Finance professor says decline of physical money affects vulnerable groups

Mike Day has been living on the streets of Toronto for two-and-a-half years, often sitting outside the Cineplex at Yonge and Dundas. Day chose not to have his photo taken. (Mahad Arale/RSJ)

Mike Day sits at his usual spot outside of the Cineplex at Yonge-Dundas Square, where he’s sat for the last two-and-a-half years. Estranged from his family and living on the streets, Day outstretches a hat for spare change, with a few pennies and coins thrown in on a cold November afternoon.

He experiences what many homeless people have: a decline in cash donations from people in the city.

“People usually give,” he said. “Some do, some don’t, but I say thank you to people. (Some people) just keep on walking or some will stop and offer to buy food.”

Laleh Samarbakhsh, assistant professor of finance at Ryerson University, notes that many countries are shifting to a cashless society. Canada is no different – but the declining availability of physical money impacts vulnerable groups including the poor, elderly and homeless.

“Electronic methods of payments have been growing significantly in the last decade, with more Canadians using electronic payment methods such as credit and debit cards for their everyday purchases,” Samarbakhsh said. “As for some of the drivers of a cashless society, we can think of the rising ATM and bank closures, a growing rejection of cash in shops, (which is) often a consequence of those branch closures and move to online systems.”

On a day-to-day basis, Torontonians often find themselves with less cash on hand. Angie Liu, who commutes from Etobicoke to her downtown office near Richmond and Jarvis said there are usually a number of homeless people near her office. She tries to give what she has.



“I always have my cards on me but I rarely have cash unless I know I’m going somewhere that only accepts cash,” she said. “If I don’t have money but I have food, I offer that instead.”

In Canada in 2012, cash purchases made up 39.7 per cent of payments. In 2017, they made up 29.8 per cent. In the UK, the percentage of cash payments dropped from 62 per cent in 2006 to only 40 per cent in 2018, according to Wired.

Liu said that she has few reasons to carry cash anymore: “Maybe if there was more incentive to use cash to pay for items, people would carry cash more. It seems like it’s more convenient for people these days to carry cards or just use their smartphones to pay and collect rewards for purchases.”

In Toronto, approximately 5,000 people live on the streets and 3,200 of those are on the waitlist for supportive housing. Homelessness and the cashless society continue to grow not only in Toronto, but also in areas across the GTA. City officials are looking for a way to stop the growing homeless population and the issues of panhandling.

When it comes to looking for a way to give to vulnerable groups, Samarbakhsh said innovation and research needs to play a major role in finding a solution in a cashless society.

“What respectful and ethical contactless forms of payment can be employed for the homeless? Would barcodes or numbered accounts be future alternatives? These are some areas that need nation-specific research and can support timely solutions,” she said. “What cannot be afforded however, is any delay in addressing the issue. The cashless society moves forward fast and it would be highly important to have the communities ready with well-tested alternatives.”

Homeless people in both in the UK and China have begun wearing barcodes around their necks to accept mobile payments. The initiative was started in the UK by an innovation project called Greater Change, which is striving for solutions to the cashless society for the homeless population.

When you scan a barcode on your smartphone, a profile comes up with a photo of the homeless person and with information on how they ended up living on the streets with payment options for how much each person would like to give.

However, Liu wonders how efficient it would actually be.

“How would they get set up with those bank accounts? I’d want to know what is required for them to set up those accounts, and how they would receive the money,” she said. “I guess the bottom line is that it’s an interesting solution, but it needs to benefit the people most vulnerable.”