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U.S. Considers Legislation on Mandatory Acceptance of Cash

Categories : Cash generates security, Cash has legal tender status, Cash is a public good, Cash is available to all users, Cash is universal, Cash protects privacy and anonymity
May 19, 2022
Tags : Acceptance, Cash, Regulation, USA
The U.S. House Committee on Financial Services passed the Payment Choice Act of 2022, a bill designed to protect the right of consumers to pay with cash at brick-and-mortar retailers.
Guillaume Lepecq

Chair, CashEssentials

This post is also available in: Spanish

The Payment Choice Act is a bill that would require applicable retail businesses to accept cash for transactions of less than $2,000 and prohibit them from charging cash-paying customers a higher price relative to customers not paying with cash. Retail businesses would retain the flexibility to accept payments through any other means. The House Financial Services Committee passed the bill 32-17 on 18 May 2022.

The Consumer Choice in Payment Coalition (CCPC) applauded the vote. The CCPC is a broad-based group of consumer advocates, businesses, and nonprofit organizations that joined forces more than two years ago to promote and advocate for maintaining the continued availability of cash as a payment option for the nation’s consumers.

“We believe it is critical to ensure that cash remains a universally available payment option for consumers throughout the nation,” said Linda Sherry of Consumer Action national advocacy group, a member of the Coalition.

According to Consumer Action and other payment-choice advocates, cashless businesses lock out millions of unbanked and underbanked Americans while eroding the fundamental consumer freedom to rely upon cash for payment anywhere in the country.

Preserving Privacy and Personal Financial Information

In a letter this week to the Financial Services Committee urging approval of the bill, the Consumer Federation of America also pointed out that paying with cash allows consumers to safeguard the privacy of their personal financial information from abuse by data miners and marketers and compromise resulting from data breaches or thefts.

Non-cash transactions, the letter said, “generate vast amounts of data, recording the time, date, location, amount, and subject of each consumer’s purchase, which are available to digital marketers and advertisers who are engaged in developing and refining increasingly sophisticated techniques to identify and target potential customers.”

The CCPC also has emphasized that cash payment always remains available, even under the trying circumstances encountered in the wake of natural disasters, including hurricanes, tornadoes, wildfires, and other catastrophic events that often result in power outages or other systems failures that render digital transactions, credit and debit cards, and other non-cash payment methods inoperable, sometimes for weeks or months at a time.

“We greatly appreciate the committee’s endorsement of cash as a vital ongoing payment option for consumers that will help us maintain the strength of our economy,” said Bruce W. Renard, Executive Director of the National ATM Council and a Co-Chair of the Coalition. “Enactment of the Payment Choice Act of 2022,” he added, “will help keep the U.S. Dollar strong and stable here at home and preserve its status abroad as the world’s leading fiat currency. Maintaining universal acceptance of cash provides all Americans with a low-cost, user-friendly, private, and reliable payment option of immense benefit to us all, individually and collectively.”

The Bill

The Payment Choice Act, sponsored by Rep. Donald M. Payne, Jr. (D-N.J.), and 48 cosponsors, both Democratic and Republican, applies to transactions in amounts less than $2,000 that occur at any retailer’s physical location, including telephone, mail, or internet-based transactions for which the retailer accepts in-person payments. In addition to requiring acceptance of cash, the bill prohibits charging higher prices to cash-paying customers than are charged to other customers.

Exceptions are provided if a retailer temporarily has insufficient cash on hand to make change or experiences a systems failure that temporarily prevents it from processing cash payments.

The bill does not apply to retailers that provide customers with a device that, at no cost to the customer, converts cash into a prepaid card; so long as the device does not require a minimum deposit of more than one dollar, there is no fee for the use of the cards that it provides. The device collects no personally identifying information from the customer. The bill further provides that it does not require that retailers accept any currency in denominations larger than $50.

Enforcement of alleged violations would be by a civil action brought by any injured person in state or federal court. A companion bill is expected to be introduced in the Senate by Sens. Bob Menendez (D-N.J.) and Kevin Cramer (R-N.D.).

Several Cities and States Already Impose Mandatory Acceptance of Cash

Massachusetts first passed legislation banning shops from refusing cash in 1978. New Jersey and Rhode Island followed in 2019, and Colorado passed a similar law last year.

Washington DC’s city council unanimously passed the Cashless Retailers Prohibition Amendment Act in 2019 to stop merchants from banning cash, and it took effect last year. Philadelphia passed a similar law the same year as San Francisco and New York, where a $1,000 fine sanctions a first violation and $1,500 for subsequent infractions.

This post is also available in: Spanish