After my wife and daughter finished their delicious breakfast, they went to pay that tab only to learn that this restaurant didn’t accept plastic. Of course, that’s their right as there is no rule that they need to finance Visa and Mastercard, but it put them in an awkward position as they don’t carry much cash these days.
Fortunately, they were able to find enough to pay by scrounging the pennies at the bottom of a purse, but what would have happened had they not had the cash? No doubt regulars knew the rules, but there was no warning on the door or menu that only cash was accepted, so how would they know?
But the fact that some businesses have had enough of “plastics” glommng four percent off the top of their hard-earned revenues is the outlier. Many are going the opposite way, accepting cards but refusing cash. Can they even do that?
Though the U.S. Treasury notes on all bills, “This Note Is Legal Tender for All Debts, Public and Private,” there is no federal law mandating that all businesses accept cash. In the absence of an explicit law stating otherwise, merchants can decline any form of payment they like.
It might create a problem should a business call the cops if someone offers cash, the business refuses it, and the ex-patron walks out saying, “your choice.” But for businesses, cash is a headache. It requires employees to be able to make change, a skill no longer common amongst cashiers. It enables employee theft. And it presents problems when the bank teller asks you to fill out this form for the government. The government hates cash because it doesn’t know where people got it, can’t trace it, and might not be able to tax it.
But who really hates cash are credit card companies and internet payment apps.
Clearly a cash-free economy has its beneficiaries, foremost banks and credit card companies: Visa and Mastercard reap $138 billion from participating merchants in service fees a year. According to a recent report in The Economist, Visa and Mastercard are two of the most profitable companies in the world, with net margins of 51 percent and 46 percent last year.
You didn’t think these corporations did it for free, did you? But as it turns out, not everybody has plastic. In fact, a lot of people don’t.
But the most significant objection to a cashless system is whom it shuts out. Whereas cash enables everyone, no matter their age, credit history, immigration status or income, to pay directly for goods or services rather than use an intermediary, credit cards generally require a bank account. Not everyone — including 301,700 households, or almost one in 10 households in New York City — has one. And even those who do don’t necessarily want to add to their credit card debt. Regardless of whether they have a choice, teenagers and people earning less than $30,000 a year are more likely to use cash. This is also disproportionately true for minorities.
On top of those who can’t use plastic, there are people who prefer not to have credit card companies selling their every purchase or the government piece together their lifestyle from their statements. Cash is anonymous, and some people prefer privacy over shiny new cards with cool computer chips.
But as it stands, the choice is up to businesses unless a local law has been enacted as in New York City as to whether they are required to accept cash as well as plastic. And, as noted at Van Leeuwen’s odd yet expensive ice cream store, the law can still be ignored until the city does something about it.
Do we need a federal law requiring the acceptance of currency for all debts, public and private? Do we need a law requiring the acceptance of plastic just in case somebody relies on cards to transact business? If the point is for a business to be paid for its goods and services, should it be a minefield for consumers or should there be some reliable norm? But then, giving up four percent to Visa is quite a bite, though the government loves being able to access records of your every transaction. Where are we heading and where should we head?
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