States push back against retailers that refuse to accept cash
DENVER — After a constituent called Colorado state Rep. Alex Valdez last spring and complained that some local businesses weren’t accepting cash, the Denver Democrat started noticing cashless businesses everywhere, from restaurants to his local coffee shop.
Valdez thought refusing cash due to the COVID-19 pandemic made no sense, as merchants were still willing to touch debit and credit cards. And he feared such policies could shut out people without bank accounts, a group that’s disproportionately low-income, Black and Hispanic.
So this year Valdez sponsored a bill that would require retailers to accept cash, with a few exceptions.
“We really just need to reaffirm that cash is currency,” he said.
In recent years, left-leaning leaders in cities such as New York, Philadelphia and San Francisco, as well as in the state of New Jersey, have enacted similar laws to protect unbanked customers who rely on cash. Massachusetts has required businesses to accept cash since 1978.
The idea gained traction this year, after public health measures and scattered coin shortages made it more difficult for some consumers to make cash purchases in 2020. Republican lawmakers in Idaho, Mississippi and North Dakota proposed bills that would require shops and restaurants to accept cash, and Washington, D.C.’s City Council voted on a cash transaction bill.
While the bills in Democratic-controlled Colorado and Washington, D.C., passed, the red state proposals did not. Many Republicans opposed the bills, siding with business groups that argue retailers should be free to choose how to serve their customers.
“We don’t support mandates; we believe that the business owner is entitled to accept or reject any method of payment, as they wish,” said Tony Gagliardi, Colorado state director of the National Federation of Independent Business, a trade group.
Consumers increasingly are using credit or debit cards to pay even for lowcost purchases, such as a cup of coffee, surveys show, and apps such as Venmo and Apple Pay are becoming more popular. Credit card companies — which charge retailers fees every time a customer uses a card — have encouraged businesses to stop taking cash.
Yet it’s unclear how many U.S. retailers have gone fully cashless. In a 2021 survey, 85% of sellers who accept cash and use the online payment processing service Square said they never plan to stop taking cash, according to Shelle Santana, an assistant professor at Harvard Business School who has been analyzing Square transaction data.
High-profile national chains that stopped accepting cash in recent years — such as Amazon Go stores and the fast-casual salad chain Sweetgreen — reversed their policies after facing criticism for excluding shoppers who rely on cash.
During the pandemic, the federal Centers for Disease Control and Prevention has encouraged stores to use “touchless” payment methods, such as apps, to prevent surface transmission of COVID-19. But the agency has also noted that the virus primarily spreads through the air, not by clinging to surfaces.
Supporters of cash transaction legislation say it’s still important to reaffirm the use of coins and paper money.
About 7.1 million U.S. households don’t have a bank account, according to the Federal Deposit Insurance Corporation’s latest survey in 2019. Rates are highest among low-income, Black, Hispanic and Native American households, as well as households headed by a person with disabilities, the FDIC survey shows. Nearly half of the unbanked people surveyed told the agency they can’t afford to maintain a minimum balance in an account.
By requiring businesses to accept cash, lawmakers can prevent retailers from discriminating against unbanked people, even unintentionally, said Carol Hedges, executive director of the Colorado Fiscal Institute, a Denver-based think tank.
“This seems to me to be one [policy] that’s a relatively burden-free way to make sure that we don’t accidentally, or unintentionally, create additional bias in the system,” she said.