No card, no service: Challenges faced by vulnerable populations of a cashless society

• Published date: 01 September 2023
• Author: Dan Horne,M. Cary Collins
• Date: 01 September 2023
• DOI: http://doi.org/10.1111/basr.12324

ORIGINAL ARTICLE

No card, no service: Challenges faced by

vulnerable populations of a cashless society

Dan Horne | M. Cary Collins

Department of Marketing, Providence

College School of Business, Providence,

USA

Correspondence

Dan Horne, Department of Marketing,

Providence College School of Business,

Providence, RI 02918 USA.

Email: dhorne@providence.edu

Abstract

How people pay is critically important to consumers

and businesses alike. Many consumers are choosing to

pay for goods and services from an increasing number

of options. Tech-savvy urbanites buy coffee by tapping

their phone on a reader. Parents returning from a night

out use peer-to-peer payment apps, such as Venmo, to

pay the sitter. The recent explosion of financial innova-

tions promises faster, more efficient, and cheaper trans-

actions. These increasing digital payment options

coincide with decreased number and volume of cash

transactions. However, vulnerable populations face

more constrained payment choices and often rely

exclusively on cash. Without experience, devices, or

acceptable credit histories, vulnerable populations may

have little access to digital transactions. The advantages

of falling digital costs and other benefits thus accrue to

the digitally connected. At the same time, those who

must transact in coins and paper money are likely to

find their relative costs increasing. This paper high-

lights payment trends and the potential impact on vul-

nerable populations in the United States as we move

toward a cashless society. This paper should stimulate

discussions of public policy initiatives to mitigate digi-

tal payment issues for vulnerable people.

KEYWORDS

cashlessness, payment technology, vulnerable populations

Received: 18 April 2022 Accepted: 15 June 2023

DOI: 10.1111/basr.12324

© 2023 Albert P. Viragh Institute for Ethics in Business at Duquesne University.

532 Bus Soc Rev. 2023;128:532–548.

wileyonlinelibrary.com/journal/basr

1|INTRODUCTION

Market economies operate on the exchange principle: We trade things of value with each other,

assuming the transaction will make us better off afterward (Alderson & Martin, 1965;

Bagozzi, 1975). Embedded in this model of individual consumption is the premise that, unless

we are in a barter economy, there needs to be a mechanism for transferring value for goods and

services. Money frees us from the constraints of barter and provides the basis for most transac-

tions. However, the form of money is critical to the transaction speed and potential risks for the

parties involved. The inability to transfer value properly will block transactions from taking

place even though the parties are willing to complete the transaction.

The inability to transfer value ranges from modest inconveniences to much more: What if

senior citizens could no longer pay utility bills with cash because the utility adopts more-

efficient online payments? What if a recent immigrant needs transportation to get to a job but

cannot purchase a used bike at a flea market because he needs a mobile phone-based peer-

to-peer money transfer app to do so? What if a cold, homeless person scrounged enough coins

to buy hot coffee but finds only digital cards are taken for payment? Each of these entails far

more negative consequences than a bit of frustration.

In developing countries, consumer transactions are cash-based, (about 80%, according to a

recent McKinsey report; Brugge et al., 2018), while developed economies are transitioning away

from cash transactions (Arvidsson, 2019). The ability of developed economies to eliminate cash

is derived from the advantages of new technologies (Allam, 2020; Fabris, 2019).

1

We use examples from the United States and other advanced economies to make policy rec-

ommendations. However, our focus here is on vulnerable consumers in any economy. Although

vulnerable consumers are difficult to describe without several dimensions (Ruof, 2004), we

define vulnerable consumers as those at a high risk of adverse financial outcomes. At the most

basic level adverse financial outcomes stem from the inability to make needed or desired pur-

chases or settle previous obligations. As detailed by Fernandez-Lopez et al. (2023), the descrip-

tion of vulnerable consumers draws on an intersection of primary attributes: socio-demographic

variables (e.g., age and education), economic variables (e.g., indebtedness and income), and

behavioral variables (e.g., risk aversion and financial literacy).

1.1 |Financial inclusion and exclusion

The literature on financial inclusion and exclusion provides additional clarity around vulnera-

bility in the context of financial services. Financial inclusion has been defined along a spectrum

from “having formal (financial) accounts”(Allen et al., 2016) to market and government efforts

to formalize financial services for all citizens (Sanderson et al., 2018). Sinclair (2001) and

Meskoub (2018) share a definition of financial exclusion: “[T]he inability to access necessary

financial services in an appropriate form. Exclusion can come about because of problems with

access, conditions, prices, marketing, or self-exclusion in response to negative experiences or

perceptions.”Koku (2015) more fully describes the array of potential barriers which create

financial exclusion, including geographic barriers for rural and urban “banking deserts”

(Dunham, 2019; Mende et al., 2019), as well as barriers such as language, risk aversion, and

planned commercial exclusion. These additional barriers intersect with demographic variables

such as age, income, and ethnicity creating groups more likely to be negatively impacted by the

movement toward a cashless economy. Critically, this is also related to adoption of innovation.

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