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  • Have you ever seen this sign (no cash accepted) in a store window and thought,

  • "Can they do that?"

  • After all, it says right on the dollar bill: "This note is legal tender for all debts, public and private."

  • How can a business turn away someone who's carrying the same currency our country has used for hundreds of years?

  • Are we becoming a cashless society?

  • In an earlier episode, we talked about how money is a global game of trust.

  • The only reason a dollar bill has value is because everyone has agreed to pretend that it does.

  • And in the last half-century, this game of make-believe has evolved to a mind-bogglingly abstract level.

  • 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.

  • Totally confident that we'll be able to exchange that digital information for goods and services.

  • Pretty weird when you think about it.

  • Today it's estimated that less than 10% of the money in the world is cash, worth roughly 5 trillion in US dollars.

  • 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.

  • The other 55 trillion or so exists only in the minds of computers.

  • The transition isn't actually that surprising.

  • After all, we moved from gold to paper because paper is lighter and easier to carry.

  • Ones and zeroes are even lighter than paper and can travel at the speed of light.

  • 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.

  • Which brings us back to the cashless store.

  • Operators of these establishments claim that eliminating cash boosts productivity and efficiency.

  • Employees no longer have to make change, count bills or roll quarters.

  • Food handlers don't have to touch money teeming with bacteria and viruses.

  • And cashless registers present no incentive for theft or robbery.

  • So if going digital only makes stores faster, cleaner and safer, why are an increasing number of cities and states banning the practice?

  • Many people believe that, as well-intentioned as they may be, cashless stores amount to a form of discrimination.

  • 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.

  • That's 8.4 million households.

  • 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.

  • These people are disproportionately likely to be poor, minorities, immigrants, or the elderly.

  • Opponents of cashless stores claim that for those in these groups, this sign may as well say, "You're not welcome here."

  • But how can they do it, anyway?

  • If you want to run a business, don't you have to accept "legal tender"?

  • According to the Federal Reserve, no.

  • Section 31 states that "United States coins and currency... are legal tender for all debts, public charges, taxes, and dues."

  • 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.

  • At least, not by the federal government.

  • Cities and states are free to make their own regulations, and that's exactly what they've been doing.

  • 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.

  • Some owners are calling these regulations "burdensome", which is an odd way to describe receiving money from customers.

  • 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.

  • Meanwhile, some businesses are already working on innovations to satisfy everyone.

  • Amazon Go, for instance, has retrofitted its automated checkout machines to accept cash.

  • 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.

  • The fact is, people still value cash for a variety of reasons.

  • For one thing, it's anonymous.

  • 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.

  • And computers aren't 100% reliable.

  • In 2018, a hardware failure at Visa prevented millions of cardholders across Europe from making transactions for hours.

  • And in the aftermath of Hurricane Maria in Puerto Rico, cash was the only means of payment available.

  • Cash is also used by many people as a budgeting tool.

  • 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.

  • Studies have also shown that spending physical currency activates the pain centers in the brain in a way that using plastic doesn't.

  • This means that the more regularly you use cash, the more frugal you're likely to become.

  • 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.

  • Though this issue has gotten a lot of public attention, the number of cashless stores in the country is still very tiny.

  • Far more are cash only.

  • 30% of all American transactions are in cash, including the majority of those under $10.

  • There are almost 70 billion individual pieces of physical U.S. currency in circulation, and that number is going up, not down.

  • Though many experts think a cashless society is inevitable, it still seems to be a long way off.

  • Until then, we'll keep bringing it to the grocery store to shop for food.

  • Just remember to wash your hands before you make dinner.

  • And that's our two cents!

  • Thanks to our patrons for keeping Two Cents financially healthy.

  • Click the link in the description if you'd like to support us on Patreon.

Have you ever seen this sign (no cash accepted) in a store window and thought,

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