Lack Of Access For The Unbanked
“We may be a cashless society in the future, but today, there are still many people who are unable to make digital payments because they don’t have a bank account, credit card, debit card or smartphone,” Rebell said. These people are known as the “unbanked,” meaning they don’t have access to affordable banking products and must instead rely on fringe services such as check cashing and payday loans.
The FDIC estimated that there were 8.4 million unbanked households in the country as of 2017. Another 24.2 million households were underbanked, meaning they had at least one bank account but also sought financial services outside the traditional banking industry.
Distrust of banks is one reason why some households are unbanked. But more often, it’s because they lack access to affordable services. Some don’t have the income and assets necessary to meet the requirements for fee-free bank accounts, while others live in banking deserts, the communities where banks have closed branches due to low profitability. Black and Hispanic households make up a disproportionate number of the unbanked and underbanked.
And though the banking industry already has a long history of discrimination, moving to a cashless society could potentially increase that problem among other businesses, too. Going cashless would essentially allow retailers and restaurants to discriminate against segments of the population by upcharging or denying service, Rebell said, including lower-income households and people of color.