Weekend discussion topic: Cashless society

[Ginevra]

I do think we will eventually operate in a cashless society. Personally, I am mostly in favor of a cashless society. I already largely operate this way, especially since the pandemic began. Literally, I had maybe a total of twenty dollars in cash in my wallet at the start of the pandemic and the only cash I spent was three dollars to post a package. The same cash has been sitting in my wallet for almost a year. 

I have heard of downsides but a lot of them don’t seem like big downsides to me. (For example, I heard once the objection that you can’t put money in a birthday card or graduation card. But I haven’t done that in years anyway; my own kids do not want a bill they have to go cash and nieces/nephews I would give a check or a gift card.) 

So what are your thoughts on having a no-cash society? 

[Dmmetler]

The big concern I can see is that being cashless costs money-you need a minimum amount deposited to get a no fee debit card, a decent credit rating to get a credit card, prepaid credit cards have a pretty hefty fee, etc. 

[Lucy the Valiant]

Also loss of privacy.

[Guest]

2 minutes ago, Dmmetler said:

The big concern I can see is that being cashless costs money-you need a minimum amount deposited to get a no fee debit card, a decent credit rating to get a credit card, prepaid credit cards have a pretty hefty fee, etc. 

So there is a concern about “spending equality,” I guess we could call it. What if you could have a card backed by cash at the bank? Kind of a Money Order card? So you take some type of payment to your bank (or you do it digitally) and the bank fills your spending card with the funds-backed amount? 

[Pawz4me]

It doesn't bother me one way or other (I don't think), but I can see where--at least as things currently work--it would be a hardship on poorer people and perhaps on younger people just establishing their credit.

[Guest]

4 minutes ago, Lucy the Valiant said:

Also loss of privacy.

Maybe. But I feel like that ship has sailed, hasn’t it? Anyone who has the normal elements of life in society has a market profile sheet a mile long. 

[Spy Car]

"No cash" would have extremely negative impacts of the most marginalized people in our society.

Those of us in the middle class often underestimate just how many of our fellow citizens do not have access to standard banking and just how ripped off these people are when the need to turn to predatory financial alternatives.

Accepting cash should be required for all debts and payments IMO. It is a matter of equity and justice in the prevailing conditions.

Bill

 

[Pawz4me]

2 minutes ago, Quill said:

So there is a concern about “spending equality,” I guess we could call it. What if you could have a card backed by cash at the bank? Kind of a Money Order card? So you take some type of payment to your bank (or you do it digitally) and the bank fills your spending card with the funds-backed amount? 

That's essentially what a secured credit card is. Usually the limits are low--two or three hundred. I think that could be a headache for many people. One decent grocery run could be more than your limit.

[regentrude]

I am fine with cashless, but that is a privilege: I have internet access, my employer pays me by direct deposit, I have access to credit cards.

There is a large unbanked population that does not have access to electronic banking. A cashless society would further increase inequality.

ETA: https://www.cnbc.com/2019/03/08/25percent-of-us-households-are-either-unbanked-or-underbanked.html

 

Edited February 12, 2021 by regentrude

[Guest]

1 minute ago, Pawz4me said:

That's essentially what a secured credit card is. Usually the limits are low--two or three hundred. I think that could be a headache for many people. One decent grocery run could be more than your limit.

Thats what I had in my early twenties to establish credit. I had a bank CD of $300 and that was my “credit” limit. 

I was thinking of something more like a money order. You could add to the card at any time. It would be backed by a one-time secured deposit. 

[Guest]

@Dreamergal Thank you for sharing that interesting glimpse of a different reality than my own. So interesting.

[Lilaclady]

I agree with what Quill and Bill said  upthread. We do need to find a way to make sure the marginalized and unbanked are banked before we go cashless.When we visited China two years ago, I was impressed with how in the cities, you can be mostly cashless. Even the street vendors were accepting payment with weChat pay and AliPay.  Just use your phone with the QR code no card necessary. 
we do have a way to go and with the rise of cryptocurrency, things may start to change fast. 

[alisoncooks]

I'm sure this is out-there, but The Handmaid's Tale definitely colors my apprehension towards a cashless society (where it was a precursor to a totalitarian state where certain populations suffered).

