By: Matthew Cavanaugh, Volume 104 Staff Member
Michael Rosen really wanted a pair of headphones.
So much so, in fact, that he filed a lawsuit against Continental Airlines (now United Airlines). In 2011, Rosen, an attorney, brought four separate claims against the airline based on its refusal to allow him to purchase a $3 pair of headphones and a cocktail using cash. The claims were eventually dismissed on the basis that his state law claims were preempted by the federal Airline Deregulation Act, but the fight was a harbinger of things to come.
Because cash contains a display of the phrase “Legal Tender for All Debts Public and Private,” there is a tendency among the broader public to believe this means it must be accepted everywhere. However, the law is more complex. It’s true that United States coins and currency are legal tender for all debts, public and private, but this means only that a creditor must accept dollars from a debtor. A private business’s decision to refuse cash at the point of sale is a regulatory matter left to the states.
In recent years, the trend towards cashless business has moved from the skies to the ground. Many restaurants and other retail businesses have abandoned cash for card or electronic payments. Chicago-based Epic Burger, the Dos Toros burrito chain, and Mercedes-Benz Stadium in Atlanta are just a few examples of businesses that have ditched the dollar.
As the trend towards cashless business has accelerated, cities and states have begun to respond. New Jersey passed a law in 2019 and joined Massachusetts as the only states banning cashless retail businesses. Philadelphia, San Francisco, and New York soon followed suit.  With other cities contemplating similar actions, it’s worth examining whether these laws make sense. This Post will argue that such laws are an appropriate way for state and local governments to protect their populations without unduly burdening business.
The main arguments in favor of cashlessness come from businesses who say that electronic-only systems are more convenient than cash and help to prevent theft (from workers and customers alike). They also cite other benefits from going cash-free, including the end of “cashing up” and trips to the bank, as well as better record-keeping.
But, as others have pointed out, cashless policies disproportionately harm lower-income people, who are less likely to have a bank account or access to credit. Additionally, credit (and occasionally debit) card transactions are usually accompanied by a processing fee, which is typically passed along to consumers. Finally, while it’s true electronic payments are growing, cash continues to be the most common way to pay for transactions under $25, particularly among people older than 55. It is also the most common form of payment for people with an annual income below $25,000.
Thus, by only allowing purchases from consumers who have access to cards or other electronic payment methods, businesses are excluding those who operate in the cash economy. This is disproportionately lower-income and older people. In fact, some businesses that experimented with cashless payment have admitted as such. More troubling, not all businesses have characterized this as an inadvertent effect—Danny Meyer, the owner of a number of cashless restaurants, put it bluntly: “And if you don’t have a checking account, you probably shouldn’t be eating at Commerce to begin with.”
Additionally, most benefits of a cashless policy go to the business, while the costs are transferred to consumers in the form of card transaction fees. There’s a reason VISA was willing to pay businesses tens of thousands of dollars to switch—it stands to make much more than that in the long run, in the form of transaction fees. Additionally, requiring customers to attach their name and bank or credit account information to every purchase they make is a diminishment of privacy and subjects that information to the risk of breach. Going cashless may mean that a business can lower its costs and improve security. But they are shutting out a class of consumers who operate in the cash economy, and the remaining customers will pay more (on average), as well as giving up more of their privacy in exchange for purchasing a meal.
Laws banning businesses from refusing cash payments can protect some of the most vulnerable members of the population. Moreover, business complaints that such laws are short-sighted and burdensome are exaggerations. The acceptability of cash as a medium of exchange lies at the heart of the financial system. It’s hardly burdensome to require business to accept American dollars.
Such laws may not be necessary in all cases. It may be that the trend towards cash-refusal slows on its own, as customers make it clear that they disapprove. But in places where it continues, cities and states should not hesitate to pass laws prohibiting the practice.
Businesses can and should continue to experiment with accepting electronic forms of payment alongside cash. In the future, when everyone really does carry a smartphone (and more importantly, knows how to use it), it may make sense to allow businesses to refuse cash and experiment with alternate payment methods. But today, the benefits of such a policy are simply not worth the costs.
 N.J. Man Who Sued Continental for Not Taking Cash on In-Flight Purchases to Hear Ruling, Nj.com (Feb. 25. 2013), https://www.nj.com/news/2013/02/man_who_sued_continental_airli.html.
 See Rosen v. Continental Airlines, Inc., 2011 WL 13077014.
 See Rosen v. Continental Airlines, Inc. 430 N.J.Super.97, 102 (Superior Court of New Jersey, Appellate Division, 2013) (quoting 49 U.S.C. § 41713(b)(1))
 E.g., Nom Deplume, Comment to Taken to Court Over a Cashless Cabin, The Economist (Aug. 24, 2011, 04:19 AM), https://www.economist.com/node/21526649/comments?page=1 (“Funny on my ‘cash’ it says ‘legal tender for ALL debts public and private.’”).
 31 U.S.C. § 5103 (1983).
 Board of Governors, Federal Reserve System, Is It Legal for a Business in the United States to Refuse Cash as a Form of Payment?, Fed. Reserve.gov (last visited Feb. 18, 2020, 3:25 PM), https://www.federalreserve.gov/faqs/currency_12772.htm.
