We are grateful for the opportunity to contribute to the public discussion on a cashless or cash-lite Canada. The Salvation Army in Canada is a national social service provider, secondhand retailer, and fundraiser with a long history of advocating for dignity and nondiscrimination. From these intersecting experiences, we share the perspective of the Royal Canadian Mint and the Bank of Canada that cash is an important financial option and urge the Government of Canada, Canadian retailers and small businesses, and financial institutions to carefully consider the needs of all people living in Canada in their deliberations on this complex issue. We offer here our perspective on behalf of the marginalized communities we work with in the hope that they will not be further disempowered and disenfranchised by diminished access and higher barriers to getting the things they need.
The Salvation Army in Canada
The Salvation Army is an international Christian organization that began its work in Canada in 1882 and has grown to become one of the largest non-governmental direct providers of social services in the country. The Salvation Army gives hope and support to vulnerable people every day in 400 communities across Canada and more than 130 countries around the world.
With the public’s generosity, more than 1.9 million people were helped by The Salvation Army in Canada and Bermuda last year, including:
• 1,350 immigrant and refugees assisted through resettlement programs
• 5,500 shelter, addictions, detox and mental health beds provided each night for vulnerable men, women and families
• 675 individuals removed from human trafficking situations
• 41,000 people helped with developmental and metal disabilities
• 9,600 people helped with budgeting, tax preparation and trusteeship
• 2,900 people helped when disaster struck.
The Salvation Army also operates 294 thrift shops and second-hand stores across the country.
Thrift Store Shoppers
More than half of all transactions at Salvation Army Thrift Stores are made in cash (54%), a value of $75M. That this is out of step with national trends toward electronic payments is partly due to the nature of the second-hand, small goods retail market as primarily occupying bricks and mortar stores and being less conducive to the shift to online shopping. The average transaction value in our stores is $15.58, and according to the Payments Canada’s 2019 payment trends report, most cash transactions are under $15.
Thrift store shoppers are often seniors, students, newcomers to Canada and people who don’t earn a living wage. It’s not unusual for them come to our thrift stores with only so much money in their pockets, looking to make the most of that sum.
Managing cash certainly has a cost for us (e.g., labour to sort, count, deposit and secure it), but at present we have no intention of switching to cashless points of sale: we know it would serve to exclude certain clientele from our stores. Salvation Army Thrift Stores are committed to non-discrimination in this way.
What’s more, as a national recycling operation, diverting approximately 79 million pounds of clothing, household items and furniture from landfills per year, we are also concerned about the increased use of plastic to replace more durable and reusable forms of currency. Notes and coins which have value more explicitly attached to them are thereby less disposable than re-loadable plastic cards.
Newcomers to Canada
We’ve observed that many newcomers and refugees to Canada experience cash as not only the easiest form of payment, but also the most dignified and respectful way to trade goods and services with one another. These communities often engage in informal markets where the physical exchange of money makes it possible to meet their basic needs (for childcare and food, for example). And because cash is accessible and empowering, it’s a way to begin acclimatizing to otherwise unfamiliar financial systems in their new home. For example, cash allows refugee families to provide school-aged children with an allowance, teaching them important lessons about Canadian culture, respectful exchange, and financial literacy.
Someone Experiencing Homelessness
For someone experiencing homelessness, who lacks a safe and secure place to store personal belongings, the loss of a debit, credit or gift card can mean the loss of so much more than the cash you’re carrying in your pocket. It may mean the loss of all the money you have for the month, as well as any extra fees associated with replacing the card or re-accessing your account. For this and other reasons, people experiencing homelessness often prefer to deal in cash while they are without stable and private housing. It’s also very difficult to hang on to personal identification while homeless, which will be discussed below.
Someone Collecting Social Assistance
For those collecting some form of social assistance income, any additional administrative fees associated with cards (e.g., service charges) chips into the arguably insufficient amount a person receives per month to meet their basic needs in the first place. The high (and rising) costs of banking transactions – including debit and tap-and-go options – is a reality some people manage by using cash. While a cashless society spells greater profits for banks through fees and lower staffing costs, some of that profit will come at the expense of people who are already making do with very little.
