The pros and cons of going cashless

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Illustration by Ryan Olbrysh for Grand Rapids Magazine.

In late December of 2023, an altercation outside J Burger N Wings, 2023 Eastern Ave. SE in the Seymour Square area ended in shots being fired at a woman and her son. The reason? She didn’t have cash to pay for her order, she wanted to pay with a card. While this incident represents the absolute worst of what can happen in the real world cash or card debate, according to federal law private businesses have the freedom to establish their own policies regarding the acceptance of cash unless prohibited by state law. Additionally, there’s no federal law requiring private businesses, individuals, or organizations to accept cash or coins as payment for goods or services.

In Michigan, individual businesses may set their own policies regarding payment methods, including whether they accept cash, credit cards, or other forms of payment. Small businesses may opt not to accept credit card payments because the costs associated with credit card processing fees outweigh the benefits. According to The Motley Fool, credit
card processing fees for merchants equal approximately 1.3% to 3.5% of each credit card transaction. It adds up.

To muddy the waters further, in June of 2023, the Detroit News reported that Detroit’s city council voted to “prohibit businesses from rejecting cash payments through an ordinance that includes misdemeanor penalties for establishments that don’t accept dollar bills or change” in the city of Detroit.

Further adding to the confusion is a lot of talk about Central Bank Digital Currencies, a digital form of a country’s official currency, distinct from cryptocurrencies. With CBDCs, each unit is a digital representation of a country’s official currency, issued by a central bank and regulated by that country’s government. Now, there are some good arguments for going cashless under a system like that, some bad aspects, and then there’s the downright ugly.

The Good
Convenience. Hygiene. Traceability.

Anyone who’s old enough to remember sending money through Western Union can attest that when cash was the primary form of payment life was a little more complicated. If you didn’t make it to the bank on a Friday afternoon, you might not have enough cash to make it through the weekend.

The rise of card readers popping up everywhere was a welcome site, especially for germaphobes who no longer had to handle filthy bills that had the potential to spread pathogens. A deeper benefit
to opting into a cashless system that
the government controls is that going cashless will help authorities stamp out crime by monitoring large amounts of money changing hands that could be linked to dangerous crimes like the drug trade or human trafficking. This sounds great. Why would anyone be opposed?

The Bad
The old. The young. The disenfranchised.

There are still people who don’t have bank accounts or smartphones. Buying and selling at flea markets and yard sales would require investment in technology. In a cashless society, there would be no roadside “honor” boxes at produce stands, no quick way to give or receive charity.

For kids, going cashless means no lemonade stands, no going door-to-door to shovel snow or mow lawns for money.

No tooth fairy, no taking back the cans for a bit of dosh, no piggy banks, which help teach kids how to save money.

The Ugly
Security. Privacy. Survival.

Four years ago I took a day trip to Chicago with my daughter’s art class. There been a security breech at my bank recently, and
I was awaiting a new card in the mail.

No problem! I went to my bank and took out plenty of cash to take with me, but I was stymied when the café we chose for lunch only accepted cards. I was outraged! The kids who were with me didn’t blink. Their entire lives have been spent online. If a switch to CBDCs was announced, it’s likely they’d fall in line, as many have not yet been through the process of waiting for a government employee to pick up the phone. If the U.S. decides to adopt a currency controlled by one central government controlled bank, what will customer service look like?

The representatives at my bank listen intently when there’s a charge on my account that I don’t recognize. (Ever tried arguing with the IRS?) If my transactions all go through one central bank that can see all my purchases, will I be able to put my car payment on the back burner to make a pressing purchase that might be deemed nonessential by the technocracy running the system?

What will happen to the people working in the private banking sector or at credit unions if a new system is implemented? How many businesses or jobs will go the way of the dodo?

Finally, one can’t ignore that a cashless economy would be vulnerable to fraud, cyber attacks, and other technological catastrophes. It’s already a major concern, but not as much for the folks who keep a fair bit of cash at home in a safe.

The CBDC issue may seem somewhat far-fetched and futuristic, but some countries, like China, are making progress toward implementing these currencies into their financial systems, while the U.S. is taking a cautious approach. Considering the implications are extensive in terms

of privacy, and the time it would take to establish a regulatory framework, it’s safe to say that for now cash is still king.

 

 

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