The Cashless Society the Cashless Society

Issue: The Cashless Society

The Cashless Society

By: Hannah H. Kim

Pub. Date: November 19, 2018 Access Date: October 3, 2021 DOI: 10.1177/237455680434.n1 Source URL: http://businessresearcher.sagepub.com/sbr-1946-108486-2910120/20181119/the-cashless-society ©2021 SAGE Publishing, Inc. All Rights Reserved. ©2021 SAGE Publishing, Inc. All Rights Reserved. Will paper money become obsolete? Executive Summary

With the rise of digital payment systems and a search for greater convenience in the retail sphere, many economists, business experts and consumers believe the United States is on its way to becoming a cashless society. Cashless businesses – those that only accept payments made by credit or debit cards or other forms of electronic transfer – have been normalized by new-economy enterprises such as Uber and Amazon that use online platforms for payment. Now, as more brick-and-mortar businesses become cashless, some politicians and advocates for the poor are raising questions about fairness. They say going cashless can discriminate against low-income individuals, the elderly and others. But some restaurants and other businesses say eliminating cash reduces the risk of robbery and provides a service many consumers want. Advocates also say going cashless would assist authorities in controlling money laundering. Some key takeaways: In 2017, debit cards were the most popular payment instrument used by adults in the United States, followed by cash and credit cards. Younger Americans are more comfortable not carrying cash than older ones, while 6 in 10 overall expect the United States to become a cashless society within their lifetime. Sweden may become the world’s first cashless country; in 2015, only 2 percent of the value of all payments there were made in cash. Full Report

Cash is not accepted at Amazon Go stores such as this one in Seattle; customers pay for all purchases with smartphones. (Stephen Brashear/Getty Images)

Micco Caporale, 31, a multimedia freelancer from Chicago, swung by a downtown café, Goddess and the Baker, to buy a cookie. She discovered that she couldn’t pay cash for the treat, because the dessert-and-coffee spot doesn’t accept it. That posed no problem for Caporale, who says she has operated mostly cash-free since she opened a bank account and got a debit card at age 18; she pays her bills online and uses digital apps to transfer money to friends. But she worries that as more Chicago businesses Page 2 of 14 The Cashless Society SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. go cashless, her friends may lose access to basic goods and services. “It’s actually rare that I carry cash,” Caporale says. “But a lot of my friends who work in cash-based industries don’t have credit cards.” With the rise of digital payment systems and changing consumer preferences, many economists, business experts and consumers believe that the United States is on its way to becoming a cashless society, where all purchases will be made with credit cards, debit cards or other forms of electronic payment. 1 New-economy businesses that use online platforms to facilitate transactions, such as the ridesharing company Uber and e-commerce giant Amazon, have popularized the cashless business model. 2 In 2016, Amazon introduced Amazon Go, a cashless brick-and-mortar grocery store that has eliminated checkout lines by using a smartphone application to connect to shoppers’ online Amazon accounts. When customers remove a product from the shelf, Amazon Go uses sensors and cameras to add the price to a virtual cart, which is automatically charged when customers leave the store. 3 As a growing number of brick-and-mortar businesses, including hotels and restaurants, also become cashless, some politicians and advocates for the poor are raising red flags. They warn that the change could discriminate against people who must rely on cash and could also pose security risks in an era when cyberthreats are growing. 4 In the past two decades, a number of payment service providers (PSPs) have emerged to facilitate cashless transactions. PSPs revolutionized the credit card processing industry by allowing businesses to accept card and electronic transactions without having to maintain a traditional merchant account, which comes with maintenance fees that can be prohibitively expensive for small businesses. 5 Notable PSPs include: PayPal Holdings, a worldwide payments system established in 1998 that supports electronic money orders. The PayPal platform includes specialized divisions: Braintree, Venmo and Xoom. 6 Square Inc., a financial services and mobile payment company that launched in 2009. Square’s point-of-sale (POS) credit card processing system allows small businesses and sole proprietors to process card transactions. 7 Stripe, a technology company founded in 2011 that provides tools for Web developers to build payment software into websites and mobile applications. Companies that use Stripe include Google, Microsoft, Salesforce and Facebook. 8 Advocates of a cashless society say that cashless payment methods can help authorities crack down on illicit activities by providing transparency and traceability during financial transactions. 9 Financial crimes, such as money laundering, bribery, tax evasion, counterfeiting and terrorism financing, are often enabled by the use of cash that is anonymous and untraceable. 10 “When you have cashless payments, you get who is buying what, exactly, and everything becomes a lot more visible,” says Pinar Ozcan, professor of strategic management at Warwick Business School in the United Kingdom. “Banks are quite interested in [electronic payment methods], because of how much more information they’re getting about their customers.” (See Expert Views: “Q&A: Pinar Ozcan on Cashless Societies.”) Since 2000, consumers’ card payments have grown rapidly, according to a 2017 report by the Federal Reserve. From 2015 to 2016, total card payments increased 7.4 percent by number of transactions and 5.8 percent by value. 11 Visa and Mastercard, the two largest U.S. card networks, process more than $15 trillion annually in payments. 12 Aided by the increase in consumer spending by card transactions, Visa reported a sixfold increase in profits in the second quarter of 2018. 13 Nevertheless, among U.S. adults, cash remains the second-most popular form of payment, accounting for Pinar Ozcan 27.4 percent of payments per month, according to a 2018 survey of consumer payment preferences by the Federal Reserve Bank of Boston. Debit cards were the most common method of payment, accounting for 31.8 percent of monthly payments. 14 As consumer payment preferences change, restaurants are often among the first brick-and-mortar businesses to become cashless. When the salad chain Sweetgreen experimented with making a few locations cashless in 2016, co-CEO Jonathan Neman said that cash purchases made up less than 10 percent of transactions. 15 Most restaurants that move in a cashless direction are fast-casual food establishments in urban areas. “The fast-casual segment generally appeals to younger folks, and younger folks are more cashless,” says Alex Susskind, associate professor of food and beverage management at Cornell University’s School of Hotel Administration. “I have a strong belief that cash will become a thing of the past.” Sweetgreen’s consumer base of Millennials complained on social media when the salad chain stopped offering bacon and Sriracha, but barely noticed when some Sweetgreen locations stopped accepting cash, said the company’s owners. 16