Someone Escaping Violence or Modern Slavery
The ability to save and spend cash can be an important lifeline for people in abusive relationships. In the case of those who have been trafficked into this country, not having identification precludes access to digital currency, bank accounts and credit. In both cases, a cashless society may lend more power and control to abusers, traffickers and exploiters, making it harder for victims to escape without a trace.
Those With an Intellectual or Mental Disability or Cognitive Impairment
We’ve already noted the stability and reliability of cash for various people living in Canada, but we would be remiss if we didn’t also discuss how the familiarity and tangibility of cash and coin is an equally important consideration for many of the people we serve. The personal identification numbers (PINs) associated with cards can be hard to remember. And the abstract nature of money which is hidden away in a bank account that one cannot see can be destabilizing, too. A cashless society would require an entirely different financial literacy: with cash and coin, you either have the money or you don’t, so budgeting and other money management skills are simpler to enact. We worry, too, that the removal of these clear and The Salvation Army – Canada & Bermuda 5 concrete currencies may also lead to increased debt, which in turn leads to other kinds of precarity, such as homelessness and social isolation.
Those Unconnected to Conventional Systems
People who don’t have bank accounts are not the only people who are underbanked, and for whom a cashless society would be more difficult to navigate. Many rely heavily on unconventional and alternative systems because of the accessibility and familiarity of such things – whether it be because they live in rural or remote settings where banks and ATMS are not available, or because banks are institutions of which they’ve learned to be wary (e.g., as a colonial legacy or corrupt system).
Banking is based on trust: banks can refuse to open accounts for people they don’t trust. And potential customers must trust banks, too, which is, for some, an uncomfortable prospect. Depositing your money in the bank can mean that you can no longer see it and know for sure that it’s there. It may also mean that you need access to a computer system to check on that deposit and build trust by seeing that it’s still there. The necessary connectivity then may be lacking not only in rural and remote communities, but also in urban settings for those without stable access to the internet because they are homeless, for instance, or have trouble hanging on to a mobile phone.
Survivor of a National Emergency
Our experience in emergency and disaster response has taught us that you only live through an emergency once before you start assessing systems for those which are most stable and reliable – for instance, keeping cash around the house, just in case. Digital financial systems are only as good as the technology available; data breaches, power outages and network breakdowns can lead to catastrophic loss of income for both individuals and non-profit organizations. We believe it would be foolhardy to rely on digital systems alone.
Canada is presently living through an unprecedented national emergency, and we appreciate that the potential for viral spread is accelerating the trend toward a cashless society. We worry that extraordinary times such as these are not times for making significant shifts. The people we serve are already incredibly stressed and a greater push toward a cashless society would add to that stress exponentially. With physical distancing, self-isolation and other public health directives in place, it is already hard for people to get what they need.
Someone Without Official Identification
To access and sustain bank accounts and use of electronic forms of payment, one must have personal identification – something that can be exceedingly difficult to acquire and hang on to. We’ve already noted that this creates a barrier for newcomers to Canada, people without secure housing, people escaping abusive relationships, including modern slavery, and others, making it harder for them to meet their own needs. Systematic barriers such as these would be exacerbated in a cashless society and there would need to be clear government policies to ensure equitable access.
Some of our clients in London, Ontario, participated in a University of Western Ontario study that sought to understand whether iris identification might help people experiencing homelessness have better access to the services which usually require personal identification. The study was specifically concerned with health care, but banking and credit are not unrelated, especially as the market consistently comes to depend more on digital systems. During that study, people experiencing homelessness overwhelmingly said that they would appreciate not having to carry with them and risk losing their personal identification. Again, as with credit or debit cards, the loss is much more significant than the card itself self; lost, too, is access to things others so easily enjoy.