[Hyacinth]

This opinion piece from the ACLU lays out some of the concerns. (Loss of privacy, hardship for unbanked populations, additional  fees for merchants, etc.). 

[Bootsie]

I think that people who want to can go just about cashless if they want. If someone wants to conduct their life that way, I don't see a problem with it.  But, I do not think we should try to move to being a cashless society or push those who want to use cash not to.  I think the privacy issues and the difficulty and cost to those who are marginalized are significant.  And, it has really annoyed me when I have gone to a store to purchase something and their computer system has gone down, preventing me from paying and leaving with my item.  So, my total is $10, I have a $10 bill--why can't I just give it to you and leave when the stores computers aren't working?  

[marbel]

Though I live mostly by cards and electronic banking, I agree that the US is not ready to be cashless.  Far too many people rely on cash. It is not necessarily easy to get a bank account if one has made, shall we say, mistakes with money in the past. I probably talk to 3-4 people a week who can't get a bank account (I work for a bank) because of their past banking history. Some banks offer "second chance" accounts  for those people, but those can come with restrictions and costs. Oddly enough, people with large bank accounts, who could afford a monthly fee, are usually spared. It's the people who can't afford fees who are charged them. Missing a fee and overdrawing an account can start a whole cascade of problems for people.

And then there is debit card fraud, which can wipe out a person's account overnight - I have literally had people calling me in tears because they woke up, checked their balance, and they had no money left. And the money doesn't come back instantly. 

Another problem is that not everyone has multiple sources of funds. I have more than one credit card so if one fails for some reason (the chip went bad, the card expired and I forgot to grab the new one, etc), I can just use another. Some people have only a debit card and if that fails, without cash in hand they might not have groceries till they get a new card. 

Cashless also has a cost to businesses - credit and debit card payments have processing fees. Often the merchant absorbs the cost (or hides it in higher prices) but I have even recently been in places that have a minimum for a non-cash payment to avoid the cost of processing. When I had some body work done on my car, the shop was upfront about adding their processing fee if I paid with a card. No extra fee for cash or a check.

And yes, there is the Handmaid's Tale scenario. 

Since working in a bank, I have a lot more compassion for people who live on the edge. (I also have a lot of frustration with people but that's another topic.) I spend a lot of time explaining basic banking to people, stuff my father taught me. I live in a very different world than many of my customers. 

Edited February 13, 2021 by marbel

[Ausmumof3]

One of the recommendations in domestic violence/divorce situations is to try to stash cash/gift cards etc to prep for getting out.  It could make life much harder for people in abusive situations.  However, society doesn’t really care about those people.  More bartering will probably happen.  
 

There was a lot of resistance to the existence of bank notes in the first place if I understand correctly.  I do think the more detached currency etc becomes from physical reality the more volatile markets etc could be but also that that horse has already bolted a long time ago.

[happi duck]

There are already so many things that leave people behind.  A cashless society would just multiply that.

[prairiewindmomma]

The flip side to Dreamer’s story are the cash transfer apps in places like Africa that makes banking possible for day laborers. https://www.un.org/africarenewal/magazine/may-july-2017/africa’s-quest-cashless-economy-gains-momentum
 

I see benefits and drawbacks to both systems.

[marbel]

1 hour ago, Quill said:

So there is a concern about “spending equality,” I guess we could call it. What if you could have a card backed by cash at the bank? Kind of a Money Order card? So you take some type of payment to your bank (or you do it digitally) and the bank fills your spending card with the funds-backed amount? 

A debit card is a card backed by cash at the bank. You deposit money into the account, the funds are available to you via your card.  There are also prepaid cards - people go to a location, Walmart may be one?, and add cash balance to the card.  

[Guest]

49 minutes ago, alisoncooks said:

I'm sure this is out-there, but The Handmaid's Tale definitely colors my apprehension towards a cashless society (where it was a precursor to a totalitarian state where certain populations suffered).

I keep meaning to read that book but I haven’t yet. I even have a copy in my house that dd read in college. Just havent gotten around to it. 

[katilac]

I think the underground economy is probably too large for America to go cashless. 

