A Cashless Economy Locks Out the Poor
nytimes.com
nytimes.com
This is now before the city council in NYC, as the article points out, so the topic has come up in conversation more recently (and it’s noticeable, my office is in the area profiled in the story) and it’s amazing how many people just haven’t considered the basic dynamics of that.
> that permission can be revoked instantly, silently, and invisibly at any time
This can happen with cash too, as 99% of Indians found out to their utter dismay on 8 November 2016!! [1].
Granted that this is a Black Swan event [2] and the revocation was done publicly. However, as someone who lived through this and experienced it first hand, I stopped trusting cash from that day onwards. I carry just enough with me to get by for couple of days.
I don't know of any other single event that sent shockwave through 1300+ million humans literally overnight.
[1] https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...
[2] I sincerely hope so. Though it's been carried out a few times in India, thankfully not within the same generation.
I suppose you leave the rest in a bank account. That won't help if all bank accounts are frozen, as I lived through in the early 90s here in Brazil (we called it "Confisco da Poupança", see https://pt.wikipedia.org/wiki/Plano_Collor#Medidas_do_Plano_...).
In stable countries with a functional rule of law however, bank credit is seriously inferior to cash for all purposes except convenience and security.
Bottom line, cashless without a citizen right to unreversible banking is a form of bondage. It creates a paralel, private justice system, where you have no rights and your are judged by the value you have as a customer of the bank. A small customer is worthless and rightless.
Can't you just bring the traditional justice system back into it, for instance, by suing them in small claims court demanding the release of your money? The judiciary supersedes whatever internal mechanisms the bank has; if the court tells the bank to give back your money corrected for inflation plus moral damages, they have no choice but to comply.
This is why one should have multiple bank accounts spread all over jurisdictions as well as keep some cash and credit lines ( also spread among different banks )
If I sue the bank, it's an absolute guarantee I will be locked out of the account for a few months to a year until the case is settled. And it will be a civil claim against a commercial entity, the burden of proof is on me, I don't have access to a free lawyer and so on. The parallel justice system has already scored a massive victory against me from day one by stripping me of most civil rights.
That's fine and dandy in a world where banking is optional and banks are businesses like any other, but in a cashless world being locked out of banking is a sentence to homelessness or death. How many days of rent delay will your landlord accept until he evicts you? How many days can you live on the streets before you are being fired from your job? What is the average life expectancy of a homeless person with no income and how often do they win in court against major financial institutions?
Don't worry about it. You can't.
https://tax.findlaw.com/tax-problems-audits/ten-things-to-re...
Things that can be done to you without any (beforehand) judicial oversight , by the IRS. Or, for that matter, can legally happen without so much as warning to you.
File a tax lien against you;
Levy your bank account;
Garnish your wages;
Close down your business;
Seize and sell your home;
Damage employment and business relationships;
Assess you personally for corporate employment taxes;
Put you in a monthly installment payment arrangement that is too high;
Contact your banker, neighbors, friends and business relationships concerning your tax liabilities;
Go after third party transferees of your assets.
We are effectively proposing adding "taking every last dollar out of your, your family and kids and anyone you did business with wallet directly".
The government is not very reasonable when it feels it is owed money.
How much did you withdraw? You may have hit an anti-money laundering trigger. Nobody cares if you withdraw small sums of money, but anything over $10k usually sends alarm bells ringing.
Reality is mobile money is big - it basically lets the poor / unbanked have kind of a virtual wallet it seemed. I never signed up (westerner with a Visa card and USD) but didn't feel like it was locking people out. Folks using these wallets could transfer funds internationally to relatives surprisingly easily it seemed (I'm used to western union) as well.
Be interesting if something like these non-bank mobile wallets ever come to US (in overseas countries you can load your wallet with cash on street everywhere so you don't have to have a visa / debit card to do so).
The cashless economy certainly drives de-anonymization, but very little evidence of "locking out poor" exists where this has actually happened
So what's poor in Africa or China is way more miserable that you think it is. And those persons, instead of being excluded like in our society, are either cast slaves (india), dead (africa) or in camps/prison (china).
You don't see no cash affecting them because there is no opportunity for them to be.
[1] https://www.statista.com/statistics/257045/smartphone-user-p...
This is totally untrue. Tourist areas attract beggars.
Beggars may not have smartphones, but penetration in first-tier cities goes much farther than "relatively well-off members of the middle class".
That is not true. I met people who don't have Alipay/WeChat on weekly basis. China's central bank beat those who refuse to accept cash payment with a big stick - Alibaba's Freshhema is a high profile target the central bank recently picked, there was actually a news article on that yesterday.
For me, I am more concerned about the fact that people's life could be dramatically affected if both Alipay/WeChat ban their accounts, say due to some business disputes. There is so far no regulation on this whatsoever.
A cashless economy will not only crush the poor, but also hit the middle class: it allows for a negative interest rate (can't withdraw your savings). I also suspect that it could enable many subtle ways to coerce consumers into certain behaviour: All your money is now just the number you see in your bank's app, giving the bank's marketing department a lot of power how you see and interact with and ultimately use that money.
That is effectively the reality of any modern economy.
https://www.investopedia.com/terms/f/fiatmoney.asp
Banks don't have the cash if everyone rushes to it and cashes out.
