Democrats, advocates warn against cashless stores

Democratic lawmakers and advocates warned at a congressional hearing Thursday that even with the proliferation of credit and mobile payments, putting restrictions on cash payments would harm low-income Americans who do not have a bank account.

Members of the House Financial Services Committee held a hearing to debate whether businesses should be prohibited from refusing cash payments, particularly with the growing popularity of credit and debit cards and mobile platforms such as Venmo and PayPal.

Rep. Donald Payne Jr. (D-N.J.), who introduced a bill this year that would prohibit retail businesses from refusing cash payments, argued that Americans should be able to decide whether they want to use cash.

“It’s about choice,” Payne said in an interview with the Hill. “To eliminate a choice is un-American.”

Payne’s bill, the Payment Choice Act of 2019, has bipartisan support among its 34 co-sponsors.

He argued that a transition toward a cashless America would be to the detriment of people who do not have a bank account or who distrust banks.

According to a 2019 Pew Charitable Trusts study cited by the Financial Technology task force, most underbanked or unbanked Americans are “lower-income households, less-educated households, younger households, African-American and Latinx households, working-age disabled households, and households with volatile income.”

New York City recently banned businesses from refusing to accept cash. Data from the city’s Department of Consumer Affairs released in October indicated that 11.2 percent of residents have no bank account and nearly 22 percent use alternative banking such as check-cashing establishments.

“Cash shouldn’t disappear,” Deyanira Del Rio, co-executive director of the New Economy Project, said at Thursday’s hearing. “People should have their choice protected and preserved, and we need stronger access from Congress to make sure people are protected in the decisions that they make.”

Rep. Tom Emmer (Minn.), the top Republican on the Task Force on Financial Technology, argued the resistance to doing away with cash was rooted in a fear of the unknown. He argued that Congress should consider embracing new technologies without the burden of government regulations.

“We can’t see all of the things out on the horizon,” Emmer said. “We have to make sure we are very careful and this institution in particular needs to start moving a little quicker, because at the end of the day that is where we are going. We can either help facilitate this technology advancement or it’s going to happen without us.”

Lawmakers also heard from representatives of the mobile payment industry, including Usman Ahmed, head of global policy at PayPal. He said there are ways to use technology such as PayPal and Venmo while allowing consumers to still use cash.

“We can partner with those entities and we will cash in the offer at the time of the sale and then digitize it on the back end,” Ahmed said. “It’s really getting on the ground in communities and the places where these people are and providing the services.”

–This report was updated on Feb. 3 at 10:07 a.m.