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 started requiring 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 did not have a bank account or had one but also used alternatives such as 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,
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.
Consumers still use cash for more than one- quarter of all payments, according to Federal Reserve data from October. Cash was used for almost half the payments under $ 10.
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 smallvalue payments,” Mark Gould, chief operating officer of the Federal Reserve Bank of San Francisco, said in a statement in the summer.
Shelle Santana, a visiting scholar at Harvard Business School who has studied payment trends, said she foresaw a “less cash” society, rather than a truly cashless one, in the near term, because many people rely on hard currency.