Cashless

Are Cashless Businesses Even Legal?

The federal government says yes, but states are increasingly saying no

Cash is king. Or rather, I should say, cash was king. In an era of efficiency, streamlined by plastic cards, Apple Pay and Venmo, using cash is no longer the most common form of payment. “The Payments Council said the use of cash by consumers, businesses and financial organizations fell to 48 percent of payments last year,” according to a 2015 BBC report. “Cash volumes are expected to fall by 30 percent over the next 10 years.” Which explains why more and more businesses are considering a cashless future.

“Apps, plastic and crypto are suddenly everywhere,” per one 2018 Slate report. “Sweden is building a ‘cashless society.’ In China, mobile payment apps are the dominant form of payment at countless establishments. In Shanghai, the venture capitalist Eric Li told me a story about trying to get his morning coffee the morning after a storm had knocked out the internet on his block. No one could buy coffee, because no one was carrying cash.”

To that end, I too recently got my first taste of what a world without cash might look like at a Sweetgreen restaurant, when they informed my dad, to his noticeable dismay, that his paper money was no good there. But why are more and more businesses opting to go cashless?

According to CulinaryLore.com, one of the main reasons a business may refuse to accept cash is because it’s just less of a headache. “No money on the premises means there is no reason to rob the establishment for cash,” they report. “And no cash means no dangerous trips to the bank for those businesses that cannot employ armored car services.” Credit card companies, they continue, are also incentivizing businesses to go cashless. “For example, Visa had begun offering small business, including some restaurants, up to $10,000 in technology, marketing expenses, etc., if the restaurant will stop taking cash.”

As for my own experience, according to a CNN report, Sweetgreen went cashless because it saved their employees time to serve more customers: “Employees at Sweetgreen spent two hours a day counting bills, but eliminating cash helped reduce long lines and increased the number of transactions per hour, the company said.”

While going cashless makes a lot of sense for new companies trying to better streamline the accounting side of their business, it does have its fair share of issues. Foremost among them, opponents of cashless businesses argue that they discriminate against the 8.4 million U.S. households who don’t have bank accounts. In fact, according to a recent CNN report, state legislatures are beginning to pass legislation to make it illegal for cashless businesses to exist. “New Jersey Governor Phil Murphy signed a law last week banning cashless stores,” reports CNN. “Philadelphia also enacted legislation prohibiting cashless stores earlier this month, and officials in New York City, Washington and San Francisco are considering similar legislation.”

The problem goes further, too, as we’ve previously discussed when looking at both credit scores and potentially scrapping coins: A cashless society makes it even harder for the poor to pull themselves out of poverty. Despite this, the federal government has no laws on the books that make cashless businesses illegal. “Federal law makes U.S. currency a legal tender for paying debts,” reports PatriotSoftware.com, an accounting and payroll software company. “As a small business owner, you must accept dollars for your products or services. This doesn’t mean paper notes. You can accept electronic dollars as payment.”

In other words, I’m sorry to be the bearer of bad news, dad, but along with the fact that you’re going to be seeing a lot more cashless businesses popping up, it’s also time to say goodbye to your favorite money clip.