Donors at a Salvation Army Christmas Kettle
Our fundraising campaign at Christmastime that utilizes our familiar red kettles makes it possible for us to help the people we’ve talked about here, and more. The Salvation Army is one of many Canadian charities who rely on a cash opportunity at some point during the calendar year. In the six weeks leading up to Christmas, we collect $23M in coin and bills – a sum that has been consistent over the last few years. Although we have diversified the ways donors can give at the kettle (e.g., introducing digital terminals), people still come prepared to give in cash. Dropping a few coins or bills into the Christmas kettle is just something they do during the holiday season, year after year.
Conclusion
As the CEO of the Royal Canadian Mint noted in the 2019 Annual Report, “Even as Canada moves to a cash-lite society, coins remain an important option for Canadians as they are private, efficient and inclusive, ensuring no one is left behind and everyone in our society can access and use a method of payment.” And as the Bank of Canada noted in its May 28, 2020 press release, “Refusing cash purchases outright will put an undue burden on those who depend on cash and have limited payment options.” In our experience and observation, a cashless or more pronounced version of a cash-lite society would have unintended consequences for people already experiencing financial and social vulnerability and would risk further marginalization and exclusion. From our perspective, cash and coin must remain an option – for fundraising, earning and spending, and to meet the needs of a diverse Canadian population.
The Salvation Army
The Salvation Army in Canada
The Salvation Army is an international Christian organization that began its work in Canada in 1882 and has grown to become one of the largest non-governmental direct providers of social services in the country. The Salvation Army gives hope and support to vulnerable people every day in 400 communities across Canada and more than 130 countries around the world.
With the public’s generosity, more than 1.9 million people were helped by The Salvation Army in Canada and Bermuda last year, including:
• 1,350 immigrant and refugees assisted through resettlement programs
• 5,500 shelter, addictions, detox and mental health beds provided each night for vulnerable men, women and families
• 675 individuals removed from human trafficking situations
• 41,000 people helped with developmental and metal disabilities
• 9,600 people helped with budgeting, tax preparation and trusteeship
• 2,900 people helped when disaster struck.
The Salvation Army also operates 294 thrift shops and second-hand stores across the country.
Thrift Store Shoppers
More than half of all transactions at Salvation Army Thrift Stores are made in cash (54%), a value of $75M. That this is out of step with national trends toward electronic payments is partly due to the nature of the second-hand, small goods retail market as primarily occupying bricks and mortar stores and being less conducive to the shift to online shopping. The average transaction value in our stores is $15.58, and according to the Payments Canada’s 2019 payment trends report, most cash transactions are under $15.
Thrift store shoppers are often seniors, students, newcomers to Canada and people who don’t earn a living wage. It’s not unusual for them come to our thrift stores with only so much money in their pockets, looking to make the most of that sum.
Managing cash certainly has a cost for us (e.g., labour to sort, count, deposit and secure it), but at present we have no intention of switching to cashless points of sale: we know it would serve to exclude certain clientele from our stores. Salvation Army Thrift Stores are committed to non-discrimination in this way.
What’s more, as a national recycling operation, diverting approximately 79 million pounds of clothing, household items and furniture from landfills per year, we are also concerned about the increased use of plastic to replace more durable and reusable forms of currency. Notes and coins which have value more explicitly attached to them are thereby less disposable than re-loadable plastic cards.
Newcomers to Canada
We’ve observed that many newcomers and refugees to Canada experience cash as not only the easiest form of payment, but also the most dignified and respectful way to trade goods and services with one another. These communities often engage in informal markets where the physical exchange of money makes it possible to meet their basic needs (for childcare and food, for example). And because cash is accessible and empowering, it’s a way to begin acclimatizing to otherwise unfamiliar financial systems in their new home. For example, cash allows refugee families to provide school-aged children with an allowance, teaching them important lessons about Canadian culture, respectful exchange, and financial literacy.
