Cashless Payments: Here to Stay, and Legal Almost Everywhere
A sign on the door to my local bagel shop in Seattle reads “NO CASH” in large red letters. Below it, the explanation: “It’s for your health and ours.” While there isn’t a lot of evidence to prove Covid-19 can be spread through cash, paper currency is considered a fomite, making it more likely to carry germs and pathogens. It’s also difficult, if not impossible, to completely sanitize both paper and coins.
But cash use was on the decline long before the pandemic. It has been losing popularity for years, as adoption of credit cards increased and digital and virtual wallets came on the scene. A widespread fear of contracting Covid-19 through unnecessary contact has driven the adoption of technology related to payments at an even faster rate than usual, and it was already climbing steadily. Paypal Chief Executive Daniel Schulman was recently quoted in the Los Angeles Times saying “digital payments [have] hit a tipping point…literally within months.” The pandemic is the cause for this rapid uptick, and it’s not just young people. Paypal, which owns Venmo, is watching grandparents adopt their platform; their fastest-growing demographic is over 50. Venmo recently surpassed 60 million users, with Paypal executives calling this moment an “inflection point” and the “death of cash.”
Of course, anyone living in a hot spot, where daily cases are climbing, with internet access and a smartphone are probably thrilled to do all their payments without coming into any contact. You may be keeping cash around for those occasions you need to use it, and if you’re a business owner, you may be reluctantly accepting it, trying to sanitize it, or politely asking your customers to ditch it, like my bagel shop. I have some news for you: we can leave cash behind (almost) totally.
That’s right: there is no federal law requiring businesses to accept cash as legal tender. It may come as a shock, even to industry insiders, but it is in fact legal for businesses all over the United States to reject cash and accept only a credit card. Federally, there is no law mandating that a private business, a person or an organization, must accept paper currency or coins.
While local laws exist mandating the acceptance of cash, for instance in New York City, how strictly they have been enforced during the pandemic is yet to be seen. There are also two federal laws moving through Congress that would require mandatory acceptance of cash. One, introduced by Congressman David Cicilline, a democrat from Rhode Island, is called the “Cash Should Always Be Honored Act.” Another is called the “Payment Choice Act of 2019” and was introduced by democratic Congressman Donald M. Payne Jr. of New Jersey. Both were introduced in the House of Representatives over a year ago, but neither have been passed in the house as of July 2020. And there are at least ten other places, mostly on the coasts, where lawmakers have proposed or enacted legislation trying to ban cashless stores.
These bills and the attitudes behind them are likely borne of a deep understanding of the very serious inequity issue regarding accessibility to cashless payments. Approximately six percent of the US population doesn’t have access to bank accounts, credit cards, or any electronic vehicle for payment. This percentage is tied to various issues: poverty, locale, and distrust of banking institutions. How to make sure this six percent is not excluded is a worthy discussion and one I hope finance, tech and other relevant industries are having.
So, after Covid, what will happen? Will those bills be passed by Congress and will we see a return or uptick in the use of cash? Doubtful. Cashless payments are full of benefits for just about everyone. They save time, reduce risk, and increase revenue for businesses. Consumers can spend more than the cash they have on their person, get money back with rewards programs, easily track purchase history, recover from theft more easily, and travel internationally with less hassle. Cash will still be used–especially by that six percent of people who are without access–but electronic payments will continue to increase their share of transactions.
