The ‘cashless’ trend threatens to leave the underbanked behind

Register now

You’ll have no doubt used one of the multitude of ways to pay without cash.

First came the credit cards. Then the contactless cards. Now the rise of payment apps means you needn't even bother bring your wallet to grab a coffee in the morning.

But the rise of a cashless, payment app based society is rarely questioned. It’s easier right? It means you don't waste change or lose that $20 note down the back of the sofa. Sure.
This is certainly true, it is simpler and easier and more effective. But there is a broader and potentially more harmful force at play. Until now, the “unbanked” have relied heavily on cash. But could the introduction of a cashless society grow these individuals into a new underclass?

Cashless societies have been a figment of the imagination for decades. Since the first introduction of cards, people thought of a day cash would become redundant. But with the rise of applications that make payment instant and easy one begins to see the new cashless world come into view.

Many apps like Apple Pay, Google Wallet and Venmo have emerged in a market that is estimated to be worth millions. Payment app development has exploded in the past few years and the competition is currently incredibly competitive. Which of these apps will become the dominant market force is yet to be seen. But it is obvious that the market itself is here to stay and will grow exponentially in the next few years.

Reporting in The New York Times recently highlighted the new trend for fast food establishments in NYC. No cash allowed. Mr Bryant, a designer interviewed in the piece worryingly commented “I’ve never experience [this] before … I guess we’re in new times.”

But this could be the future. With the widespread use of payment apps, and banking organisations like Visa now offering to pay establishments to only accept card, we could be looking at a new global trend.

The question few have asked is where does this leave the unbanked? Without access to these apps or cards they will be unable to partake in more and more of the economy. This is the crucial challenge for payment apps and cashless banking. How do they adapt to provide services for the unbanked.

Jeremy Light, the head of payment services at Accenture, notes in a City AM article, “This means that as we manage the transition to cashless ways of doing business and living everyday life, innovations must be brought in for the unbanked as well.”

Only time will tell how well we adapt.

For reprint and licensing requests for this article, click here.
Cash Mobile payments Retailers ISO and agent