Gone Cashless?
Leaving your wallet in the car was once a big frustration, but now all you need is one plastic card to make it through the day. As businesses across the country get rid of their bulky registers and trade it in for a sleek and minimal monitor, having a wallet full of cash won’t get you as far as it used to.
This transition into a cashless society can spark controversy. On one hand, transactions are more efficient and the physical security aspect of protecting and transporting cash is eliminated. On the other hand, there is an increase in payment vulnerability that marginalizes the groups of people who only have access to cash. Additionally, going cashless poses an entire new risk to the economy.
As technology evolves, efficiency has been pushed to the forefront of all our minds. Automation has converted humans into minimalists who no longer make room for spare cash in their phone wallets. Going cashless streamlines the process for both customers and employees. What was once a three, maybe even four, step process has now turned into a one step swipe or chip insert. The employee does not even have to announce the total for the transaction anymore. The popular salad chain, Sweet Greens, reported that “its cashless locations processed 5 to 15 percent more transactions per hour” (Wang, 2019). This cash-free process cultivates a more pleasant, faster, and error-free experience for the customer, and potentially delivers more revenue for the business in the long run.
In addition to an increase in efficiency, the physical security of the payment process is eliminated. Owners don’t have to worry about the heedless teenager forgetting to lock up the cash register at closing. In 2017, the FBI reported that 26 percent of United States robberies took place at retail locations (Wang, 2019). Additionally, businesses can minimize the internal threat of theft too. According to the 2015 Retail Fraud Survey, employee theft is the “single biggest cause of loss to retailers” (Leinbach-Reyhle, 2015). A more unassuming factor that is attractive to businesses is the elimination of cash handling costs. No more bank fees to process deposits and no more paying for armored deliveries to transfer cash to and from the bank. It is estimated that small to medium sized businesses “pay tens of billions of dollars annually” on these expenses (Wang, 2019). Lastly, employees can dedicate more time to more essential tasks and spend less time manning the cash register. As corporations weigh the pros and cons of going cashless, there are evident gains to consider.
In contrast to these gains, there are serious drawbacks to weigh. From a cybersecurity standpoint, data security is a legitimate concern when it comes to going cashless. With a rise of credit card transactions, there comes a rise in data tracking and recording (Future Branches, 2020). In 2017, Equifax faced a weighty data breach that “exposed the personal information of 147 million people” (Equifax data breach settlement, 2020). Besides the hit to their reputation and stress, Equifax ultimately agreed to a settlement that could cost them up to $425 million. Instances like this require consumers and corporations to remember the consequences of a digital world. Transitioning into an entirely cashless society would potentially catalyze data breaches like this.
Another call to concern is the marginalization of consumers. Although it may feel like everyone has access to a bank account these days, there are still a large number of consumers without access to any financial services in the United States. In 2017, 6.5 percent of United States households, in other words 8.4 million households, “did not have a bank-issued debit or credit-card” (Wang, 2019). If a business switches to cashless, especially in a low income market, it will deter non-banking consumers, leaving both the consumer and the business worse off. Currently, there are no federal statutes in place that prohibits businesses to go cashless; however, local laws can be put in place to prevent this from happening. States like New Jersey and Massachusetts as well as cities such as San Francisco and Philadelphia have all passed laws banning cashless businesses (Sadeghi, 2020).
As businesses, law makers, and consumers look ahead to the future, they will find themselves puzzled by the decisions presented to them. In many ways, technology has transformed our lives to make it easier, but it has also created challenges we would have never foresaw without it. A cashless society is slowly looking to become inevitable in a more and more automated world and we must all adapt to be better fit for it.
Works Cited
Equifax data breach settlement. Federal Trade Commission. (2020, July 15). https://www.ftc.gov/enforcement/cases-proceedings/refunds/equifax-data-breach-settlement.
Future Branches Austin 2021. (2020, May 5). Here's how a cashless society will impact the world. Future Branches Austin 2021. https://futurebranches.wbresearch.com/blog/cashless-society-strategy-impact-the-world.
Leinbach-Reyhle, N. (2015, October 8). New report IDENTIFIES US retailers Lose $60 billion a year, employee Theft top concern. Forbes. https://www.forbes.com/sites/nicoleleinbachreyhle/2015/10/07/new-report-identifies-us-retailers-lose-60-billion-a-year-employee-theft-top-concern/?sh=293c05d480eb.
Sadeghi, M. K. (2020, September 16). Fact check: No US law requires businesses to take cash, but local laws may mandate it. USA Today. https://www.usatoday.com/story/news/factcheck/2020/09/16/fact-check-cashless-businesses-banned-only-some-local-state-laws/3330804001/.
Wang, C. (2019, August 19). Cash me if you can: The impacts of cashless businesses on retailers, consumers, and cash use. Federal Reserve Bank of San Francisco. https://www.frbsf.org/cash/publications/fed-notes/2019/august/cash-me-if-you-can-impacts-of-cashless-businesses-on-retailers-consumers-cash-use/#_ftn3.
