The Return of Cash

For a while, there was a hard push to eliminate cash as a medium for transactions. There are a host of reasons why people and businesses would prefer to transact business with plastic or digitally, but that was a business choice above the use of cash. The argument wasn’t just about the virtues of a cashless society, but that cash was the currency of criminals.

The key point is that deals done in cash weren’t on the government’s radar and couldn’t be proven by records. In contrast, deals done by plastic or digitally had records. They could be traced. They showed where you were and when. They showed how much money you paid, and thus how much you had, and whether you were hiding it from the government or paying out more than you should be able to, unless you were engaged in criminal conduct.

Ironically, there is a shift back to cash happening in certain cities, not so much for the reasons of privacy or liberty, but because cash is the currency of choice for certain marginalized folks.

For many people, it is simply more convenient to buy something with a swipe or a tap. Businesses that refuse cash say it is faster and easier for workers to process digital payments and keep customer lines moving. Fans of the cashless approach also say it spares employees from mundane tasks like counting money and limits the danger of robbery and theft.

But critics of cashless businesses say they discriminate against people who lack bank accounts and credit cards, while also raising the specter of hackers stealing personal data tied to digital transactions.

Who doesn’t have a bank account? Who doesn’t have a credit card?

The city’s Department of Consumer Affairs said last year that one in nine New York households did not have a bank account, and that one in five were “underbanked,” meaning they had a checking or savings account but relied on something other than a bank to cash a check. Bronx households, the agency said, were around twice as likely not to have a bank account.

“I worry about the real-world discriminatory effect that cashless business can have on New Yorkers, especially in communities of color,” Mr. Torres, a Bronx Democrat, said.

In order to alleviate this discrimination, the New York City Council has passed an ordinance prohibiting certain businesses from refusing to accept cash in payment. It’s almost as if the legend on currency, that it’s “legal tender for all debts public or private,” still matters. But the motivation for this prohibition is to accommodate the needs of those who lack the capacity to pay using alternatives to cash, not to protect the privacy of individuals.

The resistance to this ordinance is that businesses should be entitled to accept whatever form of payment they choose. If it means that some people who lack the means to pay in the manner required by the business won’t be able to shop there, then the business will lose their patronage and they can shop elsewhere.

The National Retail Federation, a trade group, has taken the position that “retailers should have the right to choose which payments to accept and to decide for themselves whether going cashless makes sense for their businesses,” according to a statement by Stephanie Martz, the group’s general counsel.

There are some sound reasons for stores to prefer not to do business in cash. It facilitates the speed of transactions, eliminates employee theft and cash discrepancies, eases record keeping and eliminates the fear of robbery. Nobody robs a store to steal their credit card receipts. But then, it not only means the store has made the choice of not serving the population that lacks the ability to purchase without cash, but that it excludes them from being served at the business of their choice.

“It is exclusionary,” she said, “because people without means are less likely to have a credit card.”

A cashless business is one unavailable to the poor, which some would extrapolate to mean minorities. Whether this is either real or significant, the fact remains that it is unlawful for any business open to the general public to refuse to serve people based on race. A cashless business may not intend that (or may, in some instances), but it has that effect if it turns out that poor people can’t pay without cash, and poor people are a proxy for black and Hispanic people.

Will this new trend to preserve the ability to use cash for the benefit of those who lack the ability to pay via alternative means be the savior of privacy, the bulwark against the government having every iota of information about your spending habits (and what they reveal about you), your whereabouts, your income and worth? Maybe, but when the justification for ordinances like this is based on factors other than privacy, “fixes” will arise that address the problem for the poor but not the rest of us.

There are pre-paid debit cards which will serve the poor, provided they carry a low or no fee. Still, a bank providing these cards would enjoy the benefit of the float, so it’s not as if they would suffer too badly for doing a public service to those lacking bank accounts. And indeed, if the government’s interest in being able to keep track of everyone’s money is strong enough, there are likely to be incentives put into place to facilitate providing the poor with the ability to use alternatives to cash.

In fairness, the manufacture of coins and currency is expensive. Pennies cost more to make than they’re worth. Bills don’t physically last long at all and have a sordid history of being counterfeited, even though a great deal of effort has been employed to prevent it. And when they’re bundled in amounts of $9,990, wrapped in a couple rubber bands, they just might have been derived from criminal conduct. But just as cash might let some criminal escape the government’s notice, it would also allow ordinary citizens to conduct their business, whether buying a sex toy, paying their therapist or purchasing a marijuana edible, without the government knowing or being able to prove it.

16 thoughts on “The Return of Cash

  1. Turk

    Maybe NYC should look in the mirror? No cash accepted for a marriage license.

    It was like that 20+ years ago when I went for mine and it still exists today.

  2. Kelly Hall

    USPS should offer basic checking and savings accounts. When the market fails, the government steps in.

      1. MelK

        Would the USPS not be on a firmer footing if it offered checking and savings accounts, and held onto the float?

  3. Erik H

    Only last year I had to turn down a client who wanted to hire me to represent him in a “cash from under mattress” transaction.

    He wanted to buy a house for more than $500,000. In cash.

    There’s nothing wrong with it but the damn government auditors would have come down on me like a swarm of killer bees, so I couldn’t help him. Poor guy.

    1. SHG Post author

      In the 90s, a fellow wanted to buy my house, told me he had a “suitcase full of cash.” As if that was an enticement to anything but disbarment and prison.

  4. Gretz

    Our government discourages cash transactions, seizing it whenever possible, and then strong-arms the banks and payment processors with things like Operation Chokepoint. Being a “Non-person” in the eyes of the government is a valid concern with real consequences, and you don’t have to be indigent to have banking problems that effectively deny you service.

    We used to joke in the military: “What are you gonna do? Stamp my meal card ‘No Dessert’?” But with banks and our government setting precedent like they have, while it’s icky guns today, how soon until it’s used to enforce other policies that can’t make it through the legislature? For our own good, and the bestest interests of teh chidrens, of course.

  5. R M

    Another expansion of legal tender laws. Meanwhile, being poor and having lots of cash in your possession is suspicious. Thanks for writing.

    1. MelK

      Traveling (car or plane) and having lots of cash in your possession is suspicious. Being a crime victim and having cash laying about is suspicious.

      Maybe it’s something about having money…

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