resources to set up a bank account and obtain a debit card.
In the case a homeless person is able to purchase necessities, they should be able to do so without worrying about if their payment method will be accepted. I hope Flagstaff and similar cities draft solutions to guarantee fairness for their large homeless populations who will still need to make purchases.
A cashless society will inevitably hurt low-income citizens. For these populations, the transition will be far more inconvenient than a simple switch to online and card-only purchasing. Technological advancement only advances the upper and middle class. Low-income individuals are only further disadvantaged.
A cashless society must involve accommodation for those who cannot afford to abandon the most accessible form of payment.