Millions of Americans Left Behind by ‘No Cash Accepted’ Policies

These individuals, often referred to as “unbanked,” find themselves excluded from participating in basic economic activities in stores and restaurants that no longer accept cash.

Jay Zagorsky, a business school professor researching society’s transition from cash to electronic payments, revealed to The Conversation what he observed in Seattle, “Numerous shops had one sign proudly proclaiming how welcoming and inclusive they were — next to another sign saying ‘No cash accepted.'”

This is particularly true for poorer households; the FDIC found that about one-quarter of those earning less than $15,000 a year are unbanked, as reported in The Conversation.

According to a Bankrate survey, basic monthly service fees for a bank account range between $5 and $15. Additionally, banks charge $4 to $5 for ATM withdrawals or services like cashier’s checks, and overdraft fees can be about $25 per instance.

This means that there are over 15 million people living in homes with no connection to banks, and another 48 million in homes with only a tenuous connection. Consequently, one out of every five people in the U.S. has little or no connection to banks or other financial institutions.

These groups are often unbanked due to requirements like a verified address and a government-issued tax identification number to open a bank account.

For instance, in Euro-using countries, almost everyone has a bank account, but in regions like the Middle East and North Africa, only about half the population does. According to The World Bank, around one-quarter of the world’s adults do not have access to a bank or a mobile-phone account.

These cards involve multiple fees: a purchase fee, a monthly service charge, and a fee for loading cash. This can add up to a significant expense for individuals who are already financially constrained.

Critics argue that cashless policies discriminate against residents without bank accounts and undocumented immigrants. Council member David Grosso commented to The Chicago Tribune, “By denying the ability to use cash as a payment, businesses are effectively telling lower-income and younger patrons that they are not welcome.”

This initiative is a reassessment of a stance taken by her predecessor, now-Governor Maura Healey. Campbell’s office conveyed to Boston 25 News that it is important for all forms of legal tender to be accepted at retail establishments. The move aims to uphold consumer protection and economic justice, ensuring that those without access to non-cash payment methods can fully participate in the marketplace.

This system was deemed to meet legal requirements as stated by Healey in August 2022. However, Campbell’s recent statements suggest a potential reevaluation of such systems to ensure cash remains a viable payment option.

Attorney General Campbell has indicated that her office is receiving significant public input on this issue and is in the process of reviewing the legalities and compliance requirements. Campbell highlighted the importance of inclusivity in payment options, recognizing that not all consumers have access to credit cards or smartphone apps for payments.

Some businesses, like the Texas-style taco chain HomeState in Los Angeles, moved to digital-only payments citing safety concerns and the desire to protect their staff and premises from burglaries, as per information from The Los Angeles Times.

The Los Angeles Times reports that after initially deciding to stop accepting cash in 2016, Sweetgreen faced backlash and subsequently reintroduced cash payments. 

According to Bill Maurer, a professor of anthropology at UC Irvine, , this change in consumer behavior has shown a tendency to persist beyond the pandemic, suggesting a lasting shift towards cashless transactions.

The absence of the physical act of handing over money may reduce the psychological impact of spending, leading to higher transaction values. 

Digital payment systems like Square enable businesses to collect customer emails and other information, facilitating direct marketing efforts. This aspect of digital payments highlights the dual benefits for businesses: improved operational efficiency and enhanced marketing opportunities.

This law, introduced in 2018 and enacted in 2020, aims to ensure inclusivity for those without access to bank accounts or credit cards. Despite the proliferation of cashless businesses during the pandemic, this move seeks to prevent financial discrimination, ensuring everyone has access to goods and services regardless of their banking status.

The motion argues that refusing cash payments systematically excludes low-income individuals and people of color, highlighting the socioeconomic implications of cashless policies and the need for equitable access to goods and services.

The decision by the City Council could have significant implications, potentially setting a precedent for other cities and influencing the broader conversation on payment inclusivity and economic justice, as per The Los Angeles Times.

These efforts highlight the critical need to assess how technological advancements can coexist with ensuring equitable access to the marketplace for all consumers, regardless of their preferred payment method.

Similar legislation was proposed in Chicago, though it was unsuccessful.

Tanya Bryant, a spokesperson for the city’s financial regulatory agency, highlights this effort as a step toward broader financial inclusion. By offering more accessible banking options, the aim is to reduce the reliance on cash and integrate the unbanked into the digital economy.

This statement highlights that the challenge extends beyond the mere use of cash. It’s fundamentally about ensuring financial inclusion and facilitating access to the banking system for those currently excluded.