How Cash Empowers the Unbanked
Oct 31, 2024
Many low-income Americans are locked out of banking by account fees, which in turn locks them out of cashless payments. Cash gives them economic access and financial control, and a ban on cashless business will open up currently inaccessible goods and services.
Writing for The Calexico Chronicle—a paper serving Imperial Valley, California—journalist Kate McQuarrie explored the stories of unbanked Californians, why cash is key to their personal autonomy, and how a ban on cashless businesses in conjunction with introducing public, fee-free banking would fully empower them to better their economic situation.
Anneisha Williams is a mother of six working in LA who has given up on banks due to the steep fees associated with running an account. She uses cheque cashing services—which take a percentage of her income—to obtain cash she can then use for daily expenses, in common with the 20 percent of Californians who are also unbanked.
Black, Hispanic and low-income people are the most likely to be unbanked or underbanked, a status that can undercut economic mobility. Other populations, such as the elderly, noncitizens and unhoused people also are acutely affected by a lack of access to banking services. For these people, cash is still king. The problem is many businesses have moved away from using cash—some are going entirely cashless—which was only hastened by the Coronavirus pandemic.
Mayra Rios, an LA-based street vendor, was also unbanked for many years and received help from a local women’s organisation that helped her turn her finances around and start a small business. She accepts online payments, but says around 40 percent of her business is cash based.
Cash is important not just for the unbanked and underbanked population, but also those who depend on it for its simplicity and ease as use—which may include elderly people and those with disabilities—as well as individuals fleeing domestic abuse, whose abusers may be able to track any savings in their account and cashless spending.
Groups of people have their own reasons for preferring cash: some elderly people struggle with the technology of online financial services. Advocacy groups point out people fleeing domestic violence rely on cash for safety, because electronic payments can easily be tracked.
San Francisco has led the way in banning cashless business, with Los Angeles also considering pro-cash legislation, with LA Councilwoman Heather Hutt saying: ‘As a city that has promised to be a safe and fair place for all, we must be proactive in ensuring that all our systems create fairness and equity for each and every individual.’
In addition to requiring businesses offer payment choice to all customers—enabling people to choose between cash or cashless depending on their personal circumstances and preferences—McQuarrie also believes more should be done to reduce the number of unbanked and underbanked individuals.
In 2021, the California Legislature established a commission to explore a public, state-run banking system, and in July this year it confirmed there was great potential for ‘CalAccount’ to improve people’s lives and financial situations. However, feasibility questions remain. There is little incentive for banks to promote CalAccount since it would likely not create profit for them.
While the future of CalAccount is uncertain, McQuarrie says ‘business owners [can] keep unbanked and underbanked Californians plugged into the economy by simply allowing cash purchases.’
No one should be turned away from a register simply because they only have cash, and no one should be locked out of opportunities to better their economic situation. The freedom and opportunity to attain a better life is, after all, the so-called American dream.