Delaware lawmakers have introduced legislation to prohibit businesses from rejecting cash payments.
Cash-free stores have begun popping up around the world with the promise of customer convenience and quick transactions, but their cash-free model leaves many people out, according to State Senator David McBride, the primary sponsor of the bill.
“Technology can bring about exciting changes as long they are accessible to everyone, including working-class Delawareans,” said Sen. McBride. “Over 8 million U.S. households do not have bank accounts and many people cannot obtain credit or debit cards. For them, cashless stores make navigating an increasingly unequal economy that much harder. By requiring stores to maintain the option of cash payments, we can avoid discrimination and keep these doors open to all customers.”
While all U.S. money is considered legal tender, there is currently no federal law that mandates businesses or individuals accept paper currency.
Instead, the push to ban cashless stores has found footing at the state and local level. New Jersey Gov. Phil Murphy signed legislation banning cashless stores last year, making New Jersey the second state to enact the ban after Massachusetts. Philadelphia, New York City, San Francisco, Connecticut, and Rhode Island also have passed similar laws.
A Federal Deposit Insurance Commission (FDIC) survey from 2017 shows that roughly 6 percent of regional households are “unbanked,” meaning no one in the household has a checking or savings account. Those numbers are drastically higher in communities of color and among households making less than $15,000 a year.
Most unbanked respondents (52.7-percent) cited “Do not have enough money to keep in an account” as a reason for not having an account.
An additional 22 percent of area residents are “underbanked,” meaning they have bank accounts but also use a mix of payday loans, money orders, or other “Alternative Financial Services” to stay afloat. That number, worryingly, is higher than the 19 percent national average.
While a Pew Research Center survey from December of 2018 shows that “adults with an annual household income of $75,000 or more are more than twice as likely as those earning less than $30,000 a year to say they do not make any purchases using cash in a typical week (41% vs. 18%),” it also shows that “lower-income Americans are about four times as likely as higher-income Americans to say they make all or almost all of their purchases using cash (29% vs. 7%).”
In 2017, The Census Bureau estimated the median household income in Wilmington to be $40,221.
“Striking the right balance between a dynamic, innovative economy and maintaining a level playing field can be tough,” McBride said. “Allowing customers the option of paying in cash is a fair compromise and is, I think, the best way forward for our state, while we work to extend banking access to everyone.”
Senate Bill 220 has been assigned to the Senate Banking, Business & Insurance Committee.