Legislation Needed to Protect Right of Under- or Unbanked to Pay Cash

82% of consumers feel that it is important for merchants to allow cash payments

By: Susan Grant, CFA Director of Consumer Protection and Privacy

Senators Kevin Cramer (R-ND) and Bob Menendez (D-NJ), and Rep. Donald M. Payne Jr. (D-NJ) introduced legislation earlier this month, the Payment Choice Act (S. 4145, H.R. 2650), to address the recent problem of brick-and-mortar retailers refusing to accept cash or charging consumers more for paying with cash. The legislation has received widespread support from consumer, privacy, and civil rights groups. Earlier this month, CFA and Consumer Action spearheaded a letter, signed by 51 advocacy groups, to the bills’ sponsors endorsing the legislation.

“The number and diversity of the organizations that support this legislation shows how fundamental the ability to pay with cash is for people in the United States,” said Susan Grant, CFA Director of Consumer Protection and Privacy. “It should be everyone’s right.”

Cashless businesses unfairly disadvantage consumers in many ways. For example, according to a May 2020 report from the Federal Reserve, nearly a quarter (one in four) of U.S. adults were either underbanked (16%) or unbanked (6%) last year.

“Unbanked consumers have little access to noncash forms of payment. Without a bank account, they are unable to obtain credit or debit cards or to use other noncash payment methods, with the possible exception of prepaid cards,” the group letter states.

Furthermore, when consumers are forced to pay for goods and services in cashless transactions, they (as well as the businesses where they shop) are also often forced to incur added expenses in the form of network and transaction fees.

The letter also highlights another, less discussed area of concern: privacy. “Noncash transactions generate vast amounts of data, recording the time, date, location, amount, and subject of each consumer’s purchase. Those data are available to digital marketers and advertisers who are engaged in developing and refining increasingly sophisticated techniques to identify and target potential customers,” the groups write.

“Paying with cash provides consumers with a lot more privacy than do electronic forms of payment and reduces the amount of personal information at risk of data breaches,” said Grant.

In addition to the concerns about privacy and the needs of the under- and unbanked, the groups also point out that cash is the most common form of payment for purchases and bill paying, according to a recent study from Cardtronics. Consumers overwhelmingly agree with that statement as well. The same study from Cardtronics reported that an overwhelming 82% of consumers felt that it was important for merchants to allow cash payments.

“It’s not about rejecting other forms of payment, it’s about having the choice to use cash when it suits your needs,” said Linda Sherry, Director of National Priorities for Consumer Action.