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Three years ago I wrote about how I was one step closer to not only going cashless -- I had pretty much already done that -- but also going walletless. (That's one of the things about writing a daily blog -- there's a public record.) I still carry a wallet in most cases, but I couldn't tell you the last time I paid for something using cash here in Toronto. It was probably at a Vietnamese restaurant.
I did, however, notice on my trip last month that Germany and Austria are still quite reliant on cash. Many places only accepted cash and many places wouldn't accept credit cards under a certain minimum spend. Fewer opportunities to just tap as well. I had forgotten how annoying it was to carry around lots of coins. You really need a change purse.
Still, a paradigm shift has taken place. And because of this shift, there's a growing movement in cities toward banning cash-free businesses. Philadelphia, Chicago, San Francisco, New York City, and Washington, DC are all working on policy. The concern is that not accepting cash discriminates against lower-income patrons.
According to the Federal Deposit Insurance Corporation (FIDC), approximately 8.4 million US households (6.5% of all households) were "unbanked" in 2017. This means that no one in the household had either a checking or savings account.
An additional 24.2 million US households (additional 18.7% of all households) are estimated to be "underbanked", meaning they have at least one account at an insured institution, but they also rely on outside financial products -- such as payday loans.
When surveyed, somewhere around half tend to cite "not having enough money" as one of the reasons for being "unbanked." But the good news is that the percentage of people without a bank account seems to be declining (see above chart).
This is important because we all know where things are headed. And banning cashless businesses isn't going to stop that march. There are deeper issues that need to be addressed. Here is an excerpt from a recent CityLab article on the topic:
“I certainly don’t think [this bill] is the right long-term solution,” said Rogoff. “The future does not lie in this direction. The future lies in giving people free debit cards and financial inclusion.” He cited the case of India. The country launched a program to decrease the number of unbanked and saw the percentage decrease from 47 percent of adults in 2014 to 20 percent unbanked in 2017 according to the World Bank Global Findex Report. “If India can manage to give people free debit cards, so can the U.S.” Rogoff said.
Kenneth Rogoff is a professor of public policy at Harvard University, the former chief economist of the IMF, and author of The Curse of Cash. If you're interested in this topic, his book may be a good one to check out.
I increasingly never carry cash on me. I just never think to take out money and, when I do, I hate paying for things and getting change back. That change just ends up in a “change jar” in my apartment and then never comes out ever again. I keep telling myself that I need to buy coin rolls but that never seems to happen.
Lucky for me, it’s pretty clear that many cities and countries are quickly headed towards a cashless society. It’s pretty easy to get by in most cities today without cash. Here in Toronto, I use Uber and my PRESTO card to get around. I can use my phone for many purchases like coffee. And I can use my credit/debit cards for everything else. I never really thought about it until recently, but I have unintentionally gone almost completely cashless.
But of course it’s not just cash that is going to disappear; it’s also our physical wallets. Just this week Fred Wilson wrote a post on his blog about how he forgot his wallet at home and how Apple Pay came to the rescue at Whole Foods. I can’t wait until more banks roll this out in Canada. It’s also encouraging to see that under “coming soon” on the Apple Pay website, the Toronto Transit Commission is listed. I guess that means it will be integrated with PRESTO.
However, this transition is not happening in the same way everywhere. There are many countries that still prefer cash. According to CNN (November 2015), only about 10% of people in Indonesia and the Philippines would prefer to pay with a credit card. And it’s for this reason that Uber now accepts cash in a number of countries. It’s what those customers wanted. I find this interesting though, because not having to carry cash is one of the main reasons I use Uber.
Of course, there’s also the question of what happens to people who are currently not connected in anyway to electronic forms of money. I get asked by people on the street for change at least every day when I walk around Toronto. But there is actually no way for me to transmit the money I have to them. I don’t carry cash and I certainly don’t carry change.
I would be curious how many of you have gone or are close to going cashless. And if you are operating cashless, did you even notice the transition happening?
