While the cashless movement gained momentum during the early stages of the COVID-19 pandemic, advocates of the right to use cash are taking their fight to Congress. In July, Rep. Donald M. Payne Jr., D-NJ, introduced a bill to prohibit businesses from rejecting cash payments for in-store transactions.

If successful, the Payment Choice Act of 2021 would set a law at the national level similar to those enacted in the past two years in New Jersey, Washington, D.C., Philadelphia, San Francisco, and New York City. Massachusetts has had a law on the books since 1978.

Cash is the only option that 55 million Americans currently have “to pay for food, housing and other essentials” because they have no bank accounts or credit cards, Payne said when he introduced the proposed legislation. “There are too many stores and businesses that want to reject American cash in favor of digital payments.”

In 2020, cash accounted for about a fifth of all U.S. purchases (19%) according to the Federal Reserve’s Diary of Consumer Payment Choice. That number declined seven percentage points from the previous year, which the Diary attributes to the pandemic. “The decline in total payments in 2020 was mostly due to a decrease in the number of small-value payments under $25.”

Long-term Ill Effects of a Cashless Society

This trend in cashless businesses will cause long-term harm to consumers and could lock millions of unbanked or underbanked Americans out of vast swaths of the economy. According to the most recent data published by the Federal Reserve, 18% – nearly one in five – of U.S. adults in 2020 were either unbanked (entirely without any bank account) or underbanked. The latter are people who have a bank account but also use “alternative financial services” such as payday lenders, sellers of money orders, or check-cashing services.