Cash not accepted | Armstrong Economics

There was a time when cash was the undisputed king. Merchants preferred cash to credit, and there were often incentives to pay with paper. For example, I remember getting lower gas prices when paying in cash. As the world moves towards a cashless society, it is becoming more and more common to see “cash not accepted” signs in establishments. At the federal level there are no laws protection of consumers willing to pay in cash. The Federal Reserve stated on its website:

There is no federal law requiring a private business, individual, or organization to accept currency or coins as payment for goods or services. Private businesses are free to develop their own policy on whether to accept cash, unless state law says otherwise.

"Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes, and dues." This statute means that all U.S. money as identified above is a valid and legal offer of payment for debts when tendered to a creditor."

However, the Federal Reserve also acknowledges that as of 2021, 4.5% of US households were unbanked. This means that 5.9 million households cannot pay by card. This is the lowest non-bank rate since the Fed started tracking in 2009. The most common reason for not having an account, reported by 21.7% of non-bank households, is that they do not meet minimum balance requirements. The second most frequently cited reason (13.2%) is that people simply do not trust banks, and the third most frequently cited reason (8.4%) is privacy.

If merchants refuse to accept cash, these people cannot participate in consumerism. Their legal tender is simply not accepted. Non-bank households are more likely to be made up of people with lower levels of education, lower incomes, disabilities, single mothers, and minorities. As the Fed said:

“Differences in unbanked rates between Black and White households and between Hispanic and White households in 2021 were present at every income level. For example, among households with income between $30,000 and $50,000, 8.0 percent of Black households and 8.4 percent of Hispanic households were unbanked, compared with 1.7 percent of White households.”

If cash is legal tender, then it should be accepted everywhere. Many merchants not only refuse cash, but also charge an additional fee for using credit. Tennessee, Arizona, Delaware, D.C., Idaho, Maine, Massachusetts, Michigan, Mississippi, New York, North Dakota, Oklahoma and Pennsylvania, New Jersey, Rhode, Colorado, and Connecticut have state-level laws protecting cash payments. Some cities, such as Washington DC, Berkeley, Chicago, New York, Philadelphia, and San Francisco, also have laws. However, I can assure you that many retailers in these areas still do not accept cash.

Washington wants to push us towards a cashless society to tax everyone, even those who give the least, on every transaction we make.