Is it discrimination when a business refuses to accept cash? Cards are definitely more convenient for business owners, but low income Americans struggle when businesses refuse to accept cash.
Going cashless is more convenient for businesses.
There are many reasons that a business owner may choose to go cashless. First of all, it eliminates the need for a cash register entirely. It saves the employees time and effort because nobody has to handle bills, count change or deposit cash. It also reduces the chance of costly miscalculations and mistakes.
It even reduces the chance of theft, because there’s no cash in the building. Without tangible money to steal, there’s less temptation for would-be criminals to break into the building and commit crimes. Employees can’t defraud the business as easily, either.
For a business owner, going cashless is a perk with very few downsides.
For low income people, going cashless can be a nightmare.
When you live near the poverty line, there’s never enough money to go around. Unexpected charges or minor mistakes can result in costly fees. Overdraft fees pile up quickly. Negative accounts absorb new deposits, leaving the account-holder with less paycheck than they expected. Accounts that are frequently negative may eventually close, and the account-holder may be unable to open a new account elsewhere.
It’s a vicious cycle that many people just avoid entirely by relying solely on cash.
According to the Federal Reserve Bank of San Francisco, “For individuals in households that earn $50,000 or less, cash is the most common form of payment.”
The Federal Deposit Insurance Corporation estimates that up to 25% of American households are unbanked or underbanked. Statistically, a large percentage of these are African American or Hispanic households.
For these cash-preferring and cash-only households, it can become impossible to shop in areas where businesses are refusing to accept cash as a form of payment. Since this predominantly affects low income households, many people argue that this is discrimination.
The Federal Government does not require businesses to accept cash.
The law clearly states that cash is legal tender in the United States. However, there is no law that requires a business or individual to accept cash as payment.
According to the Federal Reserve, “There is… no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether ot accept cash unless there is a state law which says otherwise.”
Many local lawmakers are forcing businesses to accept cash.
Fortunately, many lawmakers are working on policies that would require businesses to accept cash. There are many states and cities that have enacted laws about cash acceptance.
Cashless business are banned in the states of Massachussetts and New Jersey.
Some cities are also banning cashless establishments. There are bans on cashless retailers in Philadelphia and San Francisco. Other major cities are currently pursuing cashless bans, including New York City.
No bank account? Here’s what you need to do.
Bank accounts can be difficult to get when you’re working on a low income. Many banks check your credit score or you Chexsystems score before approving an account.
If you’ve had a bad experience with a bank, you may find yourself unable to open a new account for several years. This is especially true if your account was closed because of an extended overdraft or was left with unpaid fees.
If you’re having a hard time opening a new account, be sure to check this out. It’ll show you how to clean up your ChexSystems report and find a bank that doesn’t use that system.