Who is left behind in a cashless society?

Alejandro Gonzalez-Rendon just wanted a burger and fries. But when he got to the counter at A&W, the cashier told him she couldn’t accept his cash. It was company policy to reduce the risk of COVID-19.

Gonzalez-Rendon says he tried to argue that there was no evidence of COVID-19 transmission through coins or bills, but he ultimately left empty-handed.

“I didn’t have much of an option,” he said. “All I had was cash.”

Gonzalez-Rendon, who suffers from a serious lung condition and lives off a monthly disability cheque of less than $1,000, doesn’t have a credit card and prefers to pay with cash to avoid his bank’s transaction fees. “It also helps me stick to my budget.”

The 45-year-old Torontonian is among those who feel left out by the increasing trend toward a more cashless economy, which has been accelerated by the pandemic. Canada was already among the most cashless countries in the world before the pandemic dramatically altered spending. Now, two-thirds of Canadians say they are using cash even less often.

Gonzalez-Rendon fears the shift will become widespread and permanent, deepening his economic exclusion. “It makes me feel powerless.”

Various studies have found that requiring customers to pay electronically disproportionately discriminates against already vulnerable populations, including the poor, homeless, seniors, new immigrants and people with disabilities. A 2019 UK study found that 17 per cent of the population would “struggle to cope” in a cashless society and that poverty was the biggest indicator of cash dependency.

“It’s a huge issue,” said Stephen Gaetz, a York University professor and the director of the Canadian Observatory on Homelessness.

The Bank of Canada was concerned enough back in May that they urged retailers to continue to accept cash. “Refusing cash purchases outright will put an undue burden on those who depend on cash and have limited payment options,” the bank said in a statement, which included comments from Dr. Isaac Bogoch, an infectious disease expert, who said that the risk of COVID-19 transmission from handling cash could be mitigated with good hand hygiene.

The coronavirus has been found in some studies to survive on surfaces for hours or days, but some scientists have suggested the risk of transmission via contaminated surfaces — or fomites — has been “exaggerated.” The World Health Organization has said there is no evidence of COVID-19 transmission from handling coins or bills, but that you should always wash your hands after handling cash. In any event, the risk of transmission from cash is no greater than from other surfaces, such as a doorknob or a keypad.

Gonzalez-Rendon said he has tried to remind retailers of this when they have refused to accept his cash, to no avail. He thinks stores should be required to take his money. “It’s legal tender.”

While retailers may not have an incentive to accommodate people who want to pay with cash, some cities have taken it upon themselves to ensure they do.

In 2018, Philadelphia became the first major city in the U.S. to force merchants to accept cash. New York City followed suit in January of this year, with their city council saying stores that only accepted credit or debit payments were discriminating against citizens without bank accounts and credit cards. (There is no active effort to implement a similar law in Toronto.)

The proportion of Canadian adults without a bank account is estimated to be between one and three per cent, said Jerry Buckland, a professor at the University of Winnipeg who studies financial vulnerability. The percentage rises among people with lower incomes, he said.

“From a Canadian national economy perspective, big deal. But from an anti-poverty perspective it is a big deal because it’s one more barrier that low-income people face in terms of getting their banking.”

Many homeless people, particularly homeless youth, don’t have bank accounts or credit cards and therefore are unable to make digital payments, said Gaetz. If they do have a bank account they typically can’t meet the minimum amounts required to avoid extra charges and transaction fees.

“The banking system is structured to discriminate against low-income people,” he said.

The dramatic shift away from cash during the pandemic could also permanently reduce the amount of money homeless people can collect from panhandling, Gaetz said. “It must be really hard to get any coins from anybody right now, and no doubt it will have an impact that will carry on after (the pandemic). It’s not like two years from now people are going to be like, ‘Oh, thank God I can have a bunch of toonies in my pocket.’”

It’s not just those without a bank account who are left out of a cashless economy. It’s also those who face technological barriers, whether due to limited internet access, low digital literacy or disability.

Laura Tamblyn Watts, the president and CEO of seniors’ advocacy group CanAge, said her organization has received several calls during the pandemic from older people who have been turned away from retailers because they could only pay in cash.

“What it led to was humiliation and a feeling like they don’t belong in society any more,” she said, adding that the combination of some retailers going cashless and the closing of bank branches have made things particularly difficult for some seniors.

Even when technology is not a barrier, some seniors just prefer paying with cash to avoid falling into debt, Tamblyn Watts said. “Technology can be a challenge, but it’s also sometimes older people making smart, financial decisions using the lessons they’ve learned over a lifetime.”

Other groups that tend to rely more on cash include refugees and undocumented immigrants. Francisco Rico-Martinez, co-director of the FCJ Refugee Centre in Toronto, said many of his clients have resorted during the pandemic to using prepaid credit cards, many of which charge additional fees.

Then there are those, like Gonzalez-Rendon, who have bank accounts but need to limit the number of transactions to avoid getting dinged with fees. Most banks limit customers to about a dozen free transactions per month if they don’t keep a certain amount of money in their account. “I have to squeeze every penny,” he says. “I can’t afford the fees.”

While the pandemic is accelerating the trend, Canadians have been moving away from cash for years. In 2009, cash was used in 54 per cent of all transactions, compared to just 33 per cent in 2017, according to the Bank of Canada. Increases in online shopping and contactless payment are likely driving those figures further down, with 62 per cent of Canadians saying they are using cash less than they did before the pandemic, according to a survey conducted in May by Payments Canada, the government agency responsible for the country’s payment clearing and settlement system.

The Bank of Canada says it’s closely monitoring cash usage and looking to other countries for lessons to ensure that any shift away from cash is as smooth as possible. “Sleepwalking into a cashless society will leave millions behind,” cautions the authors of the aforementioned UK report. Sweden, the least-cash-dependent country in the world, is currently trying to slow its rush to cashlessness for this very reason.

Buckland, the University of Winnipeg professor, said it’s important that if Canada continues to move toward a cashless future meaningful efforts are made to include the “unbanked” and others currently left out of the cashless economy. “Getting this right is very important ethically.”