[Lady Marmalade]

Well, this pandemic got me out of my comfort zone and got me using my phone to pay and now I feel like that's the greatest thing ever.  I love being able to just have my phone in my pocket when I go out! I'm always disappointed when I have to actually pull out a card to swipe.    But I don't think it's a solution for much of the world around us. 

Those pre-paid cards are terrible to use.  Different places have different ways they process them and too often you can't use them as a partial payment, so you're left with a very small amount that you can't use on a card, and that adds up over time. 

And what happens in situations where there is power loss over a length of time? You can't get gas, food, water, shelter without a way to pay. 

I  can see the appeal myself, but I don't think it will happen any time soon. 

[Carrie12345]

I think it has some drawbacks that have already been mentioned, but it also feels almost inevitable at some point, so we’d better get to work on remedying them.

My mother used to struggle a lot with car issues and swore we should go back to the horse and buggy. But society was no longer set up for equine travel.  It’s an imperfect analogy of course. But mainstream society had long moved on despite the problems it caused for some.

I’m not a fan of dismissing an issue based on our refusal to solve problems we should be fixing already. Keeping some cash in circulation for poor people still leaves people poor.

[Lilaclady]

49 minutes ago, Bootsie said:

 And, it has really annoyed me when I have gone to a store to purchase something and their computer system has gone down, preventing me from paying and leaving with my item.  So, my total is $10, I have a $10 bill--why can't I just give it to you and leave when the stores computers aren't working?  
 

 

I think this has to do more with employees making off with the money and all that entails. I was reading about John Patterson who bought the rights to the cash register when he discovered it helped to reduce the theft in his store by his employees. 

[Guest]

13 minutes ago, Carrie12345 said:

I think it has some drawbacks that have already been mentioned, but it also feels almost inevitable at some point, so we’d better get to work on remedying them.

My mother used to struggle a lot with car issues and swore we should go back to the horse and buggy. But society was no longer set up for equine travel.  It’s an imperfect analogy of course. But mainstream society had long moved on despite the problems it caused for some.

I’m not a fan of dismissing an issue based on our refusal to solve problems we should be fixing already. Keeping some cash in circulation for poor people still leaves people poor.

I feel the same. And I like your car analogy.  

[prairiewindmomma]

We created a lot of rules around banking post 9/11 supposedly designed to combat terrorism but which in fact made it harder for the undocumented to have access to banking and identification. 
 

One of the things we could do is acknowledge the reality before us and create a system to document workers, have them pay taxes, and give them access to banking and the like. 

[Bootsie]

4 hours ago, Quill said:

So there is a concern about “spending equality,” I guess we could call it. What if you could have a card backed by cash at the bank? Kind of a Money Order card? So you take some type of payment to your bank (or you do it digitally) and the bank fills your spending card with the funds-backed amount? 

A debit card (without overdraft ability) is a card backed by cash at the bank.  The problem is that many people do no have access to a bank, or the fee that a bank will charge for this type of service is high relative to the amount of money they have.  Just like fees are charge for money orders, there would be some type of fee associated for this service being provided by a bank.

[Bootsie]

3 hours ago, Lilaclady said:

I agree with what Quill and Bill said  upthread. We do need to find a way to make sure the marginalized and unbanked are banked before we go cashless.When we visited China two years ago, I was impressed with how in the cities, you can be mostly cashless. Even the street vendors were accepting payment with weChat pay and AliPay.  Just use your phone with the QR code no card necessary. 
we do have a way to go and with the rise of cryptocurrency, things may start to change fast. 

The downside to this for someone in China is that there is no way for them to get their money outside of the country.  It is not simply a privacy issue that all of your expenditures can be traced--where you were, what you bought, and when you bought it.  It is an issue that your purchasing power if you are Chinese is not transferable to any other currency.  I do not want to be in a situation in which I can only spend money in my current home country.

[fairfarmhand]

On Christmas Day, there was a bombing in Nashville. That bombing affected a major telecommunication network in our area. For days, many stores in our area couldn't process transactions with cards. You should have seen the craziness in the stores. People were so angry that they couldn't pay for their things. I know, I know "We should have our communications secure." Right. How does that help when there is a natural disaster or something like that? You can't always plan on these things. Stuff happens. 