Most Foresee a Cashless Future

Views on likelihood United States will become cashless

Note: Numbers do not add up to 100 due to rounding. Source: Art Swift and Steve Ander, “Most Americans Foresee Death of Cash in Their Lifetime,” Gallup, July 15, 2016, https://tinyurl.com/ybgku85y

Almost two-thirds of adults believe the United States will become cashless, with all purchases made by credit cards, debit cards or other forms of electronic payment, within their lifetime.

A 2016 Gallup Poll found that those ages 18 to 49 were more comfortable not carrying cash in public than those ages 50 and older. Gallup also found that 62 percent of U.S. adults expect the United States to become a cashless society within their lifetimes. 17 Cashless restaurant owners argue that eliminating cash discourages robberies, reduces customers’ wait times in lines and allows employees to focus on serving guests. “We feel a manager’s time is so valuable,” said Leo Kremer, co-owner of the New York-based taco chain Dos Toros, “and it was being spent on what is only 10 percent of our revenue.” 18 Marc Glosserman, owner of the barbeque restaurant Hill Country in Washington, stopped accepting cash after a series of burglaries resulted in losses of tens of thousands of dollars. “For us, it came down to the integrity of our physical space, keeping the restaurant safe and mostly keeping our employees safe,” Glosserman said. 19 In 2017, Visa launched a program to award $500,000 to 50 U.S.-based food service owners who invest in technologies allowing them to accept digital payments and commit to the cashless trend. 20 Some critics point out that credit card issuers and banks have a direct interest in promoting the cashless trend because of the fees they collect. 21 Banks can charge customers interest on balances that are not paid in full each month, and credit card interest is the primary source of revenue for credit card issuers, according to data published by the payment industry consultants R.K. Hammer. 22 Whether going cashless will improve restaurants’ profits is uncertain. The elimination of expenses for bank services or armored cars can reduce business costs, but credit card companies charge merchant fees of 2 to 4 percent per transaction. 23 After going almost entirely cashless in 2017, Sweetgreen did not report an effect on its bottom line. 24 Susskind says going cashless could produce labor savings. Throughout the restaurant industry, he says, the constant pressure for higher wages, including some municipalities’ proposals to raise the minimum wage to $15 an hour, has restaurant owners rethinking their traditional business models. One idea is to become cashless, or to eliminate tipping, and then increase menu prices to generate more revenue to pay all staff members a higher wage.

“In full-service luxury restaurants, there’s a big gap between servers who are tipped and cooks who are paid an hourly wage,” Susskind says. “Some restaurants are thinking about ways to adjust for discrepancies and make it a fair and equitable pay system for everybody.” Electronic payment systems used in stores, restaurants and taxis have been shown to increase tip frequency and amounts. Customers using Square who left a tip rose from 38 percent in 2012 to 45 to 50 percent in 2013. A spokesperson for Square said its interface, which allows businesses to suggest tip amounts on payment touchscreens, is designed to encourage tipping. 25 Electronic payment systems also can encourage customers to leave gratuities at places where they may not ordinarily tip, such as clothing stores or flower shops. But encouraging consumers to tip can cause a backlash against “guilt tipping.” 26 A 2014 study found that payment touchscreens in New York City taxis that suggested default tips of 20, 25 or 30 percent resulted in a greater percentage of riders who left no tip at all, compared with touchscreens that suggested tips of 15, 20 or 25 percent. Overall, however, the higher default tip suggestions brought in total tip revenue that was about 10 percent higher than the lower promptings, the study in American Economic Journal: Applied Economics said. 27 Although electronic payment systems may increase tip frequency and amounts, servers generally prefer being tipped in cash, according to some personal finance experts. 28 In some states, servers are paid as little as $2.13 an hour, and rely on tips to make a living. 29 Servers can use the cash immediately after their shift ends, while tips left on cards are added to servers’ paychecks and typically distributed every other week. And some restaurant managers deduct the card processing fee from the servers’ tips. 30 Economic Discrimination

