How elotes and tamales keep a cashless society at bay

July 4, 2017 | by Will Hernandez

photo istock

Once summer hits in Chicago, street food vendors are not hard to find in the Mexican-dominated Pilsen neighborhood.

You'll notice them by the 18th Street Pink Line stop. They're scattered around the perimeter of Harrison Park, a staple in the neighborhood for decades.

Most vendors sell the same kinds of foods: The most popular items are tamales and elotes — grilled Mexican corn served with a variety of condiments mixed into a creamy concoction.

And if you want dessert, it's not hard to find a "paleta man" pushing a cart filled with ice cream bars and ice cream sandwiches.

But in a world that continues to go more digital and mobile, there's only one way to pay for a tasty treat from these hardworking vendors: cash.

No one uses Square to accept a credit card. Not one vendor will ask you to Venmo them for a tamale. In fact, some of them still use flip phones. It's truly amazing to see in this smartphone-dominated world.

Pilsen is one example of the many anomalies when it comes to the digital discussion; as long as street vendors are in business in this kind of a neighborhood, talk of a cashless society is moot.

That's an exaggeration to some extent. But a look at these street vendors tells a story about one aspect of the cashless society discussion that doesn't get enough attention — the 10 million unbanked households in the U.S. (in addition to many millions more worldwide).

And we can take it a bit further. In a neighborhood that's home to branches of Bank of America, BMO, Byline Bank and Wintrust, cash is still king at many businesses — even those that do accept bankcards. It's not uncommon to see a line of cardholders 10-deep at Bank of America, all waiting to withdraw cash from the two lobby ATMs.

But back to the street vendors. Is there any solution that might persuade these folks to accept electronic payments of some sort?

M-Pesa comes to mind.

For those people unfamiliar with it, M-Pesa is a mobile money program that lets users send and receive money through text messages on their mobile device. Deposits and withdrawals are handled through a network of authorized M-Pesa agents at local merchants.

An M-Pesa-like system in the U.S. could work in communities such as Pilsen, particularly for those residents who favor old school feature phones over an iPhone or a Samsung Galaxy. You could take such as system a step further by incorporating the direct carrier billing model, as well.

Individuals without a bank account who want to buy a tamale could charge the purchase to their monthly phone bill. They could later pay that bill with cash at a wireless carrier store or check-cashing establishment, both of which are plentiful in Pilsen and other less affluent neighborhoods in Chicago.

As for the seller, funds would be deposited into the M-Pesa-type account with a same-day cash-out option. The provider of this type of service could employ bodegas, check-cashing stores and supermarkets in an agent network. The provider could charge a small fee for the service.

The margins might be thin, but an established provider with other profitable revenue streams could implement the concept as a community service. Companies such as MasterCard and Western Union come to mind, since they tend to work with such communities more than other providers in the payments industry.

The bottom line is that until the business operations of a street vendor in Pilsen are addressed in the push to a digital future, the notion of a truly cashless society is a pipe dream at best.


Topics: Transaction Processing, Trends / Statistics



Will Hernandez
Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago. View Will Hernandez's profile on LinkedIn

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