THE SMARTPHONE ECONOMY
Post-coronavirus crisis, should we go cashless?

What’s happening

When Amazon opened its first cashless Go stores in 2019, cities and states that banned cashless businesses forced the company to quickly pivot and start accepting cash. But amid the coronavirus pandemic, many Americans are rushing to use cashless payments, eager to avoid touching surfaces potentially contaminated with the virus. According to a YouGov poll, almost half of Americans say that they are turning to cashless payments when making in-person transactions during the crisis. And as businesses look at reopening, they are implementing cashless protocols, such as Starbucks’ pledge to shift to cashless payments so customers don’t have to worry about virus spread.


Why there’s debate

For cashless proponents, the pandemic is demonstrating why it’s time to go digital. Cash can spread germs as it moves through hands, they say. And cashless payments are faster: The millions of Americans still waiting for mailed coronavirus stimulus checks could have had the money deposited directly into their bank accounts.

Advocates also argue that swiping or hovering a card over a terminal is more convenient than counting out bills. Businesses would save money by saving the time that would otherwise be used to handle cash, they say. Plus, they say that thefts would decrease with the absence of money in cash registers and a better ability to track payments.

But opponents maintain that going cashless is discriminatory. Several states and cities, including New York City and New Jersey, have already banned cashless businesses. Going cashless excludes people without bank accounts — such as those who are young, low-income, homeless or undocumented. And a cashless world would be difficult for people who are less tech savvy, like the elderly, who often struggle to navigate digital systems.

Critics also worry about scenarios in which, instead of being robbed of $20 from your pocket, you are hacked and lose everything in your bank account. There are also privacy concerns, as it’s easier to monitor digital payments. Vulnerable people, such as domestic abuse victims, could no longer secretly save cash in hopes of escaping dangerous circumstances. Finally, critics say that there are logistical difficulties to a cashless society, given that there’s no universal global digital banking system.

What’s next

China is currently piloting the world’s first digital national currency, and other countries are considering following suit. Amid the pandemic, Democrats have floated plans to give Americans “digital dollars” for future stimulus relief and to provide banking for those without accounts, but no legislation has yet been passed.
Perspectives

Proponents

Cash is dirty and can carry germs

“Do I want to grab the thing that you were just holding in your hand? No.” — Harvard economist Kenneth Rogoff to Politico
Digital wallets are more convenient

“For the U.S., digital wallets would have radically improved the government’s ability to help individuals and small businesses in this pandemic. Americans who signed up for direct deposit received stimulus payments much more quickly than those waiting for paper cheques” — Gary Cohn, Financial Times
Going cashless will help businesses recover in the pandemic

“I think the business case spoke for itself before COVID-19. I think it’s a necessity after COVID. And who knows how long we’re going to be operating with a latent amount of fear in our [customers’] minds about touching and extra contact?” — Steve Cannon to the Atlanta Journal-Constitution

It’s time to modernize our financial system
“The U.S. financial system was once considered unrivaled, but COVID-19 has exposed a network of outdated and inefficient technologies. Among the many lessons from this crisis, one will be that the U.S. must invest in its financial infrastructure to promote economic growth at home and its strategic influence abroad.” — Aditi Kumar, Los Angeles Times

Critics

A cashless society is an exclusionary society“Forcing customers to use only credit or debit is a discriminatory business model that disadvantages low-income people, people of color, undocumented immigrants and seniors. Communities of color in New York City are more than twice as likely to be unbanked and are far less likely to host a branch of a bank than the national average.” — Stuart Appelbaum, labor union president, to the Guardian
Without cash, it’s easier to get into financial trouble

“It can hurt people with low incomes when businesses go cashless, it can hurt workers who rely on cash tips and — even if you’re not in either of these groups — it can hurt you because it’s easy to get into financial trouble with credit cards.” — Sally French, New York Times

Cash provides privacy

“Cash safeguards our personal information, so each of us can decide whether or not to share the details of our spending habits. Digital payment technology makes it too easy to surrender our privacy.” — Doug Pertz, USA Today

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https://en.wikipedia.org › wiki › The_Cat_Who_Walks_Through_Walls

The Cat Who Walks Through Walls is a science fiction novel by American writer Robert A. Heinlein, published in 1985. Like many of his later novels, it features Lazarus Long and Jubal Harshaw as supporting characters.

Everyone should be able to participate in our economy

"Going cashless had positive results, but it also had the unintended consequence of excluding those who prefer to pay or can only pay with cash. Everyone in the community needs to have access to real food.” — Statement from SweetGreen restaurant chain, which reversed its cashless policy, Washington Post

Digital systems can fail

“Digital systems may be ‘convenient,’ but they often come with central points of failure. Cash, on the other hand, does not crash. It does not rely on external data centres, and is not subject to remote control or remote monitoring.” — Brett Scott, the Guardian