Cash and the City

What impact does a cashless economy have on city life?

Sri Lanken Street Vendor. Getty Images ©. Source.

Cities are centers of commerce. Bustling cities–particularly those in the global South–have thriving informal and semi-formal economies taking place in the streets. These economies rely on cash. As a portable and universal tool for exchanging value, cash is unbeatable. But its decentralized nature leads to other challenges: it can easily be stolen, lost, and it has few safeguards against being used for corruption or black-market exchanges. For these reasons and others, some governments have attempted to move their societies toward cashless payments.

One recent attempt, and failure, in removing cash from the daily lives of city dwellers was Google’s attempt in Nairobi, in collaboration with a local bank, to launch a smart card system to replace cash payments on matatus–the city’s de-facto public transit network of private minibuses.

Bebapay ad. Source.

Launched in 2013, Bebapay was meant to modernize the experience of using transit in Nairobi. Instead, it folded in 2015. Even with strong government support, the system never took off.

Two types of people got in the way: drivers and the cash-poor.

Matatu drivers, even if the companies they worked for officially supported Bebapay, did not want to adopt the program. It quite literally took cash out of their hands. Drivers were given little incentive to change their ways, particularly since they likely benefited from the small-scale corruption of handling the cash.

Riders faced another challenge. Bebapay cards worked by carrying a balance, which is a barrier for people with unpredictable income. Leaving even a little money on a card is difficult when that money might have been spent on a meal or other more pressing expenses.

This begs a larger question, who and what else might be hurt by a move toward a cashless city? Certainly, buskers and panhandlers and anyone else that traffics in spare change. Other informal transactions might become tricky, like craigslist purchases or the small-scale community uses of cash in garage-sales and fundraisers. It would introduce one more layer of technological dependence. Will the illiterate be able to use the new system? Non-native speakers?