Who Gets Hurt When the World Stops Using Cash


Cash doesn’t have the status it used to.

In fact, some state and local governments are forcing businesses like restaurants and retail shops to continue accepting cash — concerned that cashless businesses effectively discriminate against consumers who do not have bank accounts or credit cards.

New York City will require most stores and restaurants to accept cash as of Nov. 19, joining cities including San Francisco; Berkeley, Calif.; and Philadelphia, all of which mandated acceptance of cash last year. New Jersey required acceptance of cash statewide in 2019, and it has been illegal for businesses to refuse cash in Massachusetts for decades. Many other cities and states are considering similar steps.

Concerns about a decline in the acceptance of cash surfaced well before the coronavirus arrived, as consumers grew more comfortable shopping online with credit or debit cards and paying quickly with mobile apps. Many businesses like electronic payments because they speed up purchases and reduce concern about theft.

Then, during the pandemic, restaurants and stores emphasized online ordering and digital payment to reduce interactions, and the risk of infection, among customers and employees. And as consumers stayed home, coin shortages occurred, making it difficult for some stores to give change. That added to a preference for electronic payments.

“The concern has been heightened as a result of the pandemic,” said Susan Grant, director of consumer protection and privacy at the Consumer Federation of America, a nonprofit advocacy group.


But as digital payments become more widespread, “we’re concerned that people aren’t going to be able to pay for necessities,” said Linda Sherry, director of national priorities at Consumer Action, an advocacy group.

Businesses that refuse cash put at a disadvantage people who lack traditional bank accounts or can’t qualify for credit cards, consumer advocates say. About one-fourth of American adults were unbanked or underbanked in 2019 — meaning they lacked a bank account or had one but also used alternatives like check-cashing services, the Federal Reserve found. Those consumers are more likely to be in a racial or ethnic minority group, have lower incomes and be less educated.

Some may like cash because it helps them budget their money or teach their children about spending. Others may be wary of a loss of privacy and vulnerability to hacking with electronic payments, or simply prefer cash, Ms. Grant said. “The decision should be the consumer’s.”

The federation and dozens of other advocacy and privacy rights groups are backing federal legislation that would prohibit brick-and-mortar retailers from refusing to accept cash. (It’s unclear if the bill will be considered this year, given the menu of pandemic-related issues before Congress.)

Consumers still use cash for more than one-quarter of all payments, according to Federal Reserve data from October, its latest comprehensive study of payment behavior. Cash was used for almost half of the payments under $10.

In a narrower Fed survey in April and May, aimed at spotting payment changes during the pandemic, 70 percent of participants said they were not avoiding cash because of concern about the virus.

Cash remains important to consumers despite a menu of competing payment options. “Many consumers value and prefer to use cash for everyday purchases, while others use cash as a backup, or for the convenience of small value payments,” Mark Gould, chief operating officer of the Federal Reserve Bank of San Francisco, said in a statement

last month that accompanied the narrowed Fed survey.

Shelle Santana, a visiting scholar at Harvard Business School who has studied payment trends, said it was unclear how aggressive the enforcement of the cash requirements had been during the pandemic. She said she foresaw a “less cash” society, rather than a truly cashless one, in the near term, since many people continue to rely on hard currency.

Some businesses that stopped accepting cash have reversed their policies voluntarily, Ms. Santana noted, after realizing they were excluding some customers.

“No one,” she said, “wants to turn away business.”

Here are some questions and answers about paying with cash:

Is it legal to refuse to accept cash?

There is no federal requirement that businesses accept cash or coins as payment, according to the Federal Reserve Board. “Private businesses are free to develop their own policies on whether or not to accept cash” unless state law says otherwise, the board explains on its website. Businesses like movie theaters, convenience stores and gas stations may refuse to accept bills over $20, and bus lines may ban payment of fares in pennies, the Treasury Department says.

How will New York City enforce its cash requirement?

The city’s Department of Consumer Affairs is responsible for enforcing the new rule, which was enacted this year. The department said that enforcement would be based on complaints and that it would issue instructions for filing a complaint before the rule took effect. Businesses that fail to comply may face fines of up to $1,000 for the first violation and $1,500 for subsequent violations.

The rule has some exceptions. For instance, a business can decline cash if it offers a cash conversion kiosk, which transfers the cash value to a debit card and is sometimes called a “reverse A.T.M.,” if the machine meets certain criteria.

Is it safe to pay with cash during the pandemic?

The virus that causes Covid-19 is mainly transmitted through close person-to-person contact, the Centers for Disease Control and Prevention says. It’s possible that someone could become infected by touching a surface or an object with the virus on it, but “this is not thought to be the main way the virus spreads,” according to the agency.

While there has been concern that handling cash can spread germs, touching a payment terminal or handling a plastic card to a clerk may also pose a risk. The C.D.C. suggests using touchless payment if possible. “If you must handle money, a card or use a keypad, use hand sanitizer right after paying,” it says.

The World Health Organization has said that “it is good hygiene practice to wash your hands after handling money, especially if eating or handling food.”