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US Edges Closer to Mandatory Acceptance of Cash

Categories : Cash ensures competition among payment instruments, Cash has legal tender status, Cash is a public good, Cash is available to all users
November 30, 2021
Tags : Acceptance of cash, Legal tender, Regulators, US
A new bill would preserve the right of Americans to pay cash and would prevent merchants from rejecting it. It is gaining bipartisan support in Congress.
Guillaume Lepecq

Chair, CashEssentials

This post is also available in: Spanish

Rep. Donald M. Payne Jr. introduced a bill in July to protect American currency as a form of payment for goods and services.  The bill, the Payment Choice Act of 2021, would make it illegal for retail businesses to reject cash for in-person, consumer transactions at stores across the country.  The bipartisan bill currently has 38 co-sponsors, 30 Democrats and 8 Republicans.

“There are too many stores and businesses that want to reject American cash in favor of digital payments,” said Rep. Donald M. Payne, Jr in a press release.  “But cash is the only option available for millions of Americans to pay for food, housing and other essentials.  In addition, I have serious concerns about the safety and privacy of the data that companies are collecting from consumers during routine purchases.  Besides, there are few things more American than cash.  A few years ago, we were fighting over who should be represented on our bills.  Now, it seems companies are more than ready to get rid of them entirely.”

Cash acceptance mandatory in physical locations, for amounts under $2,000, but not $100 bills

The bill states that “Any person engaged in the business of selling or offering goods or services at retail to the public who accepts in-person payments at a physical location (including a person accepting payments for telephone, mail, or internet-based transactions who is accepting in-person payments at a physical location)—

“(1) shall accept cash as a form of payment for sales made at such physical location in amounts less than $2,000; and

“(2) may not charge cash-paying customers a higher price compared to the price charged to customers not paying with cash.””

The text also includes several exceptions, for instance in case of a systems failure which prevents the acceptance of cash or if the merchant lacks sufficient cash to return change. Merchants would not be required to accept $100 bills. Merchants could also alternatively provide customers with a device that would load cash on a pre-paid card, as long as there are no fees to use the card.

Several Cities and States already impose Mandatory Acceptance of Cash

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

New Jersey Assemblyman Paul Moriarty, a Democrat and primary sponsor of the bill, told WNYC: “This idea of ‘we don’t want to accept cash’ just marginalizes the poor, young people who haven’t established credit yet, people who prefer to pay in cash.”

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 did San Francisco and New York, where a $1,000 fine sanctions a first violation and $1,500 subsequent infractions.

Countries are increasingly mandating Cash Acceptance

Several Countries already impose mandatory acceptance of cash. Spain has recently passed legislation guaranteeing the freedom to use cash at any time and in any establishment. In France, the acceptance of cash is compulsory by law and violations are punished by a €150 fine. In China, the acceptance of cash is also mandatory; the People’s Bank of China (PBOC) said in a statement: “Cash is the most basic means of payment. Entities or individuals cannot refuse to accept it.” The European Commission and the ECB also call on EU Member states to ensure that cash continues to be accessible and widely accepted everywhere. In 2010, the Commission issued a non-binding recommendation stating that the acceptance of euro banknotes and coins as a means of payment in retail transactions should be the rule, and that refusals should be possible only on the basis of the “good faith principle”.

Other countries are still investigating the situation.  In October 2019, the governor of the Riksbank, Stefan Ingves called for stronger legal protection for cash. “If it were to be established by law that one was forced to accept cash in Sweden, more of us would probably choose to have cash in our wallets.” said Ingves. The Central Bank had proposed to the Parliament in April to establish a committee to review the concept of legal tender. In February, the Euro Retail Payments Board, which is chaired by the ECB, established a working group to analyse access to and acceptance of cash. It is tasked with reviewing obstacles regarding the acceptance of cash and initiatives aiming to ensure acceptance of cash also in the future.

This post is also available in: Spanish