Facing the digital divide at Boston’s cash-only shops

By Katheleen Conti GLOBE STAFF  FEBRUARY 20, 2018

Most of the chairs were already filled at Johnny’s Barber Shop as morning turned into afternoon on a recent Friday.

Johnny’s — like many of the dozen minority-owned barbershops and hair salons that dot Dorchester’s Bowdoin Street — has a loyal customer base. But the shop and other businesses in the Bowdoin-Geneva neighborhood are at risk of putting themselves at a disadvantage: In a digital world, they remain cash-only operations.

“A lot of customers ask if I take credit cards,” Johnny’s owner, Joao Goncalves, said. “I say I don’t take them. Sometimes they say, ‘I’ll go to the bank,’ but they don’t come back.”

Cash-only has long been common in immigrant and minority sections of the city like Bowdoin-Geneva — lower-income areas dominated by small, independent, service-oriented outfits that have survived by catering mostly to people who live within walking distance. Their reasons for eschewing electronic payments range from a lack of Internet access to the expense of using online-based systems for low-cost transactions (men’s haircuts along Bowdoin Street average $15) to the hassle of dealing with fraudulent charges.

But with cash transactions falling out of favor — especially among younger consumers — limiting payment options to paper currency is becoming a liability.

Minority- and immigrant-owned small businesses already are more vulnerable to market pressures and gentrification. As new development gets closer to a lower-income neighborhood, property owners start charging higher rents or bringing in new businesses to cater to the influx of new residents.

“For [cash-only businesses] to be integrated and have access to the larger community dollars, they have to start learning how the larger community consumes,” said Anh Nguyen, executive director of Bowdoin Geneva Main Streets, a nonprofit that’s part of the Boston Main Streets Foundation, which uses city funding to support commercial districts. “They’re the ones with the money.”

To help narrow the digital divide, Bowdoin Geneva Main Streets has launched an online crowdfunding campaign with a goal of raising a minimum of $2,500 so it can qualify for a $7,500 grant from Boston Main Streets Foundation. The money would be used to purchase the mobile-friendly electronic payment system Square for the dozen or so beauty and nail salons and other cash-only businesses in the neighborhood, as well as to subsidize Internet service for those that don’t have it. Nguyen launched a similar initiative when she worked in San Francisco, introducing Square to small businesses in the Tenderloin, a lower-income — but rapidly gentrifying — neighborhood.

Nguyen said that for mom-and-pop shops, Square is preferable to a traditional credit card setup, which is generally procured through a bank, because the fees aren’t as high, a contract isn’t required, and the businesses get to own the hardware — which includes an iPad Mini — instead of leasing it.

“If we don’t provide them with the technology, they’re going to struggle. . . . They’re going to continue to be challenged with national retailers and online companies,” said Roy Hirshland, a board member at Boston Main Streets Foundation and chief executive of T3 Advisors, a real estate firm that specializes in tech and life sciences. “Our kids, [when] they go with a friend to buy lunch and they want to split the lunch, they’re not digging in their pockets, they’re using platforms like Venmo to split the cost.”

Giving small business owners resources to adapt as demographics start to change can be useful, said Japonica Brown-Saracino, an associate professor of sociology at Boston University, who authored a book on gentrification. But as property values and rents continue to rise and more new people start moving in, she said, stronger measures have to be taken to keep locally owned businesses in place.

“[That] could include grants to support longtime businesses, campaigns aimed at shining a light on the enduring character of the commercial district, or measures put in place to reduce rent increases or to help business owners purchase their storefronts,” Brown-Saracino said. “As gentrification advances, getting new residents to frequent longstanding businesses plays an important role in sustaining those businesses.”

But, she added, “Even that support cannot always shelter those businesses from steep rent increases.”

The majority of business owners in the neighborhood rent their space, according to a survey by Bowdoin Geneva Main Streets and MIT’s Department of Urban Studies and Planning, and rents have already started to tick up in some spots. Introducing electronic payment systems might help business owners weather some of the market changes, Nguyen said. In addition to customer convenience, a service like Square can generate sales metrics that let owners know which days they do the most business, or which services or products are most profitable.

But not everyone is sold on the idea of credit payments. One Bowdoin Street salon owner — who did not want to be identified — said she once leased a credit card payment system from a bank that cost her between $200 and $300 a month. She also absorbed the 5 percent per transaction fee instead of passing it on to her customers. On top of that, a customer who paid for an $80 service with a credit card later had the bank reverse the charge, forcing the business owner to fight for the money due her. Soured by the experience, the salon owner said she immediately stopped accepting credit cards.

But Niurka Ortiz, owner of Onyx Beauty Salon on Bowdoin Street, said credit cards have been good for her bottom line, even with the occasional chargeback.

“It’s a necessity,” she said. “Most of my clients use credit cards.”

Ortiz said she is less concerned about the possibility of gentrification affecting small businesses than the neighborhood’s reputation as a dangerous place. That’s what’s really holding back commercial growth, she said.

“What worries people here is the violence and delinquency,” Ortiz said.

Nguyen said the high crime rate has contributed to Bowdoin-Geneva’s commercial isolation. Unlike other sections of Dorchester, such as Ashmont and Savin Hill, the neighborhood lacks the trendy restaurants and other amenities that attract outside spending. As a result, it has yet to benefit from the wealth pouring into Boston from the technology, health care, education, and tourism economies.

“We’re not getting a share of that money, so how do we create a bridge for them to start getting that money?” Nguyen said.

“Right now, we’re just throwing spaghetti at the wall see if it sticks,” she said of the credit card program. “It’s one step toward a lot of different things we have to do to integrate the community into a larger economy.”


Katheleen Conti can be reached at kconti@globe.com. Follow her on Twitter @GlobeKConti.