A few days ago, I went to the restaurant Lemonade and they had a sign saying “no cash.” The same thing happened to me in McDonalds and the more I look around, it seems like more businesses are going cashless. Is it all just a coincidence?
According to the LA Times, coronavirus has led to more stores going cashless. Only 8% of retailers in March were cashless and in April this reached 31%.
Based on the timeline, it’s pretty apparent that the main factor behind this is the pandemic. Since it has started, businesses have gone cashless to avoid handling the possible contagious change and cash.
Not only that but while people have been stuck at home, they’ve been the ones with all the coins, thereby reducing the number of coins that businesses have. So places where we usually see coins coming in, like laundromats, have seen a slowdown, if not a complete halt.
Therefore, because retailers don’t have any change in return for their customers they expect people to either give the exact amount in cash or pay with a card.
But the problem lies beyond a simple lack of coins.
8.4 million Americans don’t have a checking or savings account based on the FDIC. Most of them are Blacks or Latinos, the same people who are getting COVID-19 at disproportionate rates and losing their jobs.
Moreover, most of these people can’t open up bank accounts because there are additional fees associated with that and when most people live paycheck to paycheck.
However, as mentioned by Nora Seager, University High School AP Economics teacher: “our economy isn’t going to work if all consumers don’t get to spend money…. If we’re just forcing [the lower class] all into debt …. we’re really taking advantage of the most vulnerable and we need to stop looking at access to finance as a privilege of only the really wealthy class”.
So how can we help out these people?
Rather than handing out cash and coins to the low-income or homeless, hand out gift cards instead so those who need to purchase food can still do so, even without access to a debit or credit card.
But for an even more accessible solution that essentially anyone could do would be to head over to a nearby Coinstar to increase the number of coins in circulation. These solutions prevent the low-income from having to round up their purchases and reduce the likelihood of converting into a completely cashless society.
A future with a cashless society will only exacerbate the already existing economic inequalities and will be a huge step backward.