As more sites go cashless after pandemic, ASU experts see downsides


As businesses and destinations begin to reopen after the pandemic has ended, consumers will likely see more places without cash.

Chase Field in downtown Phoenix, home of the Arizona Diamondbacks, will reopen at full capacity later this month. When the stadium was opened to a limited number of fans in April, the team announced a new policy of not accepting cash. Fans use a smartphone app to book parking and to order and pay for concessions. Cash is not accepted at dealership counters, parking garages or the team store.

The east entrance to the Grand Canyon, closed for over a year, reopened last month with a policy of only accepting park passes and credit cards – no cash.

Going cashless won’t be a major drawback for people who already use their debit or credit cards almost everywhere, but it does raise privacy and fairness concerns, according to two experts from Arizona State University.

“It’s more hygienic because there is less contact and you don’t share bills and change,” said Geoffrey smith, clinical associate professor of finance in the WP Carey Business School at ASU.

“Things are heading towards cashless, but now is the right time for companies to deploy it, as consumers accept it more under the guise of security.”

Plus, companies don’t have to rent armored cars to transport large amounts of cash.

Some companies accept digital payment services, like Apple Pay, Smith said.

“I think it’s the future, where you use your phone and get rid of cards,” he said. “People like speed, convenience and accurate record keeping.

“You can go out to dinner and split the bill right at the table on everyone’s phones.”

Additionally, Smith is even seeing physical retail sites adopting cashless policies.

“Some places try to get rid of cash registers in stores by switching to some kind of shopping where you put your item in the cart and it will charge you right then,” he said.

Amazon Go and Amazon Go grocery stores use this method, where there are no payment lines.

“It saves space and frees up manpower,” Smith said. “Retail needs to compete with the online experience, so these types of instant payments allow retail to be more competitive.”

But he sees that some people prefer to use cash for privacy reasons.

“There is a loss of privacy. All of your transactions are now electronically tracked, and people can tell where you have been, how much you spent and what you bought, ”he said.

As consumers’ purchases add up, the data can be leveraged to gain more personal information.

“For example, if you go to the same place every day for a coffee, a company may infer that you work in that region because you are there 200 days a year at 8 am,” he said. he declares.

But the shift to cashless transactions raises equity concerns, as low-income people are less likely to have accounts with traditional banks, according to Debra radway, professor at WP Carey School and Certified Financial Planner.

“Many banks have minimum balance requirements, they have overdraft fees and a lot of fees in place that make the cost prohibitive for a low-income person to have an account at a traditional bank,” he said. she declared.

“With large institutions, they usually have a minimum amount that you need to keep in your account or you need to have direct deposit to waive the fees.

A traditional bank’s charge for an overdraft could be $ 40 or $ 50, she said, although credit unions typically charge less.

Banks are for-profit businesses and make money from large fees and balances carried by customers, which they can lend, by charging interest.

“They have a requirement that they have to be in underserved communities, but typically banks are focused on making a profit so that they seek out the most profitable customers,” Radway said.

A 2019 investigation by the Federal Deposit Insurance Corporation found:

  • In the United States, 5.4% of households, or about 7.1 million, were “unbanked,” with no checking or savings accounts.
  • The percentage is much higher for black households, 14%, and Hispanic households, 12%.
  • Unbanked households said the main reason was that they did not have enough money to keep an account.
  • About 7% of unbanked households had a credit card.
  • According to another FDIC survey in 2017, two-thirds of unbanked households reported paying their bills in cash.

However, being unbanked doesn’t mean avoiding fees.

“If you’re low-income and don’t have a checking account and you’re paid by check, you have to pay an additional fee to cash that check,” Radway said.

“If you want to see who serves the poor, it’s the check cashing companies and the payday loan companies. When the poor live paycheck to paycheck, they run out and have to take short-term loans and wait for their next paycheck to come in to cover it.

“These tend to have high annualized fees, but if you don’t have an account, you have no choice.”

Not everyone subscribes to the cashless trend. Last year, New York City joined with Philadelphia and San Francisco in banning stores from going cashless over fairness concerns, especially the difficulty that homeless and undocumented people face. would have to deal with the acquisition of bank accounts.

Some sites recognize that many consumers still use cash. At Staples Center in Los Angeles, where the Lakers play, concessions are cashless, but fans can use cash-to-card kiosks in the arena to convert dollar tickets into prepaid cards at no cost.

Radway said other countries, like China, use digital wallets that are not attached to bank accounts.

“It will be interesting to see how we move towards paying on our cashless phones,” she said.

“These fine-tech companies offer banking services and let you move money without a bank.”

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