In June 2018, District of Columbia council member David Grosso introduced the Cashless Retailers Prohibition Act, which seeks to prevent financial discrimination by requiring restaurants to accept cash. Besides minors, potential customers who rely on cash include people who are unbanked or underbanked, and are more likely to have low income, less education or be in a racial or ethnic minority group, according to a May 2018 report by the Federal Reserve. 31 “By denying the ability to use cash as a form of payment, businesses are effectively telling lower-income and young patrons that they are not welcome,” Grosso said. 32 The Cashless Retailers Prohibition Act awaits a council vote, but received support from five other D.C. council members who co-introduced the bill on June 26, 2018. 33 According to the Federal Reserve report, 95 percent of adults in the United States had access to bank or credit union accounts; 18 percent of these adults were underbanked, meaning they have a bank account but also use alternative financial services, such as payday loans. About 5 percent of adults, or 13 million people, are unbanked, which means they do not have a checking, savings or money market account. 34 Critics also say cashless restaurants have made no accommodations to include people who only have cash. Neman, of Sweetgreen, said a potential solution could be to install machines in stores that could convert cash into gift cards. 35 Some cashless restaurants have simply given free meals to people who do not have debit or credit cards, or who cannot pay by a mobile phone application. Thomas Nguyen, owner of several South African restaurants in the Houston area, decided to abandon the cashless business model after receiving daily complaints. 36 Minorities Less Likely to Get Credit

Percentage of applicants denied within past 12 months, by ethnicity

Source: “Report on the Economic Well-Being of U.S. Households in 2017,” Board of Governors, Federal Reserve System, May 2018, Table 18, https://tinyurl.com/yclay38c

Black and Hispanic credit applicants were more likely to be rejected than white applicants, according to a Federal Reserve study.

Federal law allows businesses to create their own payment policy and how tender can be accepted. 37 Massachusetts is the only state with a law requiring businesses to accept cash. 38 In 2013, a New Jersey appeals court dismissed a lawsuit arguing that cashless airline cabins violated New Jersey’s Consumer Fraud Act and unlawfully discriminated against low-income people who do not possess credit cards. The court ruled that federal airline deregulation law pre-empts claims under state law. 39 Debit and credit cards are usually issued by banks and credit unions. When a customer gives such a card to a merchant for a purchase, the card number is sent over an internet connection or a phone line to the credit card network, which requests authorization from the issuing bank. 40 In most cases, to apply for a credit card, customers need to provide their credit history and credit score, as well as proof of income, most of which requires participation in the traditional banking system. 41 Financial inclusion – possessing access to useful and affordable financial services and having the knowledge to use these tools – is the foundation for reducing poverty and spurring economic growth, according to the World Bank. “Globally, two-thirds of adults without an account cite a lack of money as a key reason, which implies that financial services aren’t yet affordable or designed to fit low-income users,” the bank said in a 2017 report. “Other barriers to account-opening include distance from a financial service provider, lack of necessary documentation papers and lack of trust in financial service providers.” 42 A 2016 report by the Federal Reserve Bank of San Francisco found that household income had a strong influence on payment preferences: 48 percent of households that earned less than $25,000 annually said they preferred to pay in cash. The figure was 14 percent for households earning $150,000 and greater. 43 Stella Adams, chief staff member of equity and inclusion at the National Community Reinvestment Coalition (NCRC), a membership organization dedicated to economic equality, says cash is an important strategy for many low- and moderate-income households. “It’s more practical for them to use cash where they know exactly how much they have. And when it’s gone, it’s gone,” Adams says. “Some banks don’t debit things as they occur, but arrange them in a certain way to maximize the potential for overdraft.” Organizations such as the World Bank and NCRC are working to encourage banks to design services for low- and moderate-income families. A dearth of bank branches, as well as a lack of access to mobile phones or a stable internet connection, also create barriers that inhibit low- and moderate-income communities from participating in the traditional banking system. Following the 2008 financial crisis and the

Page 6 of 14 The Cashless Society SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. closure of nearly 5,000 bank branches, concern grew among experts and advocates for the poor that banking deserts – neighborhoods with inadequate, or entirely absent, mainstream financial services – were increasing among low-income and minority communities, according to a 2016 study by the Federal Reserve Bank of New York. 44 The study investigated areas affected by bank closures and found that low-income residents, those with a median annual household income of $24,375, were about three times more likely to live in a banking desert than higher-income residents. Sparsely populated rural areas were also less likely to have a bank branch. 45 Despite the steady recovery of the U.S. economy since the financial crisis, big banks, such as Citigroup and Bank of America, have continued to close branches and encourage customers to move to online banking. 46 The Federal Deposit Insurance Corp. (FDIC), the government agency that insures bank deposits, said that the overall number of U.S. bank offices in December 2017 was 84,000, the lowest since 2006. 47 During the first quarter of 2018, U.S. bank profits increased 27.5 percent from a year earlier to a net income of $56 billion, according to the FDIC, which cited lower tax rates as well as higher net operating revenue as among the reasons for the increased profits. 48 Some experts say online banking and mobile applications could remedy the lack of access to brick-and-mortar banks in some neighborhoods. But Adams of NCRC says that many unbanked areas also are in digital deserts that lack broadband internet capacity. “A cashless society is segregation against low- and moderate-income families who may or may not have access to mobile apps, because they’re on a tight schedule, and they’re more likely not to have their phone bill paid up on time,” Adams says. “To go to a cashless society is to go to an elitist society. It is basically putting people through the back door and going to segregated public accommodations by economics.”

