Cashed Out: How a Cashless Economy Impacts Disadvantaged Communities and Peoples (EventID=114127)

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Connect with the House Financial Services Committee Get the latest news: https://financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinancialCmte Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Thursday, October 14, 2021, at 12:00 p.m. (ET) Oversight and Investigations Subcommittee Chairman Green and Ranking Member Emmer will host a virtual hearing entitled, “Cashed Out: How a Cashless Economy Impacts Disadvantaged Communities and Peoples." - - - - - - - - Witnesses for this one-panel hearing will be: • John Breyault, Vice President of Public Policy, Telecommunications, and Fraud, National Consumers League • Beverly Brown Ruggia, Financial Justice Program Director, New Jersey Citizen Action • Norma Garcia, Policy Counsel and Director, Mission Economic Development Agency (MEDA)-San Francisco • Representative Alex Valdez, Member, Colorado House of Representatives • Todd Zywicki, Professor of Law, George Mason University Antonin Scalia School of Law Overview This hearing will assess the growing trend toward a cashless, digital-only economy and the adverse impacts on persons who are low wealth, unbanked, underbanked, or otherwise disadvantaged. With the continued surge of more and varied digital payments options, the drive for the efficiency and convenience of going “cashless” threatens to further marginalize those already on the margins: communities of color that live in poverty, unhoused persons with no permanent address, the underbanked and unbanked, elderly persons, and immigrants without documentation, among others. It also affects those who prefer to use cash to avoid overdraft fees imposed by banks, which have grown increasingly onerous in recent years. This hearing will consider the collateral damage caused by cashless systems, the risks to marginalized communities, policy responses of certain jurisdictions to ban cashless businesses, and possible federal solutions to address these adverse impacts. Finally, the hearing will examine the lack of consumer protections for and disproportionate impact on low-income persons when digital payments are misdirected. At the onset of the COVID-19 pandemic, as governments around the world mandated lockdowns and quarantines that severely limited face-to-face interactions, a new generation of payment solutions proliferated during what some experts refer to as the “death of cash.” This trend began in the years preceding the pandemic. According to an analysis of Square payment transactions conducted between 2015 and 2019, America’s “cashless trend is clear but nuanced” as consumers increasingly used credit and debit cards for smaller purchases. In 2018, The Pew Charitable Trusts (Pew) conducted a nationally representative survey of Americans’ views on, and experiences with, various payment methods, including cash, checks, cards, and mobile application payments. The results showed that in any given month in 2018, most Americans used a range of traditional methods to make payments: credit cards (70%), debit cards (61%), prepaid cards (12%), cash (78%), and checks and money orders (37%). In that year, 56%, or roughly 143 million adults, made at least one mobile payment. Almost 30% of respondents opted not to use mobile payments because of concerns about loss of funds. Those who did make a mobile payment were twice as likely (39%) as credit card users (20%) to report that disputes were difficult to resolve and over four times more likely (23%) to report not knowing who they should contact. The Exclusionary Impacts of Cashless Commerce The benefits of peer-to-peer digital payment platforms and mobile applications (collectively “P2P apps”) are understood to provide speed, convenience, and merchant security. Early in the COVID-19 pandemic, some also believed eliminating cash would help prevent the spread of the coronavirus, though medical studies have since demonstrated that cash generally does not spread respiratory diseases, such as COVID-19. However, the benefits for merchants come at a cost for some consumers that fall into three categories: (1) lost access; (2) lost privacy; and (3) lost security for consumers. According to Pew, cash was the primary payment method for 35 million American adults, or 14% of the U.S. population, with unbanked, lower income, and consumers of color most likely to pay with cash. While White consumers were more likely to report using cash in the prior month, people of color were nearly twice as likely to report they primarily pay with cash. For this 14% of the population, eliminating a cash payment option limits or entirely forecloses their ability to engage merchants or conduct transactions in other sectors of the economy where cash is not accepted. In March 2020, during the onset of the COVID-19 pandemic, the Metro Transportation Authority in New York City announced... Hearing page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=408496