For several years now, and even more so during the global COVID-19 pandemic, advocates of a cashless society have grown louder and louder. Yes, the convenience of going cashless by using a smartphone app or a credit/debit card to make purchases is not to be ignored. However, it appears that advocates of a cashless society aren’t quite looking at the big picture.
As the coronavirus hit the U.S. hard in spring 2020, more people decided to, or were mandated to, stay home to help slow the spread of the virus. As part of this, more and more people made essential and non-essential purchases via online stores.
This surge in online shopping, however, left many Americans out in the cold.
Unbanked and Underbanked
According to the Federal Deposit Insurance Corporation’s (FDIC) 2019 survey How America Banks: Household Use of Banking and Financial Services, “An estimated 5.4 percent of U.S. households were “unbanked” in 2019, meaning that no one in the household had a checking or savings account at a bank or credit union (i.e., bank). This proportion represents approximately 7.1 million U.S. households.”
Racial and Economic Disparities
Additionally, the FDIC Survey found that, “Consistent with the results of previous surveys, in 2019 unbanked rates varied considerably across the U.S. population.” The report continues, “unbanked rates were higher among lower-income households, less-educated households, Black households, Hispanic households, American Indian or Alaska Native households, working-age disabled households, and households with volatile income.”
In 2019, more Black (13.8%), Hispanic (12.2%), and American Indian or Alaskan Native (16.3%) households were unbanked as opposed to White households, which came in at a much lower 2.5%.
Cashless is Bad for Equality
These numbers indicate that not allowing cash payments clearly harms a large segment of the American population. In a time of deep racial and economic divide, businesses would be wise to look for ways to be more inclusive and diverse in the ways they conduct business. By providing a variety of ways in which customers can pay for goods and services, businesses are helping to close the gap between the haves and have nots.