Even street musicians, like Charlotte Campbell of London, are accepting electronic payment for contributions and CD sales. (Daniel Leal-Olivas/AFP/Getty Images)

Some consumers may opt out of using debit or credit cards, or other electronic payment methods, because of concerns regarding privacy, security and debt. In 2017, Google said it partnered with third parties to give marketers access to 70 percent of all debit and credit card purchases made. 49 Google executives said the identities of consumers were kept anonymous, but critics have cited studies showing the ease with which researchers identify individuals from credit card metadata. 50 Critics warn that an individual’s privacy could easily be compromised, especially if data are hacked. 51 In 2017, a record 1,579 U.S. data breaches exposed more than 178 million records, according to the Identity Theft Resource Center, which was established to support victims of identity theft. 52 Data breaches can expose sensitive personal information such as names,

Social Security numbers, birthdates and addresses, and lead to the rise of identity theft. A 2018 identity fraud report by the advisory firm Javelin Strategy & Research said identity fraud rose 8 percent in the last year to 16.7 million U.S. consumers. While credit card accounts remained the most common target for thieves, the report noted a significant growth in the opening of fraudulent intermediary, PSP accounts. 53 With pressure rising to strengthen their cybersecurity networks, banks are investing three times as much on information technology security than comparably sized nonfinancial organizations. 54 The proliferation of cashless businesses may also be contributing to rising consumer credit card debt: Revolving credit increased at an annual rate of 2 percent and reached $1.041 trillion in September 2018, according to the Federal Reserve. 55 Cash Remains Strong in U.S

Despite growing chatter about the United States becoming a cashless society, demand for U.S. currency, both domestically and internationally, has been steadily rising since the 1980s, the 2016 study by the Federal Reserve Bank of San Francisco found. 56 Many cashless business pioneers now accept cash. In 2010, Apple reversed its no-cash policy for iPads after a public outcry when a disabled California woman on a fixed income tried to buy the device with $600 she had carefully saved up. 57 In 2017, Amazon launched Amazon Cash, which allows customers to add cash to their online accounts by showing a bar code at participating brick-and-mortar retailers. 58 Attitudes regarding paper currency and digitized payment systems vary around the world. In 40 of 42 major economies, the growth of cash in circulation has outpaced economic growth over the past decade, according to the Federal Reserve Bank of San Francisco. 59 In 2016, 85 percent of global transactions were in cash, reported the World Economic Forum, the international organization that runs the annual Davos economic conference. 60 The U.S. dollar is seen as a safe currency in other countries in times of economic or political uncertainty. 61 The Treasury and the Federal Reserve have estimated that 60 percent of all U.S. banknotes in circulation are held outside the United States. 62 While demand for cash has risen in most advanced economies, some countries, such as Sweden, are striving to become cashless. 63 According Sweden’s central bank, in 2015, about 2 percent of the value of all payments in the country were made in cash. 64 The widespread adoption of cashless payments was made possible by the cooperation of the Swedish banking system in creating a jointly owned payment infrastructure and ATM network. In 1959, Swedish banks had collaborated to create an automated clearinghouse, Bankgirot, and in 2012, launched the mobile payment system, Swish, to allow consumers to transfer money in real time. 65 Ozcan, the professor at Warwick Business, says other countries, such as Singapore, are using Sweden as a model. But Adams, the NCRC staffer, says Sweden is not a good model for the United States. “Sweden is a very homogenetic nation, and there’s not a lot of income inequality in their society,” she says. The European Union could be, however. The passage of the EU’s General Data Protection Regulation (GDPR) in May 2018 ensures consumer rights over their personal data, and includes requirements for financial institutions to notify consumers when their personal information is shared with third parties, or within 72 hours of a data breach. 66 The EU’s second Payment Services Directive (PSD2), which took effect in January 2018, mandates that banks must share customer data in a secure, standardized form to authorized organizations. 67 Also called Open Banking, the directive can promote competition within the financial services industry by allowing third parties, such as startups, to create products by accessing consumers’ transactional data. Some experts see Open Banking as a catalyst for a potential revolution in retail banking. 68 Stella Adams Adams says she believes the United States will one day develop into a cashless society. “But you don’t just take the cashless move without taking the regulation, without addressing the inequality, without doing all that [countries in the EU] did to make it work,” she says. “We haven’t done the work as a nation around this issue.” About the Author