Someone Experiencing Homelessness
For someone experiencing homelessness, who lacks a safe and secure place to store personal belongings, the loss of a debit, credit or gift card can mean the loss of so much more than the cash you’re carrying in your pocket. It may mean the loss of all the money you have for the month, as well as any extra fees associated with replacing the card or re-accessing your account. For this and other reasons, people experiencing homelessness often prefer to deal in cash while they are without stable and private housing. It’s also very difficult to hang on to personal identification while homeless, which will be discussed below.
Someone Collecting Social Assistance
For those collecting some form of social assistance income, any additional administrative fees associated with cards (e.g., service charges) chips into the arguably insufficient amount a person receives per month to meet their basic needs in the first place. The high (and rising) costs of banking transactions – including debit and tap-and-go options – is a reality some people manage by using cash. While a cashless society spells greater profits for banks through fees and lower staffing costs, some of that profit will come at the expense of people who are already making do with very little.
Someone Escaping Violence or Modern Slavery
The ability to save and spend cash can be an important lifeline for people in abusive relationships. In the case of those who have been trafficked into this country, not having identification precludes access to digital currency, bank accounts and credit. In both cases, a cashless society may lend more power and control to abusers, traffickers and exploiters, making it harder for victims to escape without a trace.
Those With an Intellectual or Mental Disability or Cognitive Impairment
We’ve already noted the stability and reliability of cash for various people living in Canada, but we would be remiss if we didn’t also discuss how the familiarity and tangibility of cash and coin is an equally important consideration for many of the people we serve. The personal identification numbers (PINs) associated with cards can be hard to remember. And the abstract nature of money which is hidden away in a bank account that one cannot see can be destabilizing, too. A cashless society would require an entirely different financial literacy: with cash and coin, you either have the money or you don’t, so budgeting and other money management skills are simpler to enact. We worry, too, that the removal of these clear and The Salvation Army – Canada & Bermuda 5 concrete currencies may also lead to increased debt, which in turn leads to other kinds of precarity, such as homelessness and social isolation.
Those Unconnected to Conventional Systems
People who don’t have bank accounts are not the only people who are underbanked, and for whom a cashless society would be more difficult to navigate. Many rely heavily on unconventional and alternative systems because of the accessibility and familiarity of such things – whether it be because they live in rural or remote settings where banks and ATMS are not available, or because banks are institutions of which they’ve learned to be wary (e.g., as a colonial legacy or corrupt system).
Banking is based on trust: banks can refuse to open accounts for people they don’t trust. And potential customers must trust banks, too, which is, for some, an uncomfortable prospect. Depositing your money in the bank can mean that you can no longer see it and know for sure that it’s there. It may also mean that you need access to a computer system to check on that deposit and build trust by seeing that it’s still there. The necessary connectivity then may be lacking not only in rural and remote communities, but also in urban settings for those without stable access to the internet because they are homeless, for instance, or have trouble hanging on to a mobile phone.
Survivor of a National Emergency
Our experience in emergency and disaster response has taught us that you only live through an emergency once before you start assessing systems for those which are most stable and reliable – for instance, keeping cash around the house, just in case. Digital financial systems are only as good as the technology available; data breaches, power outages and network breakdowns can lead to catastrophic loss of income for both individuals and non-profit organizations. We believe it would be foolhardy to rely on digital systems alone.
Canada is presently living through an unprecedented national emergency, and we appreciate that the potential for viral spread is accelerating the trend toward a cashless society. We worry that extraordinary times such as these are not times for making significant shifts. The people we serve are already incredibly stressed and a greater push toward a cashless society would add to that stress exponentially. With physical distancing, self-isolation and other public health directives in place, it is already hard for people to get what they need.
Someone Without Official Identification
To access and sustain bank accounts and use of electronic forms of payment, one must have personal identification – something that can be exceedingly difficult to acquire and hang on to. We’ve already noted that this creates a barrier for newcomers to Canada, people without secure housing, people escaping abusive relationships, including modern slavery, and others, making it harder for them to meet their own needs. Systematic barriers such as these would be exacerbated in a cashless society and there would need to be clear government policies to ensure equitable access.
