As cash use falls victim to the pandemic, it's also hurting society's most vulnerable

The COVID-19 pandemic has sped up the already-declining use of cash in Canada as more people have switched to using debit and credit cards, and that change is hurting people whose livelihoods depend on cash.

When the pandemic hit, many businesses started asking people to use debit and credit cards instead of cash out of fear of transmitting COVID-19 via money. Some stores even stopped accepting cash altogether.

This has led to a "very dramatic decline" in the number and value of ATM withdrawals, said Tracey Black, president and CEO of Payments Canada, the organization responsible for the electronic movement of money in Canada. Debit card payments, interbank transactions, direct deposits, bill payments and more all go through Payments Canada. 

Before the pandemic even started, cash was already falling out of favour with many Canadians. Between 2013 and 2018, use of cash declined 40 per cent, losing almost three billion transactions to debit and credit cards, according to Payments Canada.

Black said that trend will continue.

"At point of sale, we will continue to see a decline in cash and an increase in the use of electronic payment options instead," she said.

Fewer people using cash has already started to hurt people who live and work on the street, said Jeff Karabanow, a social work professor at Dalhousie University in Halifax. He said panhandlers, street musicians and performers all rely on cash. 

"I've noticed over the last three months during COVID that a lot of folks that are experiencing poverty and homelessness couldn't kind of, work the streets as they did for survival," said Karabanow.

Karabanow worries how these people will support themselves.

He said many people living on the street lack a home address, proper identification and the means to pay fees to open a bank account, so they have no access to banking and can't accept money sent via e-transfer.

"The folks that I work with that are experiencing poverty ... either on the streets or are a few paycheques away from the streets, it's going to again marginalize and exclude them from civil society," said Karabanow.

Kendall Worth is experiencing that exclusion first-hand. 

He's an anti-poverty advocate in Halifax who uses cash to help manage his finances. But during the pandemic he's run into situations where his money isn't accepted. Recently at a grocery store, he went to the only checkout that still took cash.

Despite that, when he tried to pay with cash, the cashier refused his money. So he ended up having to pay with his debit card.

"I didn't want to because I knew that was going to increase my service charges to my account at the end of the month," said Worth.

For someone who lives on a tight budget, saving every cent matters.

Increased use of debit and credit cards can be risky, said Rob McLernon, a licensed insolvency trustee with Grant Thornton in Halifax.

He said cash makes it easy for people to see how much they're spending and they can literally see or feel how empty their purse or wallet is afterwards.

Because debit and credit cards offer no visual or physical cues that alert people to how much money they're spending, they can end up in debt.

McLernon said people have more of a reliance on credit than ever before.

"It's the, 'I want it all, and I want it now syndrome.' If you start buying things that maybe you can't really afford today and hoping that tomorrow you'll have more funds to be able to pay for it, you know, it can really be a recipe for disaster," he said.

McLernon said credit and debit cards are fine as long as they're used responsibly and people don't go into debt. Electronic payments also have their place, offering people convenient ways to buy goods without getting close to others.

And that helped keep the Canadian economy afloat during the pandemic, said Black.

"I think Canadians are appreciating the value of electronic payments and I think that this situation that we find ourselves in has just provided more opportunities for us to understand the value of paying electronically over paying with cash," she said.

As the country moves further away from using cash, Karabanow said society needs to make sure nobody is left behind, especially those who can't get debit or credit cards.

"Once again, these folks are going to be excluded from just basic monetary transactions if we move much more to a cashless environment, so I think we have to be careful, we have to be cautious," he said.