Hannah H. Kim is an independent business journalist and book ghostwriter. She is from Los Angeles and is a graduate of the Iowa Writers’ Workshop. Her previous reports for Business Researcher were on the meditation industry and the ethics of AI. Chronology

1792–1920 A national currency and central bank are established. 1792 Congress passes the Coinage Act, creating the dollar and establishing the U.S. Mint. 1863–64 National Banking Acts creates a system of national banks after two earlier failed attempts at establishing a central banking system. 1913 The Federal Reserve Act creates a central bank with the authority to issue Federal Reserve Notes, commonly known as the U.S. dollar, as legal tender. 1920 First credit cards appear when individual businesses, such as oil companies and hotels, issue them to customers. 1950–1978 Credit card use spreads. 1950 Diners Club introduces the first universal credit card that could be used at a wide range of establishments. 1958 American Express unveils a charge card.… Bank of America in California establishes BankAmericard, a bank credit card system that allows the bank to credit the merchant’s account and charge the cardholder at the end of the month. 1967 Barclays Bank in North London, United Kingdom, introduces the first automated teller machine (ATM). 1976 BankAmericard is renamed Visa. 1978 Massachusetts passes the Discrimination Against Cash Buyers Amendment, requiring all retailers in the state to accept cash. 1994s–Present The trend away from cash generates controversy. 1994 Stanford Federal Credit Union becomes the first U.S. financial institution to offer online banking. 1997 Coca-Cola introduces vending machines that allow customers to make mobile payments through text messages. 1998 PayPal Holdings launches a worldwide online payments system that supports money transfers. 2009 Square Inc., a payment service provider, launches; it allows merchants to accept card payments on smartphones and computers. 2013 A New Jersey appeals court dismisses a lawsuit arguing that cashless airline cabins discriminate against low-income people who do not possess credit cards. 2014 Following the 2008 financial crisis, U.S. banks close 4,821 branches by this year. 2015 Sweden becomes the world’s most cashless country, with just 2 percent of the value of all payments made in cash. 2016 Big banks continue to close branches and encourage customers to move to online banking. The overall number of bank offices declines to 84,000, the lowest number in a decade. A study by the Federal Reserve Bank of New York finds that low-income residents are three times more likely to live in a banking desert than higher-income people. 2018 U.S. banks record a total net income of $56 billion in the first quarter, a 27.5 percent increase from a year earlier.… District of Columbia council member David Grosso introduces the Cashless Retailers Prohibition Act, which would require restaurants to accept cash to prevent discrimination against low-income patrons.

Resources for Further Study Bibliography

Books

Bandelj, Nina, Frederick Wherry and Viviana Zelizer, “Money Talks: Explaining How Money Really Works,” Princeton University Press, 2017. Three economic sociologists edit a compilation of essays that explores how social relations, emotions, moral values and institutions shape an individual’s relationship with money. Baradaran, Mehrsa, “How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy,” Harvard University Press, 2018. An associate professor at the University of Georgia School of Law examines unequal access to banks among low-income and minority

Page 9 of 14 The Cashless Society SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. communities. Birch, David, “Before Babylon, Beyond Bitcoin: From Money that We Understand to Money that Understands Us,” London Publishing Partnership, 2017. An international expert in digital identity and digital money explores how technology will influence the future of money.

Articles

Roberts, Jeff John, “Why a Popular Salad Chain Stopped Using Cash,” Fortune, Sept. 14, 2017, https://tinyurl.com/yco9le65. Stressing convenience, hygiene and safety, the salad chain Sweetgreen goes cashless. Schweitzer, Ally, “How A ‘Cashless’ Future Could Leave D.C. Residents Shortchanged,” WAMU Radio, Aug. 29, 2018, https://tinyurl.com/ydagrfll. Critics complain cashless restaurants are a form of economic discrimination.

Reports and Studies

“Report on the Economic Well-Being of U.S. Households in 2017 – May 2018,” Board of Governors, Federal Reserve System, June 2018, https://tinyurl.com/y8kmdsp7. Access to bank accounts increased to almost 95 percent in the United States in 2017, and the number of “unbanked” people continued to edge down, the Federal Reserve reported. “UFA2020 Overview: Universal Financial Access by 2020,” World Bank, April 2017, https://tinyurl.com/ycqer9x3. The World Bank, an international financial institution, sets a goal of 1 billion people gaining access to an account at a bank or other financial institution in which they can electronically store, withdraw and transfer payments. Greene, Claire, and Joanna Stavins, “The 2016 and 2017 Surveys of Consumer Payment Choice: Summary Results,” Federal Reserve Bank of Boston and the Federal Reserve Bank of Atlanta, May 2018, https://tinyurl.com/y8y8r9dp. A survey by two Federal Reserve banks finds stable consumer payment behavior over the past decade. Swift, Art, and Steve Ander, “Most Americans Foresee Death of Cash in Their Lifetime,” Gallup, July 2016, https://tinyurl.com/ybgku85y. A majority of Americans expect the United States to become a cashless society within their lifetimes, according to a Gallup Poll. The Next Step