Three years ago I wrote about how I was one step closer to not only going cashless -- I had pretty much already done that -- but also going walletless. (That's one of the things about writing a daily blog -- there's a public record.) I still carry a wallet in most cases, but I couldn't tell you the last time I paid for something using cash here in Toronto. It was probably at a Vietnamese restaurant.
I did, however, notice on my trip last month that Germany and Austria are still quite reliant on cash. Many places only accepted cash and many places wouldn't accept credit cards under a certain minimum spend. Fewer opportunities to just tap as well. I had forgotten how annoying it was to carry around lots of coins. You really need a change purse.
Still, a paradigm shift has taken place. And because of this shift, there's a growing movement in cities toward banning cash-free businesses. Philadelphia, Chicago, San Francisco, New York City, and Washington, DC are all working on policy. The concern is that not accepting cash discriminates against lower-income patrons.
According to the Federal Deposit Insurance Corporation (FIDC), approximately 8.4 million US households (6.5% of all households) were "unbanked" in 2017. This means that no one in the household had either a checking or savings account.
An additional 24.2 million US households (additional 18.7% of all households) are estimated to be "underbanked", meaning they have at least one account at an insured institution, but they also rely on outside financial products -- such as payday loans.
When surveyed, somewhere around half tend to cite "not having enough money" as one of the reasons for being "unbanked." But the good news is that the percentage of people without a bank account seems to be declining (see above chart).
This is important because we all know where things are headed. And banning cashless businesses isn't going to stop that march. There are deeper issues that need to be addressed. Here is an excerpt from a recent CityLab article on the topic:
“I certainly don’t think [this bill] is the right long-term solution,” said Rogoff. “The future does not lie in this direction. The future lies in giving people free debit cards and financial inclusion.” He cited the case of India. The country launched a program to decrease the number of unbanked and saw the percentage decrease from 47 percent of adults in 2014 to 20 percent unbanked in 2017 according to the World Bank Global Findex Report. “If India can manage to give people free debit cards, so can the U.S.” Rogoff said.
Kenneth Rogoff is a professor of public policy at Harvard University, the former chief economist of the IMF, and author of The Curse of Cash. If you're interested in this topic, his book may be a good one to check out.
I increasingly never carry cash on me. I just never think to take out money and, when I do, I hate paying for things and getting change back. That change just ends up in a “change jar” in my apartment and then never comes out ever again. I keep telling myself that I need to buy coin rolls but that never seems to happen.
Lucky for me, it’s pretty clear that many cities and countries are quickly headed towards a cashless society. It’s pretty easy to get by in most cities today without cash. Here in Toronto, I use Uber and my PRESTO card to get around. I can use my phone for many purchases like coffee. And I can use my credit/debit cards for everything else. I never really thought about it until recently, but I have unintentionally gone almost completely cashless.
But of course it’s not just cash that is going to disappear; it’s also our physical wallets. Just this week Fred Wilson wrote a post on his blog about how he forgot his wallet at home and how Apple Pay came to the rescue at Whole Foods. I can’t wait until more banks roll this out in Canada. It’s also encouraging to see that under “coming soon” on the Apple Pay website, the Toronto Transit Commission is listed. I guess that means it will be integrated with PRESTO.
However, this transition is not happening in the same way everywhere. There are many countries that still prefer cash. According to CNN (November 2015), only about 10% of people in Indonesia and the Philippines would prefer to pay with a credit card. And it’s for this reason that Uber now accepts cash in a number of countries. It’s what those customers wanted. I find this interesting though, because not having to carry cash is one of the main reasons I use Uber.
Of course, there’s also the question of what happens to people who are currently not connected in anyway to electronic forms of money. I get asked by people on the street for change at least every day when I walk around Toronto. But there is actually no way for me to transmit the money I have to them. I don’t carry cash and I certainly don’t carry change.
I would be curious how many of you have gone or are close to going cashless. And if you are operating cashless, did you even notice the transition happening?
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