Cashless society dangerously disrupts the poor, the elderly and the homeless


The British literally have less money in their pockets these days, and that has nothing to do with Brexit: debit cards have usurped banknotes and coins in 2017, and the decline in cash withdrawals at ATMs also accelerates. That's why The Big Issue magazine is testing a program to equip suppliers of contactless card readers. This could become a model for providing basic banking services to people without a fixed address.

Selling The Big Issue is a way for homeless people and other vulnerable people to get out of poverty. They buy the magazine with their own money at a price of £ 1.25 per issue and then sell it on the street for £ 2.50. Since its inception in 1991, the magazine says that more than 92,000 suppliers have participated, earning 115 million pounds.

While Britain is far from having cashless transactions, around 70% of payments are now digital (and growing). Paul Logan, 59, a salesman at The Big Issue, said his magazine sales were unpredictable: one day he might not sell, and then 10 or more the next day. It is part of the pilot project with iZettle, a payment fintech owned by PayPal, which has equipped 20 UK sellers with card readers.

Logan explains that his regulars are used to paying in cash, but that the card reader gives him a better chance of winning new customers. "You can miss the opportunity to have a new regular customer" if you only accept money, he said.

Is the money still worth it?

While formerly cash-dependent businesses, such as The Big Issue, are seeking to adapt, this raises questions as to whether liquidity has lost its usefulness. It plays a role in tax evasion and illicit financing. For shops and restaurants, paper tickets and coins make them a target for the flight. Digital payments avoid this and also speed up the payment process, so businesses can serve more customers.

However, liquidity remains an economic necessity for around 25 million people in the UK, including the 1.3 million who do not have a bank account. When people are cut off from traditional financial services, it is more difficult to save money and simple things like sending or receiving money and paying bills become more expensive.

Financial exclusion is one of the factors that makes it particularly difficult for a homeless person to raise the money needed to afford formal accommodations. More than 300,000 people in the UK are affected by homelessness, according to Greater Change, based in Oxford. The organization's digital platform is designed to give homeless people a way to accept cashless donations and ensure that the money is used, for example, to settle in formal housing.

The Big Issue plans to offer card readers to more sellers this year, but it will not be easy, according to Russell Blackman, chief executive of the publisher. Logan and other vendors participating in the iZettle pilot project were selected for their bank account, which is out of reach for many homeless people. To provide services, banks generally have to comply with the anti-money laundering requirements, including proof of address and identity card.

The Big Issue is talking to banking groups to develop accounts for people who do not have a fixed address. Blackman is confident he will be able to distribute more card readers this year and connect homeless people with basic banking services, which may be available even for those who do not sell the magazine. "Getting a bank account is a crucial step for their integration into society," said Blackman. "It's a very important part of what we do now."

The story continues

How to pay in Sweden

And then there is Sweden, which could almost no longer have money by 2023. The Swish payment app made its appearance as an Abba melody, with stores displaying signs to inform customers that Tickets and coins are no longer accepted.

Yet about 1 million people in the country (out of a population of 10 million) are still not ready for digital payment, according to Christina Tallberg, National President of the National Pensioners Organization of Sweden. About 600,000 of them are elderly, while others include people with disabilities and refugees.

Christina Tallberg

This is a problem when, increasingly, even essential services in Sweden require digital money. Tallberg points out that going to public toilets in Sweden may require digital payment, while parking a car sometimes involves a smartphone app. In Sweden, many banks also do not want to process banknotes and coins.

For 75-year-old Tallberg, the way to ensure that people are not left behind is through education and ensuring that species do not go away too quickly. His organization organizes study circles where retirees learn to use an iPhone and a computer.

Asking banks and businesses to continue to accept cash could also provide a safety net for people not to be left behind. It is something that other countries have tried. The People's Bank of China cracked down on merchants who refused to accept cash, fearing a violent reaction from groups that did not make up for the country's cashless revolution.

"We are not against digitization," Tallberg said, "but we think when you talk about cash, it's a little too fast."

  • Contactless payments are expected to become widespread in the United States. JPMorgan is at the origin of this change by deploying contactless technology on its payment cards. Visa announced that there would be 100 million contactless cards in the US by the end of the year.
  • This week, Quartz members covered the future of Goldman Sachs. One of the reasons his shares are trading below book value is the unknown consequences of his involvement in the 1MDB scandal. Another less amusing fact: CEO David Solomon worked for three other banks during his career – Drexel Burnham Lambert, Salomon Brothers and Bear Stearns – none of which exists yet.
  • Ethereum Classic was attacked. Some cryptographic exchanges interrupted the transactions, while others required longer confirmation times to avoid playing during the so-called 51% attack against the token network.
  • Morale investors in developed markets plummeted, according to a monthly survey of the German research company Sentix. Investors may be in a bad mood after last year's market turmoil, or be a common sign of government malfunction and political turmoil.
  • The future of finance elsewhere

  • Google is now an authorized payment institution in Ireland and also has an electronic money license from the Bank of Lithuania. The licenses could allow the technology giant to offer a wider range of financial services. TransferWise, based in London, is applying for a license in Brussels as a Brexit cover.
  • In the neo-bank battle, the value of N26 is now greater than that of Revolut (paywall). The German investor has raised $ 300 million in the largest European investment in fintech (paywall), and its valuation of $ 2.7 billion makes it the second largest banking startup in the world, behind the Brazilian Nubank.
  • Bank accounts can help the rural poor. A study in Kenya found that free banking reduces recipients' dependence on wealthier family members abroad.
  • Plaid, whose technology links bank accounts to startups such as Venmo and Acorns, has spent about $ 200 million to acquire Quovo. The acquisition target is similar to Plaid but focused on brokerage and investment data.
  • The European Banking Authority calls for regulation of pan-European cryptography (paywall), saying the current system could be exploited. And the Bank for International Settlements said it was unlikely that central banks would issue a digital token similar to Bitcoin (pdf).
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