Dining

Albrecht, Chris, “Report: Being Cashless Backfires When Payment System Crashes,” The Spoon, Oct. 19, 2018, https://tinyurl.com/y9j6anox. Sweetgreen, the cashless quick-dining salad chain, suffered a recent system crash at one of its locations in Los Angeles, forcing employees to give out free meals to waiting customers. Kauffman, Jonathan, “Bay Area restaurants go cashless, but what about the consequences?” San Francisco Chronicle, Aug. 16, 2018, https://tinyurl.com/y98o8uue. The increasing number of independent restaurants and businesses forgoing cash in the Bay Area is a sign of the growing economic divide in the region, says a food writer. Nirappil, Fenit, “As restaurants go cashless, a backlash is building. Will D.C. intervene?” The Washington Post, July 9, 2018, https://tinyurl.com/y888jf2v. Some restaurants in the District of Columbia say they are going cashless to improve efficiency and safety, but lawmakers and other restaurateurs say the practice discriminates against immigrants and other groups.

Sweden

“Sweden leads the world in cashless payments,” The Local Sweden, Oct. 16, 2018, https://tinyurl.com/y8tu7q2l. Sweden is now the world’s most cashless society and is expected to maintain that status, according to a recent study. Meyer, David, “Sweden Is Going Cashless So Quickly That Its Central Bank Is Speeding Up Plans for a National Digital Currency,” Fortune, Oct. 26, 2018, https://tinyurl.com/yaodrmbg. Sweden’s central bank has been pressing ahead with plans for an e-currency despite critics’ warnings that a cashless society can discriminate against the elderly, disabled and others. Savage, Maddy, “The Swedes rebelling against a cashless society,” BBC, April 6, 2018, https://tinyurl.com/ybtjj7mw. Sweden’s elderly population is the most vulnerable as the country moves to end cash transactions, advocates for seniors say. Organizations

Council Member David Grosso 1350 Pennsylvania Ave., N.W., Suite 402, Washington, DC 20004 1–202–724–8105

Page 10 of 14 The Cashless Society SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. www.dccouncil.us/council/david-grosso At-large District of Columbia council member who introduced the Cashless Retailers Prohibition Act of 2018 to require food establishments in D.C. to accept cash. Federal Reserve 20th Street and Constitution Avenue, N.W., Washington, DC 20551 1–202–452–3000 www.federalreserve.gov Central bank of the United States, created by Congress in 1913 to provide the nation with a stable monetary and financial system. Identity Theft Resource Center 3625 Ruffin Road, #204, San Diego, CA 92123 1–888–400–5530 www.idtheftcenter.org Nonprofit created in 1999 to support victims of identity theft and to provide educational resources in cybersecurity, fraud and scams. National Community Reinvestment Coalition 740 15th St., N.W., Suite 400, Washington, DC 20005 1–202–628–8866 www.ncrc.org Membership organization that promotes community reinvestment in traditionally underserved communities. Square Inc. 1455 Market St., Suite 600, San Francisco, CA 94103 1–415–375–3176 www.square.com Mobile-payment company that allows individuals and merchants to accept card payments via a smartphone or tablet. Strategy and International Business Group 2.228, Scarman Road Building Warwick Business School, University of Warwick, Coventry, CV4 7AL United Kingdom +44 (0)24–7652–3038 www.warwick.ac.uk/fac/soc/wbs/subjects/sib Business school group that conducts research in strategy and international business. Sweetgreen 8840 Washington Blvd., Culver City, CA 90232 1–310–660–7471 www.sweetgreen.com Fast casual restaurant chain serving salad that became a cashless business at nearly all of its branches in 2017. Notes

[1] David Birch, “Before Babylon, Beyond Bitcoin: From Money that We Understand to Money that Understands Us” (2017), p. 18; Art Swift and Steve Ander, “Most Americans Foresee Death of Cash in Their Lifetime,” Gallup, July 15, 2016, https://tinyurl.com/ybgku85y. [2] “Tap the app, get a ride,” Uber, accessed Oct. 11, 2018, https://tinyurl.com/y8kffw7q; “Payment Methods,” Amazon, accessed Oct. 11, 2018, https://tinyurl.com/ya32d6xp. [3] Leena Rao, “Amazon Go Debuts as a New Grocery Store Without Checkout Lines,” Fortune, Dec. 5, 2016, https://tinyurl.com/y7ojatu4. [4] Jennifer Saranow Schultz, “The Merchants That Don’t Take Cash,” The New York Times, June 8, 2010, https://tinyurl.com/yd3dvrw4; Rachel Sadon, “D.C. Councilmember Wants To Do Away With Cashless Restaurants,” DCist, June 26, 2018, https://tinyurl.com/ybueu6ez. [5] Frank Kehl, “How To Accept Credit Card Payments For Your Small Business,” Merchant Maverick, May 7, 2018, https://tinyurl.com/y9hbq7z3. [6] “Who We Are,” PayPal, accessed Oct. 11, 2018, https://tinyurl.com/hb56bm5. [7] “Square Point of Sale: The POS that’s easy to set up and use,” Square, accessed Oct. 11, 2018, https://tinyurl.com/y7v5d4t2. [8] “Our mission is to increase the GDP of the internet,” Stripe, accessed Oct. 11, 2018, https://tinyurl.com/yb7nhwy4. [9] Julia Boorstin, “Going cashless to fight rising financial crime,” CNBC, April 20, 2017, https://tinyurl.com/y8jsjfek.