Some of our clients in London, Ontario, participated in a University of Western Ontario study that sought to understand whether iris identification might help people experiencing homelessness have better access to the services which usually require personal identification. The study was specifically concerned with health care, but banking and credit are not unrelated, especially as the market consistently comes to depend more on digital systems. During that study, people experiencing homelessness overwhelmingly said that they would appreciate not having to carry with them and risk losing their personal identification. Again, as with credit or debit cards, the loss is much more significant than the card itself self; lost, too, is access to things others so easily enjoy.
Donors at a Salvation Army Christmas Kettle
Our fundraising campaign at Christmastime that utilizes our familiar red kettles makes it possible for us to help the people we’ve talked about here, and more. The Salvation Army is one of many Canadian charities who rely on a cash opportunity at some point during the calendar year. In the six weeks leading up to Christmas, we collect $23M in coin and bills – a sum that has been consistent over the last few years. Although we have diversified the ways donors can give at the kettle (e.g., introducing digital terminals), people still come prepared to give in cash. Dropping a few coins or bills into the Christmas kettle is just something they do during the holiday season, year after year.
Conclusion
As the CEO of the Royal Canadian Mint noted in the 2019 Annual Report, “Even as Canada moves to a cash-lite society, coins remain an important option for Canadians as they are private, efficient and inclusive, ensuring no one is left behind and everyone in our society can access and use a method of payment.” And as the Bank of Canada noted in its May 28, 2020 press release, “Refusing cash purchases outright will put an undue burden on those who depend on cash and have limited payment options.” In our experience and observation, a cashless or more pronounced version of a cash-lite society would have unintended consequences for people already experiencing financial and social vulnerability and would risk further marginalization and exclusion. From our perspective, cash and coin must remain an option – for fundraising, earning and spending, and to meet the needs of a diverse Canadian population.
The Salvation Army
Canada and Bermuda Territory
Territorial Headquarters
July 8, 2020
The Honourable Bill Morneau, P.C., M.P.
Minister of Finance
90 Elgin Street
Ottawa, ON K1A 0G5
The Honourable Ahmed Hussen, P.C., M.P.
Minister of Children, Families and Social Development
140 Promenade du Portage
Gatineau, QC K1A 0J9
The Honourable Mary Ng, P.C., M.P.
Minister of Small Business, Export Promotion and International Trade
125 Sussex Drive
Ottawa, ON K1A 0G2
Dear Ministers Morneau, Hussen and Ng,
Re: Cashless or Cash-lite Society
The Salvation Army, like a number of entities inside and outside of government, has observed the growing trend toward cashless payments in retail settings, take-out and dine-in restaurants, and other contexts. As the Bank of Canada and others have noted, concerns about the spread of COVID-19 appear to have accelerated this shift.
While we acknowledge the convenience and appeal of cashless and even contactless payments for a significant portion of the population, we are concerned about the impact of further, long-term shifts toward a cashless or more cash-lite society for vulnerable low income and marginalized Canadians who may be underbanked or unbanked.
Attached you will find a brief paper, which sets out The Salvation Army’s concerns about the impact of such a move, which is informed by our perspective as:
1. An organization that serves and supports a wide array of vulnerable people in 400 communities across Canada
2. An operator of second hand Thrift Stores which provides low-cost, environmentally friendly retail options to people of modest means
3. A national charitable organization that continues to benefit significantly from cash donations, particularly during the Christmas season
As you and your colleagues continue to monitor recent trends toward a cashless or cash-lite society and explore policy responses, we urge you to consider the impact these trends are having and will continue to have on a range of individuals, families and charitable organizations.
We would be pleased to meet with you or a member of your staff to discuss this further, and we thank you for all you have been doing to support the physical, mental and financial wellbeing of all Canadians.
Sincerely,
Dani Shaw
Acting Director, Public Affairs and Senior Legal Counsel
The Salvation Army Canada and Bermuda Territory
2 Overlea Blvd, Toronto ON M4H 1P4 – 416-422-6228
