In major cities in China, over 90 percent of people use WeChat and Alipay as their primary payment methods, ahead of cash. In the US, the use of money is just 16% of total transactions and is expected to decline as card growth accelerates.
The growing use of cashless payment puts financially disenfranchised populations at a disadvantage as they cannot participate in services that require cashless payments and pay the higher cost when transacting in cash.
Two populations less likely to participate in cashless payments are the elderly and the poor. The elderly are less able to manage cashless payment methods, especially without transition support. If local authorities or utility companies do not support cash, the elderly cannot get their government subsidies and face hurdles to paying for essential services.
In the US, many restaurants refuse to accept cash due to a combination of incentives from credit card networks like Visa and Mastercard and the desire to create a frictionless experience for high-value customers. In addition, those who do not qualify for cards or cannot afford mobile payment methods are excluded from these retailers.
Low-income people who participate in cashless payment options face stiff penalties for overdraft fees from their savings accounts. They are ineligible to receive credit cards that reward wealthy users for money spent. People who rely on cash subsidize more affluent people who use credit cards.
In the US, The Cashless Retailers Prohibition Act of 2018 would make it illegal for restaurants and retailers not to accept cash or charge a different price to customers depending on their payment type.
Fintech companies have access to broader information on a customer's financial habits and social network.