What is the cost of a cashless society?

ein the epidemic, “Dirty money” is starting to get something new, somewhat literal in the sense that businesses across Canada – from local stores to major retailers like Second Cup – have banned the use of cash. Before we understood the aerosol-dependent transmission of the virus, every surface seemed to be a threat: doorknobs, groceries, and, of course, money. By May 2020, the number of “click and go” transactions had escalated so dramatically that the Bank of Canada issued an appeal to retailers to continue accepting notes and coins “to ensure Canadians had access to the goods and services they needed.”

There is no doubt that printed or minted currency is a dirty and gross type (paper banknotes, studies show, can be covered in everything from E. coli to feces). But we now know that the potential for the coronavirus to spread is as low as any other surface with high traffic. However, companies and consumers’ reluctance to engage with the money can be hard to shake. E-commerce has been systematically dumping cash in Canada over the past decade, and experts believe the pandemic has accelerated that trend. In fact, according to a 2021 report by Payments Canada, about 40 percent of Canadians say the pandemic has put them off cash for the foreseeable future. With Canada becoming one of the most cashless countries in the world, with an expected 70 percent drop in use by 2030, we have to consider the consequences of a mass shift to digital payment.

These consequences will likely be invisible to those of us who don’t have to worry about accessing bank accounts and credit cards. But, if you are someone who has to worry, the digitization of the economy will likely make it difficult to pay for food, basic goods, and transportation. In our rush to abandon cash in the guise of technological progress, are we leaving behind the people who rely on it the most?

Ieasy to assume Everyone has a bank card or line of credit, but according to social justice group ACORN Canada, 15 percent of Canadians are “underbanked,” meaning their interaction with traditional banks is limited, and an estimated 1 million more don’t have bank accounts at all ( This may be a conservative number due to sporadic data collection).

Some of these people may simply prefer to use cash or checks for personal or privacy reasons, but many are left out for reasons beyond their control: exorbitant bank or ATM fees, lack of reliable access to bank branches, inability to qualify for credit, or lack of knowledge or resources to access digital banking. Without bank accounts, people tend to rely on cash, which means that the popularity of cash-free policies can quickly deprive them of society.

In areas with few retail options, for example, this trend can seriously jeopardize access to essentials. Back in June 2020, then-CEO of the Canadian Civil Liberties Association Michael Bryant told CBC that getting people to use electronic payment could be active “[threaten] Food security” is by making it difficult for people to reliably purchase groceries, which adds “another layer of anxiety” to everyday life. According to research, most of these people are already low-income and marginalized, the hardest hit by indigenous, disabled, displaced and remote communities. Unlike in some US jurisdictions, such as Massachusetts, DC, and New York City, there is no law at any level in Canada requiring retailers to accept cash, a Bank of Canada spokesperson told Global in 2020 — only they must accept the correct type of payment. This means that there are no protective barriers for those who are locked out of credit or debit.

Not only is making purchases difficult for unbanked or underbanked people, but receiving payments, including government checks, can also become very costly. The majority of communities in Nunavut, for example, have no bank branches at all. Similar situations exist across parts of the Yukon, which can leave some with little choice but to rely on exploitatively priced check cashing shops. Bonnie Morton, a Saskatchewan anti-poverty advocate, told CTV in 2020 that people without bank accounts often face “huge fees” when cashing checks at places like cash stores, which usually charge a base rate and a percentage of the total value of the check. check. For example, if you need to cash a $1,000 paycheck twice a month, the fairly standard fee of $2.99 ​​per check plus 3 percent of the value will make you lose $32.99 each time, or roughly 800 dollars throughout the year. As Morton said, “A cashless society works only for those who have enough money.”

Many rural and remote communities in Canada are notorious for poor internet services, which makes it difficult to rely on internet banking alone. And since banks have been closing branches at rapid rates for years, with more than 2,000 closing their doors between 1990 and 2017, it doesn’t look like the situation will improve any time soon.

THere are options To resolve the impasse without changing the country’s weakest — if Canadian officials are willing to make the effort to make it happen.

One idea that has become popular is the use of prepaid cards: rechargeable payment cards that are similar to credit or debit cards. Historically, it has been an effective way for governments to quickly send money to people who do not have access to banking services, as it is easily distributed by mail and gives recipients immediate access to the funds. Governments have used them to provide assistance at short notice, such as helping victims of the Alberta bushfires, and advocates say prepaid cards would have been useful if deployed during the pandemic to distribute a much-needed Canada Emergency Response Benefit (CERB), which has not They are.

As far as it has been deployed in Canada, prepaid cards have proven to be fairly successful in distributing benefits; In Ontario, its use of unemployment and disability programs has likely helped recipients avoid check-cashing fees and cut costs to the government to about $1.7 million annually. If they are adopted more widely, and used for things like federal tax returns and other types of government aid, prepaid cards could be very useful in moving unbanked and underbanked people into an increasingly cashless society.

Another answer might lie in Canada Post’s busy hands. Many countries, including the United Kingdom, France, Italy and China, use their own post offices to provide banking services, both in person and online, at low cost. In rural communities not well served by banks, initiative has become vital. The establishment of such a service here is not so farfetched: Postal banking has been a part of Canadian culture for more than a century, even corporate pressure from the banking industry put an end to it in 1968. Despite persistent resistance from major banks, the concept has spread to support ; More than 600 municipalities, in almost every corner of the country, have passed resolutions supporting postal banking. It is also supported by the Canadian Federation of Postal Workers. Researcher and consultant John Anderson argued in a 2013 research paper that traditional banks, with their sparse branch distribution and high fees, have long been failing Canadians. With post offices in more than 1,200 communities underserved by banks, Canada Post’s infrastructure – which includes well-established and integrated networks in local communities – can be instrumental in extending financial inclusion to most of the country’s population in rural and remote areas.

Expanding financial inclusion also means distributing the resources required to engage in digital banking, such as providing low-cost laptops and phones to people who can’t afford them. We had a preview of what this could look like during the pandemic, when community initiatives provided people with electronics in order to attend virtual health appointments and ease isolation. But outreach on a small scale and driven by philanthropy cannot go far, especially when such outreach is often limited to large urban centers with decent internet access. If Canada is serious about making sure that people can participate in the digital economy, communication devices and internet access may need to be seen more as a right than a personal luxury.

A cashless trend may be inevitable. But there are ways to prevent unbanked people from becoming collateral damage. Canada can provide better access to laptops and phones for those who want them and explore innovative solutions for those who don’t, all while building on existing structures and methods. Financial inclusion advocates are more than willing to make the change, but Pence has not compromised on our political representatives.

Lucy Abrichard is a British writer and researcher based in Montreal. She is a former Chawkers classmate on The Walrus and her writing has appeared in it viceAnd the digital amazementAnd the Chatelenand in other places.

Christopher Dupont Martinez

Christopher Dupont Martinez is a freelance illustrator and graphic designer at Kwayaciiwin Education Resource Center.

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