Washington embraces cash-free living, but at what cost?
As the U.S. capital traded stifling summer heat for cool autumn breezes, signs began appearing at bus stops, asking Washington commuters: what do you think about buses going cash-free? Salad lunch spot Sweetgreen doesn't take greenbacks. Neither do certain vendors at Nationals Park like Ben's Chili Bowl, a local eatery popular with baseball fans.
Slowly, D.C. businesses are ditching paper money for plastic, embracing a trend gaining traction nationwide.
"I'm all for the cash-free system" on buses, Rogers Ferguson, a 52-year-old Washington native and Navy veteran, told Agence France-Presse (AFP).
"I do a lot of travelling abroad so I'm very acclimated to not carrying cash."
The 2018 World Payments Report, released this month by consultancy Capgemini and banking giant BNP Paribas, indicates a global cash-free boom. In 2015-2016, 483 billion transactions were cashless. That number is expected to rise at a 13 percent compound annual rate through 2021, according to the report. Though the United States has often been a laggard in terms of payments innovations, businesses in Washington are adopting the cash-free model. Bus operator WMATA told AFP it is exploring the concept for efficiency reasons: accepting cash can waste lots of time when customers are boarding.
But cost and security are also key factors, says James Angel, a professor at Georgetown University's McDonough School of Business. Cash is "expensive to transport, you've got to count it, you've got to worry about it disappearing and you also have to worry about the safety of your employees," he explained. There is no federal law forcing businesses to accept cash. Some states such as Massachusetts have statutes on the books, but they do not appear to be widely enforced. But while businesses can reap the benefits of ditching real dollars, is there a hidden cost for consumers?
"There's no free lunch here," Angel says. Of course, consumers absorb the literal expenses, such as processing fees and technology infrastructure. Angel also warns of ethical considerations about leavin
g people behind in a cash-free world.
Tony Boomer, a 33-year-old laborer in the capital, says he is wary of cash-free businesses due to security concerns, and argues that some people just like paying in cash.
"It's kind of wrong," Boomer told AFP. "It's like you're separating the people that don't have credit cards."
In a country of more than 325 million people, 13 million Americans don't have a bank account, according to Federal Reserve figures. Another 18 percent are what is known as "underbanked" - meaning they have an account, but still use alternative financial services such as check cashers and money orders. In Washington, that translates to 37,000 unbanked and 72,000 underbanked households, officials say - meaning a whole segment of the population could be cut out of the new retail economy.
"Unfortunately a lot of the unbanked are primarily poor people, or people of color," says Stephen Taylor, commissioner of Washington's city Department of Insurance, Securities and Banking. A lack of education, distrust of institutions and high banking fees all play a role, explains Taylor, who manages Bank on DC, a program connecting financial institutions and underserved communities. Ferguson says a cash-free Washington could leave behind longtime residents who are senior citizens, as well as young teens and people who struggle to set budgets.
"Folks don't really know how to manage money," argued Ferguson, the father of a 13-year-old son.
"The businesses who don't accept cash really hinder their lifestyle because they can't manage it unless they physically see it."