Try paying 600€ worth of taxes in Portugal with cash and all you'll get is a fine because its banned.
Try to buy a macbook? You better have a bank account because its illegal to buy it using cash.
You owe 3000€ to a friend who lent it to you? Can't just give him the money 100€ bill at a time because that's illegal too.
Anyone who says "you're not forced to use banks" or "cash has value because you must pay your taxes with it" is either ignorant or intentionally misleading.
I ended up using Walmart to cash a check (the ones which weren't hand-written because Walmart won't do that) and using their moneycard as my debit/credit card for payments. This system worked reasonably well, but I do not want to go back to it.
There are often charities that are asking for money at the entrances of the tube. The UK is depending quite heavily on charities for people in need. This year it looks like they started equipping themselves with contact-less payment systems. It would be interesting to be able to see the numbers behind the scene.
What is quite sad is that beggars are not able to equip themselves with contact-less payment systems. I assume that they necessarily will become dependent on the charities to be able to survive.
In Sweden I've seen a beggar with a "Swish" number displayed. (Swish is the domestic cashless person-to-person payment system, all you need to use it is a cell phone and a bank account). So it's not impossible for beggars to be cashless.
I don't know if the experience of giving some physical money to someone necessarily translates well. Do you know if people actually bother to read/scan the "Swish" number to do donations?
A cashless economy will help solve this problem that affects everyone, especially the poor (paradoxically).
they going to make you open your phone. send your money away to them. then steal your phone.
I'm not saying that this will solve all problems, but will make things difficult for the thieves.
I'm referring mainly the common "default" crime: a man with a gun robbing a shop and run with all the sweet money. It's far common in many countries although not so common in many other places.
Even if all local shops accept cash, there's still tons of stuff you can't do without a checking account.
On the topic of cash-free living: I only use cash for 3 things these days: to buy cheese, to pay my cleaning lady, and for my son's weekly allowance. Even the babysitters accept online payment these days.
I don't know about everywhere in the world, but aren't most 'checking' (most people don't use checks any more) or current accounts already free? They make money off investing your deposit. How much are people paying for their current accounts?
I mean, remember that if banks are making money off investing your deposit, they don't have much interest in maintaining accounts for people who don't have much money to invest.
I know at times when I didn't have direct deposit (corp to corp contractor, before I figured out how to setup all the requisite infrastructure on my end) I usually ended up paying like $10 a month or more for my personal checking. Every time I went in the bank, the teller would have some different wacky scheme for getting me free checking, usually involving transferring money between my accounts every month... but it was a lot more work keeping up with how to get the free checking (the requirements for people without direct deposit kept changing) and $10/month was cheaper than the time to figure it out.
But, I mean my point is that I think checking is not free if you don't have a decent job. add to that the money they charge you if you aren't organized enough to make sure there is enough money in the account to cover the fee, and yeah, I can totally see how poor people wouldn't have a checking account.
Most Dutch bank accounts do cost a bit, as far as I know. I remember when this was first introduced in the late 1980s, and I immediately switched banks then. But by now the amounts is negligible, and the convenience of modern banking easily worth it.
2) Garnishment orders - can the state or other collectors garnish the checking account - so all your money disappears?
3) Will the bank allow the account to go negative, charging major fees, then blacklisting you with checksystems?
4) How controllable is saving money in these accounts? Some folks "save" money by not cashing their checks, then going to a check cashing place when they need the money.
Is it possible that a few % of population have medical debt, tax debt or other support orders that make using a normal checking account difficult? Past experience with fraud or being ripped off in a checking account?
Anything broadcasting transactions, by default, with no way to turn off egregious abuses strikes me as a personal security risk. See https://www.google.com/amp/s/www.wsj.com/amp/articles/whats-...
2) Not without a court order I would hope.
3) Depends on what you choose and what the bank will allow. It's safer not to.
4) I'm still puzzled over the relevance of checks.
I admit, every time I discuss such financial issues with Americans, I keep being surprised by how medieval American banking still is. Isn't there a market for modern banks over there?
It appears the owner of my favourite cheese shop is a bit of a Luddite. Or at least, he refuses to get a pin transaction machine, and only accepts cash payment. No idea why. Might be ideological in some way.
The first thing that happens when they're in debt is that their bank account gets frozen to pay the debts leaving them with nothing.
Forcing all transactions to be electronic takes away the margins they live in. It's no longer possible for them to pay 1/2 their rent with a promise to pay the rest in a couple of days when they get paid so that they can feed their children during that period. The rent comes out of their account on time and their children go hungry until payday.
> It's no longer possible for them to pay 1/2 their rent with a promise to pay the rest in a couple of days when they get paid so that they can feed their children during that period.
Why not? You can transfer money whenever you want.
Having a cash option available benefits society and just giving poor people electronic banking would not confer the same benifits.
They must have hit a tipping point where the faff of cash drawers, trips to the bank and so on were not worth it.
Might not be a thing in the land of hipster-ish coffee shops.
[1] https://edu.bankofengland.co.uk/knowledgebank/what-is-legal-...
Nobody has to accept a jar of pennies, or a house purchase in singles, or even cash at all.