The State of New York recently enacted a bill into law that makes cashless businesses illegal. Restaurants, stores and other businesses that use electronic methods, credit and debit cards for transactions, but refuse to accept cash, will be banned. Although the cashless industry is surging in bigger cities in the United States, it still might not be the best idea to discontinue the use of cash.
People find it easier to make a transaction using their credit cards instead of hard cash. It is convenient to carry plastic cards instead of loose change, waiting lines will be shorter at restaurants and crimes related to money will decline if nobody carries cash. On the supply side, the businesses also seem to profit from cashless transactions. Handling cash requires labor that slows the business down. As a result, a lot of companies endorse a cashless economy. Facebook is planning to start its own digital currency, Libra, in the future which will be undoubtedly followed by other tech giants who will start their own digital currency.
This dawn of digital currencies, however, comes with its inevitable shortcomings. The people who enjoy the cashless economy need to have one basic requirement: a bank account. In the state of Mississippi, 15.8 percent of people living are “underbanked,” meaning they do not own a bank account to get access to those cashless privileges. With the poverty rate still high, the idea of limiting cash payments seems to hurt the people who are unable to make ends meet. Furthermore, poverty-stricken people do not have sophisticated mobile devices that support the apps for payment and money transactions.
This system increases the costs of services for businesses, too. They have to pay a significant amount of money for card processing fees and high tech devices must be installed that will accept the various types of payment methods available in the market today. For businesses, especially small businesses, this can incur huge costs if they opt for the digital method of processing money. Such increased costs eventually trickle down to customers through a price hike that dissuades customers from spending their money.
It is true that the cashless system of transactions promises a wider range of services than a cash-based system. The benefits might be attractive, but the cost incurred is higher and makes this system not presently feasible.