As more sites go cashless after pandemic, Arizona State University experts see downsides

0

As businesses and destinations begin to reopen after the pandemic closes, consumers are likely to 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 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 concession counters, parking garages or team stores.

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

Cashless payment won’t be a major inconvenience 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 the State University of the ‘Arizona.

“It’s more hygienic because there is less contact and you don’t share the bills and change,” said Geoffroy 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 businesses to roll it out when 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 love the speed, convenience and accurate record keeping.

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

Plus, Smith even sees brick-and-mortar retail sites adopting cashless policies.

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

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

“It saves space and frees up work,” Smith said. “The retail business has to compete with the online experience, so these types of instant payments make the retail business more competitive.”

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

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

As consumer purchases pile up, data can be pulled for more personal information.

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

But the move towards cashless transactions raises equity concerns as low-income people are less likely to have accounts in traditional banks, according to Debra radway, lecturer at WP Carey School and certified financial planner.

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

“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 fee for an overdraft can be $ 40 or $ 50, she said, although credit unions typically charge less.

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

“They have an obligation to be in underserved communities, but typically banks are focused on making a profit, so they look for the most profitable customers,” Radway said.

A 2019 investigation by the Federal Deposit Insurance Corporation found:

  • 5.4% of households, roughly 7.1 million, in the United States were “unbanked,” with no current account or savings account.
  • 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 in an account.
  • About 7% of unbanked households had a credit card.
  • Two-thirds of unbanked households reported paying their bills in cash, according to another FDIC survey in 2017.

However, being unbanked does not mean avoiding fees.

“If you have a low income and you don’t have a checking account and you get 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 is embracing the cashless trend. Last year, New York City joined with Philadelphia and San Francisco in banning stores from operating cashless over fairness concerns, especially the difficulty homeless and homeless would face. – papers for acquiring 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 bills 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 fintech companies offer banking services and let you move money without a bank.”


Source link

Leave A Reply

Your email address will not be published.