I was able to buy food for my family after the bombing with cash. Which was nice considering, we'd been sick with covid and I was out of quarantine and could finally pick up some stuff for our family because we were running pretty low. 

 

[Ausmumof3]

2 hours ago, Carrie12345 said:

I think it has some drawbacks that have already been mentioned, but it also feels almost inevitable at some point, so we’d better get to work on remedying them.

My mother used to struggle a lot with car issues and swore we should go back to the horse and buggy. But society was no longer set up for equine travel.  It’s an imperfect analogy of course. But mainstream society had long moved on despite the problems it caused for some.

I’m not a fan of dismissing an issue based on our refusal to solve problems we should be fixing already. Keeping some cash in circulation for poor people still leaves people poor.

That’s a pretty good analogy.  As someone who struggled with driving and still hates driving some places it does definitely disadvantage you.  But society does what it’s going to do and we just have to learn to navigate it as best we can I guess.

[Bootsie]

What would the tooth fairy leave?

It would also make some things like paying the neighborhood kid who feed the dog while we were away difficult.  And, I think there is an advantage for kids to actually see money and how it is spent.  For many kids, I think it is helpful to see if I have a $10 bill I can change it into $1 bills and purchase a $1 coke ten times, then all of that money has been used, even before they are able to do all of the arithmetic involved.  That is easier for a child to relate to than swiping a card which has a balance change but not really something tangible for the child to see leaving.  

[regentrude]

56 minutes ago, Bootsie said:

It would also make some things like paying the neighborhood kid who feed the dog while we were away difficult.  

Not really - with Venmo it is very easy to quickly send small amounts of money. Students use it all the time to split their pizza bill, reimburse the person who bought drinks for the group etc.

[Bootsie]

1 minute ago, regentrude said:

Not really - with Venmo it is very easy to quickly send small amounts of money. Students use it all the time to split their pizza bill, reimburse the person who bought drinks for the group etc.

Do you have to have a phone to do that, though?  I was thinking of situations of giving small amounts of money to children that did not yet have a smart phone. But then the age at which a kid gets a smart phone is probably getting younger than I realized.  

[Ausmumof3]

14 minutes ago, Bootsie said:

Do you have to have a phone to do that, though?  I was thinking of situations of giving small amounts of money to children that did not yet have a smart phone. But then the age at which a kid gets a smart phone is probably getting younger than I realized.  

This is true, ds did some work recently that he was paid cash for.  If he had to have a bank account and get paid that way he would have had to be registered for tax, do a tax return the whole thing I imagine.  It wasn’t a huge amount of money and probably he just wouldn’t have been able to do it, missing out on an earning and learning opportunity.

IDK.  Maybe my feelings about this have been influenced by the ridiculous amount of time I’ve spent trying to sort out tax stuff, social security etc the last few weeks.  But I think for those currently in the workforce it’s hard to see how stupidly complicated some of those barriers to entry/reentry are etc.  Fully cashless society feels like it would add a whole new level of complication to cottage industry type businesses, kids work and pocket money, Facebook marketplace and more.  

[Guest]

6 hours ago, Bootsie said:

What would the tooth fairy leave?

It would also make some things like paying the neighborhood kid who feed the dog while we were away difficult.  And, I think there is an advantage for kids to actually see money and how it is spent.  For many kids, I think it is helpful to see if I have a $10 bill I can change it into $1 bills and purchase a $1 coke ten times, then all of that money has been used, even before they are able to do all of the arithmetic involved.  That is easier for a child to relate to than swiping a card which has a balance change but not really something tangible for the child to see leaving.  

That is true, but even with that as an ideal, I moved away from cash with my kids at some point because I constantly had to go to the bank and get a certain amount of dollar bills to give them, say, allowance or to pay them for doing bigger jobs. It would also happen that I would buy something for them and then they would give their cash right back to me, like if I was ordering them a downloadable game for instance. It was redundant and not very sensible. (Also, this was several years ago; those kids are 23 and 21 now.) I began to think learning those cash lessons was not particularly relevant to the actual reality of how they would be purchasing things in the future and that learning good digital money management skills was much more important. Thus it is actually important for them to understand the abstraction of their bank balance getting smaller when they use a debit card, or a credit card balance increasing, making it harder to pay off. 

