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Cashless used as a selection tool by trendy retailers

Categories : Cash is available to all users, Cash is universal
September 27, 2017
Tags : Card payments, Cash, inequality, Unbanked, Underbanked
The current trend of offering only cashless payments at fast food joints and other retailers makes those places inaccessible to the unbanked and the underbanked, according to an FDIC survey. Retailers should allow all payment options.
Communication Team / Equipo de Comunicación

An increasing number of trendy new restaurants and retailers are imposing a card-only policy, arguing that digital payments are faster and cheaper to process than those made in hard cash. A recent example is the number of new of cashless fast-food restaurants that have been appearing in New York City. Despite this trend, a study carried out by the Federal Reserve Bank of San Francisco indicates that cash remains consumers’ preferred payment instrument – at least when the cash option exists. 

To justify their shift to cashless, retailers often state that handling and storing cash is expensive. Yet, Craig Sherman – National Retail Federation’s spokesman – affirms that the costs inherent to cash payments are microscopic compared to those related to cards. In addition, most of the costs linked to cash transactions – such as safe transportation – can be reduced as there are many players in the cash management market. On the contrary, financial institutions rarely open to negotiation when it comes to card-related fees, which can range from 1.5% to 3% per transaction – a cost often passed-on to consumers.

Moreover, card-only retailers are inaccessible to the unbanked and underbanked which represent about 27% of the American population, according to a 2015 survey of the Federal Deposit Insurance corp. Jay Zagorsky – professor of economics at Ohio State University – highlighted the discriminatory character of cashless policies. In his view, card-only payments may serve as a selection tool used by fashionable retailers to turn low-income workers away.

Fortunately, the majority of retailers understand consumers’ needs and offer both options to settle the bill. Indeed, Domino’s once considered going cashless but quickly backtracked after noticing that a significant number of customers were relying on cash, favouring pizza lovers’ freedom of choice and convenience.

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