[10] Ibid. [11] “The Federal Reserve Payments Study: 2017 Annual Supplement,” Board of Governors of the Federal Reserve System, Jan. 25, 2018, https://tinyurl.com/y9uf5bnu. [12] Emily Bary, “Visa and Mastercard earnings: More than just payments at play,” MarketWatch, July 25, 2018, https://tinyurl.com/ydh3evar. [13] Maria Armental and AnnaMaria Andriotis, “Visa’s Profit Rises Sixfold as Card Spending Growth Continues,” The Wall Street Journal, April 25, 2018, https://tinyurl.com/y8kqhn7m. [14] Claire Greene and Joanna Stavins, “The 2016 and 2017 Surveys of Consumer Payment Choice: Summary Results,” Federal Reserve Bank of Boston, May 10, 2018, https://tinyurl.com/y93wjazw. [15] Gloria Dawson, “At Sweetgreen, a Suitcase Full of Cash Won’t Buy You Lunch,” The New York Times, July 30, 2016, https://tinyurl.com/ycth9fer. [16] Ibid.; Nancy Cook, “Is Sweetgreen the Ultimate Millennial Brand?” The Atlantic, Sept. 4, 2014, https://tinyurl.com/y84bla32. [17] Swift and Ander, op. cit. [18] Joyce M. Rosenberg, “Cashless restaurants trend results in faster lines, less hassle for customers, employees,” USA Today, April 20, 2018, https://tinyurl.com/y7snozs3. [19] Ally Schweitzer, “How A ‘Cashless’ Future Could Leave Many D.C. Residents Shortchanged,” WAMU, Aug. 29, 2018, https://tinyurl.com/ydagrfll. [20] “Visa to Help U.S. Small Businesses Go Cashless,” Visa, July 12, 2017, https://tinyurl.com/ybrs4u3k. [21] Patrick Jenkins, “ ‘We don’t take cash’: is this the future of money?” Financial Times, May 10, 2018, https://tinyurl.com/ya5qeh6l. [22] Selena Maranjian, “This Is How Credit Card Companies Hauled in $163 Billion in 2016,” The Motley Fool, April 13, 2017, https://tinyurl.com/y7nqr583. [23] Melissa McCart, “The Problem With Cashless Restaurants,” Eater, Feb. 15, 2018, https://tinyurl.com/ybfufauc. [24] Jeff John Roberts, “Why a Popular Salad Chain Stopped Using Cash,” Fortune, Sept. 14, 2017, https://tinyurl.com/yco9le65. [25] Rachel Levin, “The Tipping Point: Is This the Beginning of the End for Gratuities?” Pacific Standard, May 19, 2014, https://tinyurl.com/y8dsa8m2. [26] Richard H. Thaler, “Behavioral economics from nuts to ‘nudges,’ Chicago Booth Review, May 7, 2018, https://tinyurl.com/y86dt434. [27] Kareem Haggag and Giovanni Paci, “Default Tips,” American Economic Journal: Applied Economics, 2014, https://tinyurl.com/y7v9jozf. [28] Sarah Max, “Should You Always Tip in Cash at Restaurants?” Money, Feb.18, 2016, https://tinyurl.com/y9zltlur. [29] “Wage and Hour Division (WHD),” U.S. Department of Labor, Jan. 1, 2018, https://tinyurl.com/jfjwb65. [30] Max, op. cit. [31] “Report on the Economic Well-Being of U.S. Households in 2017,” Board of Governors of the Federal Reserve System, May 2018, https://tinyurl.com/yclay38c. [32] “Cashless Retailers Prohibition Act of 2018,” David Grosso D.C. Council At-Large, June 26, 2018, https://tinyurl.com/y7lu4cls. [33] Gene Marks, “Why going cashless is discriminatory – and what’s being done to stop it,” The Guardian, July 15, 2018, https://tinyurl.com/ybp8t7x3. [34] “Report on the Economic Well-Being of U.S. Households in 2017,” op. cit. [35] Dawson, op. cit. [36] “Restaurants that don’t accept cash upset some customers, but they reap benefits,” The Associated Press, Los Angeles Times, April 18, 2018, https://tinyurl.com/y8sf6c3j.

[37] “Legal Tender Status,” U.S. Department of the Treasury, Jan. 4, 2011, https://tinyurl.com/hde67es.

