Some believe that soon our society should completely give up cash. Will such a deal be successful? And will we regret our decision? There are more questions than explanations, but some outcomes can be predicted now. For example, the life of homeless and low-income people may worsen even more due to their actual isolation from the world.
In recent years, contactless payment technology has been rapidly developing, and electronic payments have captured most of the market. It is predicted that the volume of non-cash payments in the world will reach 726 billion by 2020.
Most of the population takes this for granted. Salaries are transferred to a bank card, and if a local grocery store suddenly stops accepting cash, most of us will just shrug and pay with a card.
However, there are some people that stay in the outback of this cashless world, in the literal and figurative sense. These are rough sleepers who hardly have a bank account or electronic devices with regular Internet connection.
Helping these people is a complex problem that has many sides and solutions. One of them is to give people an opportunity to earn money, rather than to let them beg for money on the street. In general, this is a reasonable solution, but not in a cashless society.
Provision of work to homeless people is not as easy as it may seem. There are specialized centers with professional psychologists, and one of the problematic stages is getting homeless interested in working. To start with, they are given a job that does not require special skills – for example, sweeping or selling newspapers on the streets, and more complex and highly paid work is offered later when they get used to earning money. Ordinary work is necessary in order not to scare people away from complexity of the tasks they perform. Indeed, what could be simpler than selling newspapers?
However, not everything is so easy in a cashless society, and this is illustrated by a case that happened in the Netherlands. Rough sleepers in Amsterdam can earn money by selling Z! magazine right on the streets. Just a few years ago, everything went well, but then banknotes and coins stopped appearing in the pockets of passers-by. The business began to suffer, and so it was decided to distribute card payment equipment among the vendors. However, it didn’t turn out so well: “After a few weeks, our vendors said, ‘Look, this is too complicated’,” says editor Hans van Dalfsen. “It became too clunky and time-consuming for the vendor to juggle their magazines, the card reader and their own mobile phone connected to Bluetooth – all that stuff was needed to carry out the transaction.”
The situation stays unchanged four years later, and the editor is still trying to find a solution to the problem. Meanwhile, cash keeps disappearing from the wallets of those who could buy a magazine and thus donate. And, obviously, all this does not at all contribute to solving the above problem with the employment of homeless people.
Another aspect is shame. Being poor means wearing some kind of stigma, be it in a developed country or a third world country.
Shame itself is a painful emotional experience that arises when one recognizes that they have failed to meet an expectation or have violated an important social standard (Tangney & Dearning, 2002). Those with low income are more susceptible to it, especially in the modern world filled with advertisements of wealthy and beautiful people, brilliant cars and big houses. It’s hard to feel confident if you wear torn, dirty or just old clothes, or you don’t have a home or a decent job. Therefore, many low-income people have difficulties in establishing connections with the rest of society.
This also applies to banking services. First of all most banks will require an address, but also many people are simply embarrassed to come in a bank branch to open an account or renew an overdue card. The shiny surrounding confuses them, and possible condemnation from people in the queue and bank employees scares them away. In addition, you need to have a certain sum in order to open an account, but pockets of these people are often empty – and if they are not, there are also much more important needs for which this money can be spent.
Monika Halan, an editor of the Delhi-based financial newspaper Mint, tells about her own experience of talking to these people: “There are reasons why people would not enter a bank branch,” she explains. “They were afraid of being mocked, their notes were dirty. They did not have the confidence that they would get treated well by the bank managers.” “You need to get banking to the poor people, in the manner that they want it – not in the manner that is supplied”, she continues.
Indeed, when we choose means of payments for the poor, it means we deprive them of alternatives and limit their opportunity to earn money. Once, we may miss the moment when we completely cut them off from the financial system. And if these people are experiencing difficulties already now, what will happen next?