Cash Is Dying, and the Unbanked Are Being Left Behind
As payments are increasingly going digital, the poor and undocumented need help to make the transition away from paper money
Imagine you didn’t have a bank account for a day. You can’t pay bills or shop for cheap goods online. You can’t even pay a parking ticket without going to a physical location. How would you possibly navigate that day? But for the people who use cash for most or all of their transactions, that’s everyday life.
In the United States, the unbanked and underbanked make up around one-quarter of the population, according to 2017 data from the FDIC. The majority of that group are non-white, minimally educated, and make less than $30,000 per year. Over half the people surveyed for the report said they didn’t have a bank account because they couldn’t afford to open one.
At the same time, government services across the United States are looking to go cashless, with New York, Houston, and D.C. considering cashless options for public transport, something low-income groups depend on daily. Some retail chains are also doing away with cash as a payment option, accepting only debit or tap-to-pay methods.
Most reports on cashless payments acknowledge that the unbanked and elderly will struggle with the transition, but not many of them outline actual solutions to the problem, focusing instead on the detriments of cash and the benefits of digital. For the one-quarter of the U.S. population who may be left behind by this transition, that isn’t good enough.
A report by the Boston Consulting Group identified five main barriers to cashless payment systems: high cost of electronic payments to retailers, lack of solutions for the customer, lack of governmental support, insufficient trust in digital payments, and an absence of support infrastructure. And those reasons make sense. Support for cashless payments is scattered, especially in poorer areas. Mastercard’s “Fareback Fridays,” where they pay the public transport fare for users with contactless Mastercards in New York City, have been…