ETA guides Capitol Hill on cashless impacts

On Oct. 14, 2021, the Electronic Transactions Association met with the U.S. House Committee on Financial Services to address a subcommittee hearing titled Cashed Out: How a Cashless Economy Impacts Disadvantaged Communities and Peoples. As a leading trade association, the ETA wanted policymakers to understand its members' commitment to financial inclusion, according to Scott Talbott, senior vice president, government affairs at ETA.

In an open letter to House Committee members, Talbott cited positive economic contributions ETA member companies make widely available to underserved consumers, urging policymakers to support payments industry growth and innovation.

"ETA encourages policymakers to focus on a framework that ensures a positive policy environment—encouraging growth and innovation governed by common principles but tailored appropriately to a company's particular risk profile," Talbott wrote. "As the industry continues to evolve, it is imperative that the framework is equipped to embrace the proper safeguards to protect consumers without stifling progress."

Dispelling myths

Detailing concerns in an Oct. 8, 2021, memorandum, FSG majority staff members framed the hearing as an assessment of cashless solutions and their potentially marginalizing effects on disadvantaged people. These concerns "led policymakers in some states and municipalities to propose – and in many cases – enact limits on merchants who would go entirely cashless," committee members wrote, citing a recently enacted Colorado law banning no-cash policies.

Talbott countered that accepting and managing cash is not free, despite what some government leaders believe. In fact, he stated, digital payments are cost effective, fast and secure cash alternatives that free consumers and merchants from carrying cash to the bank and worrying about theft and losses. He also addressed several misconceptions, stating:

• Cash is not free: Cash carries consumer costs, which include risk of loss and theft, and merchant costs incurred by theft, errors, transportation and storage; these costs are reflected by rising prices.

• Helping the underserved: Financial inclusion is a priority for ETA members, whose products and services are designed to help all consumers, especially the underserved, transact swiftly and securely.

• War on cash: Despite rumors to the contrary, there is no war on cash, and the digital payments industry provides consumers and merchants with fast, secure, convenient payments. 

• Digital payments risk: Digital payments are very secure and use the latest technology—from chips to tokenization—to identify and combat fraud, and with zero liability to the consumer for fraud.

Common goals, aligned interests

Talbott noted that consumers want payment choices, and electronic transaction benefits outweigh perceived benefits of using cash. The Biden Administration and financial regulators prioritize financial inclusion and income equality, which electronic payments support by driving speed, security and convenience, he added.

In March 2021, the ETA published How FinTech is Addressing the Financial Needs of the Underserved, detailing numerous economic contributions by ETA member companies.

"One of the goals of our financial system is to provide high-quality, affordable financial services to the broadest possible set of consumers," ETA researchers wrote. "Over the past decade, financial institutions (FIs) and financial technology (FinTech) companies have transformed the financial landscape through the introduction of technologies that expand access to, and provide a number of new financial offerings for, consumers at lower costs. These products and services — which support improved financial management, increased transaction security, and stronger financial stability — are continuing to expand financial opportunities for traditionally underserved consumers."

The ETA white paper is downloadable at www.electran.org/public-policy/how-fintech-is-addressing-the-financial-needs-of-the-underserved/ .

Talbott affirmed ETA members are working with federal and local communities to deliver quick, secure and convenient payment solutions. "The modern payments industry is open to all consumers," he said, "[A]nd we have products and services to suit every need that are available everywhere the consumer is."

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