I would guess many people with little kids now may never give them cash allowances or cash tooth fairy money or cash payment for sweeping out the garage. They will Venmo it, or the parent will just add it to a digital ledger. 

PS. I hated the tooth fairy thing, lol! 

Edited February 13, 2021 by Quill

[Guest]

5 hours ago, regentrude said:

Not really - with Venmo it is very easy to quickly send small amounts of money. Students use it all the time to split their pizza bill, reimburse the person who bought drinks for the group etc.

Yeah, my ds21 uses Venmo very frequently, and his roommate Venmos me his portion of the rent every month. 

[madteaparty]

Haven’t read the replies but it’s already practically cashless in China for example and this was a couple years ago. Even street vendors had a little page displayed with their QR code. I was able to use cash, but I was a minority for sure. 

[TravelingChris]

I have been building up a cash reserve at my house to have some money if we lose power or stores lose access to registers, etc/  My area had a tornado in right before I moved here and lost power for 11 days because it hit the main transmission lines from the nuclear power plant.  Also, we are about to have ice storms/etc too. Best to have some cash. 

[Carrie12345]

17 minutes ago, TravelingChris said:

I have been building up a cash reserve at my house to have some money if we lose power or stores lose access to registers, etc/  My area had a tornado in right before I moved here and lost power for 11 days because it hit the main transmission lines from the nuclear power plant.  Also, we are about to have ice storms/etc too. Best to have some cash. 

We have emergency cash at home, too. It’d still have incredibly limited use in a power outage since nearly every business uses electronics, even if not internet, for transactions.  My local farm would probably find a way to work with me, but my gas station would be SOL on multiple fronts.  The last time I was in our supermarket with a power failure, they actually went no-cash and did old school credit card rubbing machines to process later. That is, for orders that were already scanned in and stuck in payment mode. There was no way for them to tally new orders. There generally aren’t price tags on supermarket items.

[Teaching3bears]

Interesting thread.  It made me think and I learned so much in a few minutes just scrolling down.

 

 

[Teaching3bears]

We will probably move to cashless at some point but oh, the joy of the piggy bank.  Somehow a card or an app isn’t the same, especially for a 5-year old.

[Pawz4me]

58 minutes ago, Carrie12345 said:

We have emergency cash at home, too. It’d still have incredibly limited use in a power outage since nearly every business uses electronics, even if not internet, for transactions.  My local farm would probably find a way to work with me, but my gas station would be SOL on multiple fronts.  The last time I was in our supermarket with a power failure, they actually went no-cash and did old school credit card rubbing machines to process later. That is, for orders that were already scanned in and stuck in payment mode. There was no way for them to tally new orders. There generally aren’t price tags on supermarket items.

Yes. It's been many years since I've understood the advice to have cash on hand for emergencies. Stores rely on scanners to ring up items. Gas pumps require electricity to work. I figure the only good cash would do me in a long term power outage would be to buy some eggs from someone with chickens, or if it were during summer/early fall from the one farm stand near me. Or possibly from a very small mom-and-pop type store that could tally up items by hand (but I don't know of any of those anywhere near me). My MIL is of an age that she believes she has to have some cash on hand. She's convinced an end-of-the-world-as-we-know-it type event is coming. I tell her she'd be much better off to stock up on booze and other things people would be willing to trade for, but she doesn't get it. She can't make the connection about how dependent on electricity and connectivity we are now.

[marbel]

12 hours ago, Carrie12345 said:

I think it has some drawbacks that have already been mentioned, but it also feels almost inevitable at some point, so we’d better get to work on remedying them.

My mother used to struggle a lot with car issues and swore we should go back to the horse and buggy. But society was no longer set up for equine travel.  It’s an imperfect analogy of course. But mainstream society had long moved on despite the problems it caused for some.

I’m not a fan of dismissing an issue based on our refusal to solve problems we should be fixing already. Keeping some cash in circulation for poor people still leaves people poor.

That's true. Eventually, probably, we will move to a cashless society. "We" just need to be mindful that there are currently people who can't participate in it and take care that they are not left behind. Cash or cashless, there will always be people who are poor. The issue is access. Of course, as with most everything else, it's easier for people who aren't poor. 