[38] “Section 10A: Discrimination against cash buyers,” 190th General Court of the Commonwealth of Massachusetts, accessed Oct. 11, 2018, https://tinyurl.com/yahjdf3e. [39] Chris Morran, “Court Rules Airline Doesn’t Need To Accept Cash For In-Flight Purchases,” Consumerist, Feb. 25, 2013, https://tinyurl.com/ybf4czvw. [40] Odysseas Papadimitriou, “How Credit Card Transaction Processing Works: Steps, Fees & Participants,” WalletHub, April 2, 2009, https://tinyurl.com/y7p5zhzy. [41] Latoya Irby, “How to Qualify for a Credit Card,” The Balance, Oct. 21, 2018, https://tinyurl.com/y6ufa9un. [42] “UFA2020 Overview: Universal Financial Access by 2020,” World Bank, Oct. 1, 2018, https://tinyurl.com/ycqer9x3. [43] Wendy Matheny, Shaun O’Brien and Claire Wang, “The State of Cash: Preliminary Findings from the 2015 Diary of Consumer Payment Choice,” Federal Reserve Bank of San Francisco, Nov. 3, 2016, https://tinyurl.com/y9w5mnma. [44] Donald Morgan, Maxim Pinkovskiy and Bryan Yang, “Banking Deserts, Branch Closings, and Soft Information,” Federal Reserve Bank of New York, July 12, 2016, https://tinyurl.com/ydd2ymv9. [45] Ibid. [46] Rachel Louise Ensign, Christina Rexrode and Coulter Jones, “Banks Shutter 1,700 Branches in Fastest Decline on Record,” The Wall Street Journal, Feb. 5, 2018, https://tinyurl.com/ybtknvtc. [47] Allison Prang, “Thousands of Bank Branches are Closing, Just Not at These Banks,” The Wall Street Journal, June 15, 2017, https://tinyurl.com/yanrdw2g. [48] “FDIC-Insured Institutions Report $56 Billion in Net Income in First Quarter 2018,” Federal Deposit Insurance Corp., May 22, 2018, https://tinyurl.com/y8ddnr52. [49] “Powering ads and analytics innovations with machine learning,” Google Inside AdWords, May 23, 2017, https://tinyurl.com/ybzlvp6f. [50] Larry Hardesty, “Data Sets Not So Anonymous,” MIT Technology Review, April 21, 2015, https://tinyurl.com/y7z9aof8. [51] Michael Reilly, “Google Now Tracks Your Credit Card Purchases and Connects Them to Its Online Profile of You,” MIT Technology Review, May 25, 2017, https://tinyurl.com/mp89wvw. [52] “2017 Annual Data Breach Year-End Review,” Identity Theft Resource Center, Feb. 8, 2017, https://tinyurl.com/y9lrm95u. [53] “Identity Fraud Hits All Time High With 16.7 Million U.S. Victims in 2017, According to New Javelin Strategy & Research Study,” Javelin, Feb. 6, 2018, https://tinyurl.com/yd4v7emx. [54] “Banks Spend on IT Security is 3x Higher Than Non-Financial Organizations,” Kaspersky Lab, March 9, 2017, https://tinyurl.com/yczw79rz. [55] “Consumer Credit – G. 19,” Board of Governors of the Federal Reserve System, Nov. 7, 2018, https://tinyurl.com/jwcpj4x. [56] Matheny, O’Brien and Wang, op. cit. [57] Michael Finney, “Cash not always welcome at Apple stores,” ABC7 News, May 17, 2010, https://tinyurl.com/yc988kgz. [58] Sarah Perez, “Amazon launches Amazon Cash, a way to shop its site without a bank card,” TechCrunch, April 3, 2017, https://tinyurl.com/ld5m3rk. [59] John Williams and Claire Wang, “Reports of the Death of Cash are Greatly Exaggerated,” Federal Reserve Bank of San Francisco, Nov. 20, 2017, https://tinyurl.com/ycpqmo59. [60] Emma Luxton, “Cash will soon be a thing of the past. Won’t it?” World Economic Forum, May 23, 2016, https://tinyurl.com/gn4qrel. [61] Williams and Wang, op. cit. [62] Richard G. Anderson and Marcela M. Williams, “How U.S. Currency Stacks Up—at Home and Abroad,” Federal Reserve Bank of St. Louis, Spring 2007, https://tinyurl.com/ybdfl8nx.

[63] Morten Linneman Bech, et al., “Payments are a-changin’ but cash still rules,” BIS Quarterly Review, March 11, 2018, https://tinyurl.com/y99ck5co. [64] Jon Henley, “Sweden leads the race to become cashless society,” The Guardian, June 4, 2016, https://tinyurl.com/huo7d35. [65] Björn Segendorf and Anna-Lena Wretman, “The Swedish payment market in transformation,” Sveriges Riksbank Economic Review, 2015, https://tinyurl.com/y9auetvw. [66] “Top Five Impacts of GDPR on Financial Services,” Brickendon, March 20, 2018, https://tinyurl.com/yd7exeya. [67] Rowland Manthorpe, “What is Open Banking and PSD2? WIRED explains,” Wired UK, April 17, 2018, https://tinyurl.com/y7p56mce. [68] “Europe begins Open Banking era in subdued style,” Finextra, Jan. 15, 2018, https://tinyurl.com/y8xtep5a.

Page 14 of 14 The Cashless Society SAGE Business Researcher