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Breakfast in America: The Cost of Convenience

Categories : Cash covers a broad range of transactions, Cash enables an immediate transfer of value, Cash facilitates budgetary control, Cash is trust, Cash protects privacy and anonymity
October 31, 2022
Tags : Cards, Cash, Convenience, Costs of payments
It is often argued digital payments are convenient. But convenient for whom? Digital payments incur costs in terms of trust, privacy, universality, freedom from commercial exploitation and the absence of discrimination.
James Shepherd-Barron

Disaster Risk Management Consultant, Author, and Founder of The Aid Workers Union

This post is also available in: Spanish

Last week, I flew to America again. It’s been a while. Too long, in fact. But that’s Covid for you.

I noticed things had changed when the taxi driver taking me to the airport asked if I wouldn’t mind paying in cash. He explained this was not to avoid paying tax but that the cost of processing card transactions had risen so much that he wondered how long he could stay in business. I duly obliged.

Not much had changed at Heathrow, though: Check-in was still a zoo; the long, snaking lines through security were as insufferable as ever, and there was no mask to be seen.

I noticed a couple of other minor changes only once in the air. The first was that the wine came in cans. It tasted just the same. It spilt just the same. It got dumped in with the organic and plastic waste just the same. The second was that I had to pay for it. This innocuous alteration to the rituals of flying across the Atlantic caught me just a little by surprise.

‘No problem,’ I thought to myself and began the contortion required to extract cash from my pocket while sitting in a seat designed by a midget while trying not to poke my neighbor in the eye or spill her wine. I proffered the crumpled notes.

“Oh. I’m sorry Sir,” said the lipstick with a tight smile, “but we don’t take cash.”

This would typically not have been a problem: a few hours earlier, I had been passing through London happily paying for my coffee and Tube tickets with my mobile phone like everyone else. But my phone – flight mode enabled, please note – and cards were crammed into the bins somewhere above my head.

“It’s more convenient this way,” crooned the lipstick.

‘Convenient for whom?’ I thought. It certainly wasn’t very convenient for me. Nor for my fellow passengers, as I would have to spend the next few minutes unseating them while scrambling around trying to locate some alternative means of payment.

Of course, we sorted it out in the end, with my neighbours smiling sympathetically at this embarrassed idiot who had not read the memo about cash, from an airline’s point of view at least, being a relic from a dim and distant past.

All of which would have played its tiny part in consigning cash to the trash can of history were it not for the fact that, on disembarking, we were all encouraged to dump our un-wanted loose change into a plastic bag as a contribution to UNICEF or some equally undeserving charity. How ironic. How can there be any ‘loose change’ on an aircraft that doesn’t accept cash? The question of convenience – or, instead, the cost of that convenience – loomed to the fore once more. Here I was, an unsuspecting public member, being told I could not use my preferred payment mechanism because it was presumably a time-wasting, expensive inconvenience to everyone in the airline industry.

Having dumped our bags at our apartment, my wife and I went out almost immediately to meet up with friends for dinner. Within seconds of entering the restaurant, the issue of payment choice and the costs associated with exercising that choice intruded.

The following statement was printed on the menu’s front page: “Please note: Due to the increased processing costs, a 2.75% convenience fee will be assessed on all credit and debit card transactions. PAY CASH & SAVE.”

With the bill coming in at nearly four figures at the end of the evening – I know, I know, but something inconvenient called inflation had also happened in the wake of the Covid thing – paying with cash was not a realistic option, so out came the cards. Cards plural. Which, in New York, entails some complicated mental arithmetic involving the subtracting of sales tax, guiltily adding an extortionate tip of not less than 20%, and then entering the total along with your half-remembered PIN into a hand-held electronic payments device, a merry, and highly inconvenient, dance.

While fumbling for our coats, I had the chance to ask the manager about his cash policy. He was troubled by it and thanked me for mentioning it. He had little option but to make the issue visible to his clientele, “especially as the actual costs were between 4.7% and 5.5% when the cost of the electronic payment systems were included.” Although complicated by Covid and the worsening economic outlook, he worried that this was already contributing to a drop-off in the number of bookings.

In an increasingly digital world, it is no surprise that these issues are now coming to the fore. There are undoubted benefits to be gained by digitisation, including access to easy credit through a financial inclusion strategy. But there are downsides, too, which society needs to consider if the option of paying with cash disappears completely. And it’s not just about the cost of transacting; it’s just as much about the social cost in terms of values foregone such as trust, privacy, universality, freedom from commercial exploitation and the absence of discrimination.

Digital payments, mainly financial technology, can exacerbate social exclusion and foster inequality. Unchecked, they stimulate indebtedness, erode our democratic right to exercise freedom of choice, discriminate against the unconnected, and ensure the poor pay disproportionate tax levels (applying levies on mobile and electronic payments is much easier than taxing the excess profits of multinationals). All this while framing the future of cash within an ideology of exclusion and accountability, perversely referred to as philanthrocapitalism.

Just because payments can be made digitally doesn’t necessarily mean they should. As any airline stewardess, taxi driver or restauranteur will be able to tell you; these are not small things. They are certainly not in the collective interest. And, worse, if we lose the ability to provide our informed consent, we risk losing it all.

This post is also available in: Spanish