Edited February 13, 2021 by marbel

[JumpyTheFrog]

People spend more when they swipe cards. I've heard 18% is common. So if we went cashless, people would spend more, there would be no privacy, and the banks would get a 2-3% cut of every transaction. No thanks! Not to mention anyone who isn't eligible for a checking account (say because identity theft gave them a negative record with Chex Systems which most banks use to see if a person is worth the risk of a checking account) would be stuck using pre-paid cards that fee people to death. And did I mention no privacy? Plus swiping cards instead of counting out money is not an easy way to teach kids about money. Finally, like others have pointed out, "Cash doesn't crash." I don't have to create an account and pay a fee to send or receive it. I don't have to wonder if the other person will dispute the transaction or if my cash will disappear if the system is hacked or the power goes out.

Edited February 13, 2021 by JumpyTheFrog

[JumpyTheFrog]

As captain of a team I had to order jerseys a few years ago. I was very specific that I wanted $16 cash. It took a few weeks for everyone to pay me because they'd forget to go to the ATM or ask if I took Venmo or Apple Pay. I occasionally pay for things online with PayPal, but I am not going to open accounts of every type because people can't plan ahead to go to the ATM.

[Excelsior! Academy]

In a cashless society it would be harder for a grandparent to slip a grandchild $20 for gas or to give a small child a couple of dollars to spend at a dollar store.  A very young child won't get the same thrill or even understand that it is "their" money if the parents helped them spend through an app on a phone.  An abused woman wouldn't be able to save up a few dollars here and there to remove herself from an unhealthy situation.  Apps would make yard and bake sales difficult.  As much as I despise fundraisers, a cashless society would make door to door trash bag sales and Girl Scout cookie stands in front of grocery store chains a bit more challenging. There would be no more throwing a few coins into the Salvation Army buckets. Sure, one could argue that all of those could be done through an app, but would it decrease or increase sales and donations? 

[Roadrunner]

Credit card companies would love it. Small businesses, not so much. Tremendous amount in fees would be transferred from the latter to the former. 
 

 

Edited February 13, 2021 by Roadrunner

[Carrie12345]

1 hour ago, JumpyTheFrog said:

People spend more when they swipe cards. I've heard 18% is common. So if we went cashless, people would spend more, there would be no privacy, and the banks would get a 2-3% cut of every transaction. No thanks! Not to mention anyone who isn't eligible for a checking account (say because identity theft gave them a negative record with Chex Systems which most banks use to see if a person is worth the risk of a checking account) would be stuck using pre-paid cards that fee people to death. And did I mention no privacy? Plus swiping cards instead of counting out money is not an easy way to teach kids about money. Finally, like others have pointed out, "Cash doesn't crash." I don't have to create an account and pay a fee to send or receive it. I don't have to wonder if the other person will dispute the transaction or if my cash will disappear if the system is hacked or the power goes out.

This is something that may be shifting.  Younger people, who have more experience with “digital money” than “paper money” have been talking about having stronger emotional ties/awareness to the alerts and instant balances their phones supply them with than they do to cash bills.

Some of us older people may want to work on owning our personal habits/impulses/comfort zones and accept that the generations below us have different experiences. 

[SKL]

I hardly ever use cash, but there are some service providers who prefer it.  Partly because, in one case, the person has executive function issues that have led to lack of a bank account.  I believe there are a fair number of people like that out there.

Another consideration is how kids can spend money if they are not old enough for a credit card.  I do send my kids into stores with my own credit card, and that usually works fine, but it isn't a solution for all situations.  And it's important for kids to get experience using money.

The privacy concern is big.  15+ years ago, I worked on a project involving technology that would allow vendors to track and analyze data of purchasers, for use in marketing - for example, if you just bought diapers, it might send you a coupon for wipes.  15 years later, imagine how sophisticated technology has become and how many uses it can be applied to, especially if it got hacked.  Bad enough I can't even say or type a word without instantly seeing ads on my computer for related products.

I think we're definitely at a point where if you want to be cashless, you can be 99% of the time, but I don't think it's necessary or right to force everyone else to be cashless.