The Controversy and Appeal of ‘Cash-Free’

Cash-free transactions made with plastic and e-wallets are seen as progressive and state of the art, at least to the FinTech community. They leave a perfect record of purchases for promotional incentives, loyalty programs, inventory control and can help with general planning. While there is a running debate on e-payment costs compared to cash, cash-free business owners don’t need to worry about handling money or employee theft.

That’s the reasoning behind cash-free’s growing adoption at quick service restaurants (i.e. SweetGreen), as well as at entertainment and sports centers. But there is a growing and serious political backlash. Philadelphia has banned cash-free stores , following in the footsteps of Massachusetts. The Wall Street Journal reports that similar action is pending in New York and New Jersey; the UK is also looking at taking action that would basically require stores and organizations to accept cash.

Public advocates – backed by vested interests such as ATM associations – are making a strong case that cash-free needs to be slowed down. They argue that poor, under-banked communities are being unfairly impacted, along with seniors and others that are simply used to paying with cash, or prefer to pay with cash for privacy reasons.

A UK study funded by the ATM industry and cited by The Guardian noted that 17 percent of the UK population – over eight million adults — would be hurt by a universal, cash-free system. Its growing usage would also, incidentally, undermine the economic basis of the entire cash distribution ecosystem (ATMs, etc.).

No one’s asserting that e-payments are a bad thing. We’ve seen their use help facilitate government payouts for welfare and unemployment. We’ve also seen industry leaders like PayPal, Amex, WalMart and others leverage them as a means to help and work with the under-banked. They’re even a profit center.

Ultimately, what we’re seeing is a transition issue, similar to the transition to private cell phones from pay phones. What’s the answer, short of “redlining” who gets to shop and where?

One partial solution is to provide e-card machines where people can buy e-cards with cash. Mercedes Benz Stadium is already doing this with 10 Visa Debit card machines located throughout its premises. Another, longer term option might be the adoption of universal e-payment cards. London’s Oyster Card, for instance, is anchored by its use for public transportation, but is beginning to be used for many other types of payments.