Have you ever seen this sign (no cash accepted) in a store window and thought
“Can they do that?”
After all, it says right on the dollar bill: “This note is legal tender for all debts, public and private.”
How can a business turn away someone who's carrying the same currency our country has used for hundreds of years?
Are we becoming a cashless society?
In an earlier episode, we talked about how money is a global game of trust.
The only reason a dollar bill has value is because everyone has agreed to pretend that it does.
And in the last half-century, this game of make-believe has evolved to a mind-bogglingly abstract level.
Now, instead of hoarding paper slips and hunks of metal as if they're of any use whatsoever, we walk up to a computer screen, tell it who we are, it flashes some symbols at us, and we walk away.
Totally confident that we'll be able to exchange that digital information for goods and services.
Pretty weird when you think about it.
Today it's estimated that less than 10% of the money in the world is cash, worth roughly 5 trillion in US dollars.
That includes all the stacks in all the bank vaults, all the bills in your wallet, all the coins in all the couches in the world.
The other 55 trillion or so exists only in the minds of computers.
The transition isn't actually that surprising.
After all, we moved from gold to paper because paper is lighter and easier to carry.
Ones and zeroes are even lighter than paper and can travel at the speed of light.
So if the object is to make currency as easy to move around as possible, going digital is just the logical next step in the evolution of money.
Which brings us back to the cashless store.
Operators of these establishments claim that eliminating cash boosts productivity and efficiency.
Employees no longer have to make change, count bills or roll quarters.
Food handlers don't have to touch money teeming with bacteria and viruses.
And cashless registers present no incentive for theft or robbery.
So if going digital only makes stores faster, cleaner and safer, why are an increasing number of cities and states banning the practice?
Many people believe that, as well-intentioned as they may be, cashless stores amount to a form of discrimination.
According to the FDIC, as of 2017, 6.5% of Americans are “unbanked,” meaning they have no checking or savings account, and no credit cards.
That's 8.4 million households.
And another 24 million are “underbanked,” which means that though they may have an account, they still rely on cash or money orders for virtually all transactions.
These people are disproportionately likely to be poor, minorities, immigrants, or the elderly.
Opponents of cashless stores claim that for those in these groups, this sign may as well say, “You're not welcome here.”
But how can they do it, anyway?
If you want to run a business, don't you have to accept “legal tender”?
According to the Federal Reserve, no.
Section 31 states that “United States coins and currency are legal tender for all debts, public charges, taxes, and dues.”
This has been interpreted to mean that creditors must accept cash for any debts owed to them, but a business owner cannot be forced to accept cash in exchange for goods and services.
At least, not by the federal government.
Cities and states are free to make their own regulations, and that's exactly what they've been doing.
Philadelphia, San Francisco and New Jersey have all banned cashless stores on the basis that it is discriminatory, and New York and Rhode Island are currently considering similar legislation.
Some owners are calling these regulations “burdensome”, which is an odd way to describe receiving money from customers.
And they propose that instead of forcing businesses to retain outdated practices, cities and states should focus on making electronic transactions more attainable for underprivileged groups.
Meanwhile, some businesses are already working on innovations to satisfy everyone.
Amazon Go, for instance, has retrofitted its automated checkout machines to accept cash.
And the Mercedes-Benz Stadium in Atlanta has kiosks where you can exchange cash for a kind of debit card you can then use to buy your hot dogs and beer.
The fact is, people still value cash for a variety of reasons.
For one thing, it's anonymous.
You don't have to be a drug dealer or gunrunner to be uncomfortable with the idea of corporations and governments keeping track of every dime you spend.
And computers aren't 100% reliable.
In 2018, a hardware failure at Visa prevented millions of cardholders across Europe from making transactions for hours.
And in the aftermath of Hurricane Maria in Puerto Rico, cash was the only means of payment available.
Cash is also used by many people as a budgeting tool.
When Julia and I go grocery shopping, we leave our credit cards at home and bring only as much cash as we've budgeted, so we know we won't overspend.
Studies have also shown that spending physical currency activates the pain centers in the brain in a way that using plastic doesn't.
This means that the more regularly you use cash, the more frugal you're likely to be.
Credit card companies seem to be aware of this fact, as they've been major proponents of the cashless movement, with Visa even offering prizes of $10,000 to small businesses that pledge to stop accepting cash as a form of payment.
Though this issue has gotten a lot of public attention, the number of cashless stores in the country is still very tiny.
Far more are cash only.
30% of all American transactions are in cash, including the majority of those under $10.
There are almost 70 billion individual pieces of physical U.S. currency in circulation, and that number is going up, not down.
Though many experts think a cashless society is inevitable, it still seems to be a long way off.
Until then, we'll keep bringing it to the grocery store to shop for food.
Just remember to wash your hands before you make dinner.
And that's our two cents!
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