Security, Financial Inclusivity, FinTech

3 Reasons Going Cashless Is Destructive


by Pay Theory Team

 4 min read

 May 2, 2022

Need Exact Change?

In 2019, San Francisco issued a “cashless” ban that required small businesses to accept cash payments.  Other cities, including Philadelphia, New Jersey, and Massachusetts, are considering similar policies, despite the growing popularity of online shopping and contactless payments.


Why? In many of these cities, not all residents have access to a bank account or credit card. Going “cashless” is disproportionately harmful to underbanked communities, leaving basic goods and services unattainable to millions of people.

3 Reasons Cashless is Destructive

1. Creates Barriers for Families

Today, over 30% of U.S. Family households are unbanked.  In some rural cities, such as North Star, Texas, that number approaches 60% while in urban areas like New York City, the underbanked represent over 37% of the urban population. These families already spend billions of dollars per year in unnecessary financial service costs - and cashless payments drive these numbers even higher for families looking to make ends meet. 


2. Cashless Payments are Less Resilient 

A purely cashless network would require complete network stability - which is not the case today. According to Ponemon Institute’s State of Cybersecurity Report, 66% of small businesses have experienced a cyber attack in the last 12 months. In the event of a security breach or system error, the only way a business could collect payments from customers is in cash. Overall, cash remains a great backup plan for businesses and customers alike. 


3. Harmful for People of Color

Removing cash payments disproportionately affects people of color: per The Federal Reserve, Black and Hispanic families are more likely to be underbanked than any other socioeconomic group in the United States. In Mississippi, 1 in 5 people do not have a bank account.


What this Means

Overall, as our workplace becomes more conscious and inclusive it is important to implement these efforts in financial transactions as well.

Although adding some cashless efforts has positive benefits, going completely cashless will exclude a significant part of the US population from being able to make purchases and receive essential services. It’s important that we consider financial inclusivity as part of our social efforts, and keep a close eye on FinTech companies working to help underbanked families and businesses.


Our Mission 

Pay Theory offers inclusive and embedded payments for schools, childcare, and healthcare providers: creating a world where cashless processing and cash families coexist. Our goal is to bring financial inclusivity to millions of families and businesses, learn more here


Federal Reserve | Report on the Economic Well-Being of U.S. Households in 2020

ACLU | Say No to the “Cashless Future” — and to Cashless Stores
Fortune | Cashless Isn’t Just Classist—It’s Bad for Business

The Mercury News | Here’s why a cashless society is not coming to San Francisco

Time | What You Should Know if You Are Unbanked Right Now

Business Insider | A new lawsuit says Chipotle's exact change policy has led to customers losing 'hundreds of thousands, if not millions of dollars' amid a national coin shortage

Fortune | Why America won’t be going cashless anytime soon

FDIC | FDIC National Survey of Unbanked and Underbanked Households

Security | A 2022 Guide to Personal Digital Security & Online Safety

Embroker | 2022 Must-Know Cyber Attack Statistics and Trends

Keeper Security | 2019 Global State of Cybersecurity in Small and Medium-Sized Businesses