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Have you ever seen this sign (no cash accepted) in a store window and thought
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“Can they do that?”
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After all, it says right on the dollar bill: “This note is legal tender for all debts, public and private.”
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How can a business turn away someone who's carrying the same currency our country has used for hundreds of years?
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Are we becoming a cashless society?
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In an earlier episode, we talked about how money is a global game of trust.
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The only reason a dollar bill has value is because everyone has agreed to pretend that it does.
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And in the last half-century, this game of make-believe has evolved to a mind-bogglingly abstract level.
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Now, instead of hoarding paper slips and hunks of metal as if they're of any use whatsoever, we walk up to a computer screen, tell it who we are, it flashes some symbols at us, and we walk away.
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Totally confident that we'll be able to exchange that digital information for goods and services.
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Pretty weird when you think about it.
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Today it's estimated that less than 10% of the money in the world is cash, worth roughly 5 trillion in US dollars.
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That includes all the stacks in all the bank vaults, all the bills in your wallet, all the coins in all the couches in the world.
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The other 55 trillion or so exists only in the minds of computers.
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The transition isn't actually that surprising.
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After all, we moved from gold to paper because paper is lighter and easier to carry.
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Ones and zeroes are even lighter than paper and can travel at the speed of light.
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So if the object is to make currency as easy to move around as possible, going digital is just the logical next step in the evolution of money.
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Which brings us back to the cashless store.
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Operators of these establishments claim that eliminating cash boosts productivity and efficiency.
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Employees no longer have to make change, count bills or roll quarters.
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Food handlers don't have to touch money teeming with bacteria and viruses.
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And cashless registers present no incentive for theft or robbery.
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So if going digital only makes stores faster, cleaner and safer, why are an increasing number of cities and states banning the practice?
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Many people believe that, as well-intentioned as they may be, cashless stores amount to a form of discrimination.
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According to the FDIC, as of 2017, 6.5% of Americans are “unbanked,” meaning they have no checking or savings account, and no credit cards.
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That's 8.4 million households.
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And another 24 million are “underbanked,” which means that though they may have an account, they still rely on cash or money orders for virtually all transactions.
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These people are disproportionately likely to be poor, minorities, immigrants, or the elderly.
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Opponents of cashless stores claim that for those in these groups, this sign may as well say, “You're not welcome here.”
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But how can they do it, anyway?
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If you want to run a business, don't you have to accept “legal tender”?
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According to the Federal Reserve, no.
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Section 31 states that “United States coins and currency are legal tender for all debts, public charges, taxes, and dues.”
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This has been interpreted to mean that creditors must accept cash for any debts owed to them, but a business owner cannot be forced to accept cash in exchange for goods and services.
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At least, not by the federal government.
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Cities and states are free to make their own regulations, and that's exactly what they've been doing.
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Philadelphia, San Francisco and New Jersey have all banned cashless stores on the basis that it is discriminatory, and New York and Rhode Island are currently considering similar legislation.
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Some owners are calling these regulations “burdensome”, which is an odd way to describe receiving money from customers.
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And they propose that instead of forcing businesses to retain outdated practices, cities and states should focus on making electronic transactions more attainable for underprivileged groups.
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Meanwhile, some businesses are already working on innovations to satisfy everyone.
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Amazon Go, for instance, has retrofitted its automated checkout machines to accept cash.
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And the Mercedes-Benz Stadium in Atlanta has kiosks where you can exchange cash for a kind of debit card you can then use to buy your hot dogs and beer.
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The fact is, people still value cash for a variety of reasons.
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For one thing, it's anonymous.
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You don't have to be a drug dealer or gunrunner to be uncomfortable with the idea of corporations and governments keeping track of every dime you spend.
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And computers aren't 100% reliable.
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In 2018, a hardware failure at Visa prevented millions of cardholders across Europe from making transactions for hours.
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And in the aftermath of Hurricane Maria in Puerto Rico, cash was the only means of payment available.
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Cash is also used by many people as a budgeting tool.
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When Julia and I go grocery shopping, we leave our credit cards at home and bring only as much cash as we've budgeted, so we know we won't overspend.
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Studies have also shown that spending physical currency activates the pain centers in the brain in a way that using plastic doesn't.
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This means that the more regularly you use cash, the more frugal you're likely to be.
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Credit card companies seem to be aware of this fact, as they've been major proponents of the cashless movement, with Visa even offering prizes of $10,000 to small businesses that pledge to stop accepting cash as a form of payment.
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Though this issue has gotten a lot of public attention, the number of cashless stores in the country is still very tiny.
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Far more are cash only.
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30% of all American transactions are in cash, including the majority of those under $10.
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There are almost 70 billion individual pieces of physical U.S. currency in circulation, and that number is going up, not down.
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Though many experts think a cashless society is inevitable, it still seems to be a long way off.
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Until then, we'll keep bringing it to the grocery store to shop for food.
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Just remember to wash your hands before you make dinner.
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And that's our two cents!
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Thanks to our patrons for keeping Two Cents financially healthy.
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