Cash is still king
The top reason Californians report for being unbanked is that they don’t have enough money to meet banks’ minimum account balance requirements. Steep and unpredictable bank fees? Forget it. With rising costs, many people just can’t afford to pay a $10 monthly service fee for a checking account or $25 to $35 per overdraft transaction.
Other people avoid banks to maintain their privacy or because they simply don’t trust banks.
Most of those households are low-income; 61% make less than $30,000 annually. Without a viable way to keep track of and save money, many Californians can’t improve their economic situation. They rely on cash and online payment services like CashApp to make purchases.
Groups of people have their own reasons for preferring cash: Some elderly people struggle with the technology of online financial services. Advocacy groups point out, people fleeing domestic violence rely on cash for safety, because electronic payments can easily be tracked.
Unhoused people commonly used to pander for cash, but many pedestrians don’t carry it anymore. Zac Clark, founder and executive director of the nonprofit The HomeMore Project, says unhoused people tell him that keeping cash poses a risk of theft for them, so many are trying to use digital systems. At the same time, without a home address, proper identification and enough money for minimum balances, people experiencing homelessness often can’t get bank accounts.
In recent years, government officials have begun to notice the struggle impoverished people face when buying goods or paying for services. One approach to solving the issue began in 2019 when San Francisco banned cashless brick-and-mortar businesses in an effort to keep retail accessible for all residents.
The ban sparked a statewide conversation about the effect of cashless businesses on customers who rely on cash. Former State Sen. Jerry Hill, a Democrat from San Mateo, introduced a bill in 2020 to require all brick-andmortar businesses to accept cash statewide, but the proposal died in a committee.
In the meantime, business owners should keep unbanked and underbanked Californians plugged into the economy by simply allowing cash purchases.
No one should be turned away from a register simply because they only have cash, and no one should be locked out of opportunities to better their economic situation. The freedom and opportunity to attain a better life is, after all, the so-called American dream.
“When you have a big family like I have, those little dollars matter,” Williams told me. “I just had enough with each and every one of those banks because of all the high overdraft fees. It was just too much for me.”
But avoiding banks limits Williams’ options for managing her money. She has to use check cashing services, which take a percentage of her income, and relies mostly on cash, making saving extremely difficult. This is reality for the nearly 1 in 5 Californians who don’t have bank accounts and must often use costlier methods to access their money.
Black, Hispanic and low-income people are the most likely to be unbanked or underbanked, a status that can undercut economic mobility. Other populations, such as the elderly, noncitizens and unhoused people also are acutely affected by a lack of access to banking services.
For these people, cash is still king. The problem is many businesses have moved away from using cash — some are going entirely cashless — which was only hastened by the coronavirus pandemic.
California needs to find a way to keep low-income people engaged in an increasingly cashless economy. Besides, every dollar clearly states it is “legal tender for all debts public and private.”
Kate McQuarrie is the California Voices Intern at CalMatters and a recent graduate of the University of Southern California with a degree in English.