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Cashless at La Colombe

While planning for my recent trip to New York City, I made sure to carry enough American currency. I set the roster of stores to visit and made a rough budget of what I expected to spend. I built in a huge buffer for my appetite at restaurants and withdrew the requisite amount from the bank.

This extent of planning is unusual. In Hong Kong, I seldom rely on cash other than the occasional taxi ride. My credit card is my go-to payment method: it’s accepted anywhere, spares me from the concerns of running out of paper currency and is the gateway to travel with the points it generates. It’s also issued by my employer, dispensing the annual fee others endure in exchange for perks.

Nevertheless, I avoid plastic whenever I travel. As a bargain hunter, I strive to maximize the value in anything I purchase; my colleagues at work call me “jetso” in Cantonese. I therefore find hard to justify the foreign transaction fee the card charges for the convenience of using it abroad. It’s also doubtful that the exchange rate is the best I can get.

So as my wife and I passed a store in Nolita, a strange sign caught my attention. The business boasted of being cashless, accepting payment by credit, debit or digital wallet only. I scoffed and kept walking, only to be confronted by similar stores elsewhere. While in line for coffee at La Colombe, I felt embarrassed to ask if they accepted cash, as if I was paying with brass coins from medieval times. Thankfully, they did.

Ordinarily, I laud the preference for digital over analog. I am after all part of a team building a virtual, branchless bank. My credit card is also one of my closest friends. But I deride the concept of cashless stores on multiple fronts.

One of my gripes is how they limit payment options. The entire premise of fintech is choice, giving customers new ways to bank, to organize their finances or plan for retirement. How ironic then that the same tools that owe their existence to choice are now bent on eliminating it. The proliferation of e- wallets, QR codes and what not does not counter this argument as they all fall within the same digital payment sphere. If I wish to pay with paper notes of legal tender with the backing of a government, I should have not objections merely because they are not denominated in bits and code.

Another major cause for concern is their exclusionary nature. It’s no stretch of the imagination to assume that a person who is unable to afford a mobile phone or the accompanying data services would be hindered from making purchases. The value of their dollar does not depreciate from the fact that it does not reside in a digital wallet. What’s more, those with bad or no credit can’t have access to credit cards or ones which charge reasonable interest. And what of the unbanked and underbanked of which there are 8.4 and 24.2 million respectively in the US alone? Without a bank account, the payment options become essentially limited to cash. If stores stop accepting it, a portion of the population becomes economically marginalized.

It’s reassuring that the issue has not gone unnoticed. Cities like Philadelphia and San Francisco as well as the entire states of New Jersey have banned cashless stores with Massachusetts having taken a stand in the 1970s. Two separate bills before the US Congress are attempting to extend the ban nationwide. Surprisingly, the issue is also prevalent in China where WeChat and AliPay enjoy dominance and widespread use. The central bank had to remind merchants to accept cash or face corrective measures.

Don’t get me wrong, I am not a proponent of limiting digital payments. As a heavy user myself, I would be greatly disappointed if their acceptance was curtailed. I also acknowledge the merchant’s perspective of limiting cash for the time and cost associated with handling, counting and storing it, not to mention the safety issues.

But excluding some for the convenience of others fundamentally clashes with the fintech ethos. It’s no different than limiting investment strategies to select customers of wealth, sparing usurious fees in exchange of minimum account balances or charging obscene amounts for simple remittances.

The Point Is

If the purpose of digital products is to promote choice and financial inclusion, it should not have the unintended consequence of excluding those who don’t have access to the tools to benefit from this new wave.

And the coffee at La Colombe was worth the wait.

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