Senators Cramer And Menendez Take Aim Again At Protecting Cash Purchases

For decades, payments providers have sought to displace cash by attempting to move merchants toward card-based and digital payments, arguing that they are faster, more convenient, and more secure to accept than cash. Now they are finding that proponents of cash acceptance are pushing back.

Late Thursday, legislation was reintroduced in the Senate that seeks to prevent merchants and businesses from refusing to accept cash. The bipartisan effort, called the Payments Choice bill, was re-introduced by Senators Kevin Cramer (R-N.D.) and Bob Menendez (D-N.J.), both members of the Senate Banking Committee. The proposed bill, a form of which was originally launched two years ago in the House of Representatives, would prohibit retail businesses from refusing to accept cash for payment and from charging a higher fee for accepting cash than for other forms of payment.

The bill’s reintroduction comes on the heels of news last month that the share of all payments using cash in 2022 dropped to 18% in 2022, compared to 20% in 2021, according to the Diary of Consumer Payment Choice from the Federal Reserve System’s FedCash Services.

Cramer and Menendez have been pushing the legislation in the Senate for several years, starting in 2020 when it was first introduced on the Senate floor. The bill was reintroduced in June of 2022.

The bill argues that allowing merchants to refuse to accept cash denies non-banked and underbanked consumers, as well as consumers that prefer to pay with cash, the ability to make purchases at merchants that only accept non-cash payments. The bill is framed as protecting consumers’ right to use their preferred payment method.

A survey by the Federal Deposit Insurance Corp. found that 4.5% of households in the United States do not have a checking or savings account. A separate study by the Federal Reserve Bank of San Francisco found that demographic represents nearly 20% of all payments in the U.S. economy.

“Cold hard cash is still legal tender in the United States, despite some businesses’ exclusive acceptance of electronic payments,” Cramer said in a prepared statement.  “Imposing premium prices on goods and services paid for with cash or forcing the use of credit and debit cards limits consumer choice and is just plain wrong. Americans should have the option of using plastic, but they should be the ones who make that choice, not businesses.”

The proposed bill does allow for some exceptions when merchants can refuse to accept cash, including instances when a system failure temporarily prevents the processing of cash payments, there is insufficient cash on hand to make change, and there is a device that converts cash into prepaid cards on premise. The legislation also includes a provision that says merchants are not required to accept cash denominations of $50 or higher.

The legislation is also supported by Congressmen John Rose (R-Tenn.), Donald Payne (D-N.J.), Alex Mooney (R-W.V.), and Gregory Meeks (D-N.Y.), as well as the National ATM Council.