Councilwoman Heather Hutt (CD10) gathered with Councilmembers Eunisses Hernandez (CD1) and Hugo Soto-Martinez, along with Community Coalition President Alberto Retana, and Jenesse Center Director of Compliance Leslie Belt for a press conference on April 30, that called for the City of Los Angeles to ban businesses from going cashless.
The city empowers all its residents to participate in its economic development, including the practice of purchasing goods and services. However, there are millions of Americans who are unable to obtain bank accounts or have been denied access to credit, preventing them from being able to engage in consumer transactions unless they are able to pay for goods and services in cash.
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City councilmembers and local leaders discussed the inequity that happens when businesses do not allow cash as a form of payment.
“The simple fact is that cashless businesses create an economy that is not inclusive and accessible to some of our most vulnerable populations,” Hutt said during the press conference.
She also stated that, “Especially as we end April, which is Sexual Assault Awareness Month, this about our victims of domestic violence who need to use cash for their safety and escape. Electronic forms of payment can track them when trying to flee.”
Cashless retail stores and even restaurants are becoming more common throughout L.A., affecting a wide range of residents regardless of their socioeconomic status. In 2019, cash was used in just 26% of transactions, down from 30% the year before, according to findings from the Federal Reserve Bank of San Francisco. When a store goes cashless, it stops accepting physical cash and only allows customers to pay for goods and services with a debit or credit card, or through a payment app.
Customers have been using credit cards since the 1950s. Debit cards and payment apps like Google Wallet and Apple Pay have made cashless payments the easiest and fastest option and cashless payment solutions continue to improve with new mobile and digital technological advancements.
Businesses have embraced cashless transactions citing advantages such as avoiding cash processing fees that arise from bank deposits, easier accounting for bookkeeping, faster checkout thus saving time and reducing the risk of theft.
Despite these benefits, there are still drawbacks local businesses face by opting for cashless payments such as credit card companies card network transaction fees.
Another disadvantage to local businesses includes regretfully having to turn away customers who try to pay with paper money. Customers who pay with cards or apps sometimes like the option of paying with cash when they have it. Some people use cash for budgeting reasons, while others receive tips or cash payments from their jobs.
Some people have no other payment option besides cash. These people may fall into the category of unbanked or underbanked. Businesses who do not accept cash cannot offer products or services to people without access to electronic payment methods. In some cases, not accepting cash is another form of discrimination.
“These are everyday people. The Black and Brown faces, the white and Asian faces, these are all the faces of Los Angeles who carry cash and want to participate in our City’s economy. Going cashless is a form of economic suppression, and a form of othering that tells Angelenos they do not belong,” said Retana.
Belt stated, “Numerous women and families do not have access to credit and are unable to obtain bank accounts safely. When survivors are forced to rely on digital transactions, they leave digital footprints and become easily traceable by abusers who often control their bank accounts.”
Overall, electronic payment processing can be convenient and fast, yet it can also be unreliable. If a payment processing system goes down, businesses will not be able to accept payment at all. A cashless business cannot take paper money as an alternative, so its operations will have to stop entirely until the system returns online. Even power outages can happen because of a technical glitch or malicious attack, local businesses may also be affected by internet service failure.
The motion is scheduled to be reviewed by the City Council’s Trade, Travel, and Tourism Committee in June.
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