By Praneeth Kandula
Abstract
In 2021, modern payment methods such as mobile pay have increased nearly fivefold since their introduction in 2015. This shift to an increasingly cashless, digital economy has been marked by inequitable financial and technological divides. Historically, Black and Latino adults have had less access to financial systems and are less likely to own traditional computers and home broadband. Without rectifying these issues, a cashless, digital economy only serves to widen divides. Using data from the Diary of Consumer Payment, this study descriptively examines the use of cash and alternative payment methods by different racial and ethnic groups from 2015 through 2020. I also extend this effort to address the effects of COVID-19. I find that racial differences not only exist but also the gap between Black and Latino adults and White adults grows between 2015 and 2019. Still, this paper finds that in 2020 the likelihood to employ cash for a transaction falls for Black adults but not for Latino adults. COVID-19 has been a critical driver of change, forcing both consumers and corporations to shift to a more digital-centric economy. While there have been positive shifts for Black adults, policy ensuring that all racial groups have access to the necessary financial and digital networks will be critical in establishing an equitable economy moving forward.
Professor Lisa A. Gennetian, Faculty Advisor
Professor Michelle P. Connolly, Faculty Advisor
JEL Classification: D1 D31 G20 I24 J11
