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Tibor Kolley/The Globe and Mail

It’s hard for Carl Stinson, 53, to imagine a world without cash. Mr. Stinson, who lives at the Good Shepherd men’s shelter in Hamilton, doesn’t have a bank account and has panhandled to pay for necessities. These days, he receives social assistance, doled out in weekly cash increments by a trustee at the shelter.

With people increasingly choosing plastic and carrying less cash in their pockets, Mr. Stinson is worried society’s most vulnerable stand to lose out.

“If [people] are not on assistance and they don’t work, how are they supposed to eat if they don’t panhandle?” he says. “[Panhandlers] will suffer... The whole society will suffer.

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“Thank goodness for the people in society who put money in a cup.”

Groups who work with very low-income people, new immigrants and seniors say a cashless society could further isolate those who struggle with technical literacy, establishing credit and the cost of financial services.

“In the shelter system, most people don’t have credit and many don’t have bank accounts,” says Toronto harm-reduction worker Peter Leslie. “Most of those people survive by panhandling … but fewer people are carrying cash.”

A recent report by Britain’s former chief ombudsman warns of negative consequences for several segments of society if the country moves away from cash too quickly. Titled “Is Britain ready to go cashless?,” the report is part of Natalie Ceeney’s continuing Access to Cash review and was released in December. It concludes that “a cashless society would do significant harm to the millions of people who would be left behind,” who, most often, are the poor.

“We encountered a widespread perception that the elderly are the most reliant on cash, but our research refutes this,” states the report, pointing to people with mental-health issues, rural people without access to reliable broadband, people who have trouble managing credit and those why rely on others to buy things for them as the groups most threatened by the loss of cash.

“There are technological developments in small segments of the market which could address some of these needs, but we also know that the vulnerable are rarely early adopters, and technology is often designed for the mass market rather than for the poor, rural or vulnerable.”

The paper also suggests charities would see a reduction in donations without cash.

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In Canada, 3 per cent of the population – about one million people – are “unbanked,” meaning they do not have a relationship with a mainstream financial institution, according to a 2016 report by Acorn Canada and the Canadian Centre for Policy Alternatives.

A further 15 per cent – or roughly five million Canadians – are what the report calls “underbanked,” people with a bank account but no credit, people unable to afford fees or high interest rates linked to products for low-income borrowers or those who live in a neighbourhood that does not have a bank branch.

Donna Borden, spokeswoman for Acorn’s Fair Banking campaign, says these people are often seniors, people on disability benefits, newcomers and people with mental-health issues, as well as those without a permanent address or government identification.

For street-involved people who do have a bank account, holding onto the cards necessary to access money can be difficult. Toronto social worker Sarah Ovens, who works in the city’s downtown east-end, says many of her clients got bank accounts after a recent government push toward direct-deposit for social assistance payments. While this cuts out cheque-cashers’ fees, people who are “homeless and somewhat chaotic have a bit of a monthly saga where their cheque is coming, but they’ve lost their debit card plus the ID required to get a new one,” she says.

“I keep copies, or originals when possible, of people’s ID,” says Ms. Ovens, who works at a drop-in program and is involved with the Moss Park overdose-prevention site. “Usually if I go with them to the bank and beg, they’ll let them get a new card or pick up their cash.”

The unbanked and underbanked are the people most likely to use expensive payday lenders and temporary credit cards that come with high fees, says Acorn Canada’s Ms. Borden.

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Money Mart is one of several Canadian options for prepaid Visa and Mastercard. Its Nextwave Titanium cards come with fees as high as $20 to activate, $15 monthly, $3.95 to load funds, $1.50 to call customer service and $10 to cancel the card. Canada Post’s prepaid Visa and Mastercards cost $15 to buy and $3 to reload. The Visa charges $3 monthly, while Mastercard users pay 1.5 per cent of transactions and $2.80 a month after 12 months of inactivity. Calling for help is free.

Ms. Borden says payday lenders’ credit cards are often tied to instalment loans, which are unregulated and expensive. “People are just getting further and further into debt.”

Another issue with some prepaid cards is activation time. Settlement counsellor Vicky Thind says new immigrants without credit often buy prepaid cards to apply for residency or citizenship online. The cards available at big-box stores such as Walmart take between an hour and a day to activate, making them less convenient than people expect, she says.

Ms. Thind, who works at the Immigrants Working Centre in downtown Hamilton, says her clients rarely have trouble setting up a bank account, but can typically only access credit cards with limits up to $1,000. Adult Canadian citizenship applications cost $630; for minors, the cost is $100. Families with low credit will often apply for one or two members at a time, pay off the card, and apply for one or two more, until everyone’s application has been completed.

Ms. Thind says she often meets older immigrants who avoid credit cards because they are worried about overspending and fraud. “They worry if the credit card is stolen, they will be in trouble.”

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