Happy April! It’s finally Spring and here in New York, we’re in that in between season where it’s not quite Spring, not quite winter but everyone has Cabin Fever! April is also Financial Literacy Month and I wanted to address a trend that I’ve been noticing a lot more frequently: cashless stores.
The first time I ever found myself in a cashless store was at a Sweetgreen location in the city. My friend and I went in for lunch and when my friend went to pay with cash they said, “O no we’re cashless.” We both looked a little confused because what does that mean? There are many places that don’t take cards. As a person who never has cash on me, I hate cash only places. In this day and age, it makes no sense to me to not accept cards. But a place that didn’t take cash, when cash is usually the safest form of currency, is bizarre to me.
However, I have noticed that more and more stores and restaurants are cashless. My financial trainer had been encouraging me to use cash only because it helps you to keep track of the money you are spending. But if the stores I go to don’t accept cash, then this method doesn’t work.
As this trend continues to rise, it begins to paint a picture about the injustice of cashless stores. Around 8.4 million households (6.5%) in the US are “unbanked”; this means that they do not have a checking or a savings account. 24.2 million households (19%) were “underbanked”; meaning that they have a bank account, but supplement with other financial services such as money orders, payday loans, and check cashing. In terms of racial disparity, 17% of black households and 14% of Hispanic households do not have bank accounts.
There are multiple reasons why people do not have bank accounts from a lack of trust in institutions to a lack of funds. Cashless stores not only discriminate against minorities and immigrants who might not be able to get a bank account, but also against senior citizens who are more likely to use cash than a card. 30% of all transactions in the US are made with cash with many purchases under $10 being made in cash. Stores that have made this transition say that it protects their employees from being robbed, it’s better for the environment because the cash does not have to be delivered via trucks, and that it saves time in the store. Credit card companies love the idea because a fee is applied for every card purchase made in the store. This is the reason why most stores that don’t take cards prefer cash; they get to keep more of their profits.
I understand why stores have hopped on the cashless bandwagon, but I worry that in cities such as New York where the gap is widening everyday between the haves and the have nots that this will only create a bigger burden.