The perils of a cashless society

8. January 2018.

Visa last year offered up to 50 small businesses a $10,000 bounty to go cashless. Though it is still too early to know what will happen to the businesses that won the contest (Visa has not announced the winners yet), the key arguments in favor of cash-abandonment are that it would lead to more efficient service and carry a lower risk of theft. A recent New York Times article profiled restaurants in Manhattan that take only plastic, and boosters are looking forward to an entirely cashless society.

Doing away with cash may indeed sound appealing. Proponents often note that China and India have already gone further in this direction than the United States. But a few drawbacks are obvious: Card companies such as Visa charge merchants high processing fees, the risk of fraud balances out the lower risk of theft, older customers may not wish to make the change, and consumers will lose yet more privacy. (Corporations will have the ability to track every purchase made.)

Perhaps less obvious is that a cashless system will exclude the poor and near-poor. Many impoverished people don’t have credit cards or bank accounts. The very poor can’t take plastic if they’re begging on the street.

Conditions in the U.S. are nowhere near optimal for a leap to a cashless society; too many people would be left behind. Your millennial friend may be happy to accept money via Paypal or another app, and your cafe may use an iPad instead of a cash register, but landlords in low-income areas still prefer money orders. It’s convenient for consumers to charge, say, an outing to the nail salon, but when you add the tip to your credit card bill, it may never make it to the worker.

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