 See Id.
 See Melissa McCart, The Problem with Cashless Restaurants, Eater (Feb. 15, 2018, 10:29), https://www.eater.com/2018/2/15/16974980/cashless-restaurants-credit-card-only-legal-problem-discriminatory (describing numerous restaurants in cities around the United States that have stopped accepting cash).
 See Peter Frost, Epic Burger: Your Money’s No Good Here, Chicago Business (June 20, 2017 7:00 AM), https://www.chicagobusiness.com/article/20170620/NEWS07/170629989/epic-burger-goes-cashless.
 See Henry Grabar, No Shirt, No Swipe, No Service, Slate (July 24, 2018, 5:24 PM), https://slate.com/business/2018/07/cashless-stores-and-restaurants-are-on-the-rise-to-the-delight-of-credit-card-companies.html.
 Tim Tucker, Mercedes-Benz Stadium Will Convert to Cashless Operation, Atlanta J. Const. (Mar. 24, 2019), https://www.ajc.com/sports/mercedes-benz-stadium-will-convert-cashless-operation/7GdA0UNpqYUrB5b4dpdNZI/.
 Major credit card providers, who stand to gain every time a card swipe replaces handing over some cash, are also active in the battle against cash. VISA, whose CEO Al Kelly has stated “We’re focused on putting cash out of business,” launched a campaign in 2017 to pay fifty businesses $10,000 each to make the switch. See AnnaMaria Andriotis, Visa Takes War on Cash to Restaurants, Wall St. J. (July 12, 2017 7:48 AM), https://www.wsj.com/articles/visa-takes-war-on-cash-to-restaurants-1499853601.
 2019 N.J. Laws A591; Christian Hetrick, New Jersey Ban Will Force Shops to Accept Cash, Philadelphia Inquirer (Mar. 18, 2019), https://www.inquirer.com/business/new-jersey-cashless-store-ban-amazon-philadelphia-20190318.html.
 See Mass. Gen. Laws. ch. 255D, § 10A; see also Megan Woolhouse, No Cash Allowed: Stores Refusing to Accept Money, Boston Globe (Aug. 3, 2016, 8:17 PM), https://www.bostonglobe.com/business/2016/08/03/paying-cash-some-stores-say-thanks-greenbacks-credit-only/a4EvjwgTpI7r4lD3xVOENO/story.html. Massachusetts has prohibited retail businesses from refusing cash since 1978.
 Alina Selyukh, Cities and States Are Saying No to Cashless Shops, NPR (Feb. 6, 2020, 1:42 PM), https://www.npr.org/2020/02/06/803003343/some-businesses-are-going-cashless-but-cities-are-pushing-back (describing campaigns to ban cashless businesses in New York City and Washington D.C.); Charisse Jones, New York Says Don’t Ditch Your Cash, USAToday (Jan. 24, 2020, 9:19 AM), https://www.usatoday.com/story/money/2020/01/23/new-york-city-bans-cashless-businesses/4551974002/.
 Dom Stapleton, Nine Reasons Your Restaurant Should Go Cashless, Modern Restaurant Management (Aug. 29, 2019), https://www.modernrestaurantmanagement.com/nine-reasons-why-your-restaurant-should-go-cashless-and-three-reasons-against/.
 See id. “Cashing up” refers to the process of adding up all the money taken in by the business that day.
 See Frost, supra note 9. A lack of trust in the financial system and fear of bank fees are both cited as common reasons for lacking bank accounts. See Michael Sivy, Why So Many Americans Don’t Have Bank Accounts, Time (Nov. 20, 2012), https://business.time.com/2012/11/20/why-so-many-americans-dont-have-bank-accounts/.
 See Andriotis, supra note 12 (noting that “many merchants prefer cash because they don’t have to share the revenue with card companies”).
 Federal Reserve Board of Governors, 2019 Findings from the Diary of Consumer Payment Choice, Fednotes (June 2019), https://www.frbsf.org/cash/publications/fed-notes/2019/june/2019-findings-from-the-diary-of-consumer-payment-choice/.
 See Nathaniel Meyersohn, Retailers Want to Go Cashless. But Opponents Say That’s Discriminatory, CNN (Mar. 26, 2019, 9:34 AM), https://www.cnn.com/2019/03/26/business/cashless-stores-amazon-go-sweetgreen-dos-toros/index.html.
 This includes Sweetgreen, one of the first businesses to cash-free, which has since reversed course. See Karen Zraick, Sweetgreen Scraps Its Cashless Policy as Criticism Grows, N.Y. Times (Apr. 25, 2019), https://www.nytimes.com/2019/04/25/business/cashless-stores-sweetgreen-amazon-go.html; Sweetgreen, Back to the Future: It’s Cash, Medium (Apr. 25, 2019), https://medium.com/@sweetgreen/back-to-the-future-its-cash-dc1de3da437a (“Going cashless. . .had the unintended consequence of excluding those who would prefer to pay with cash or can only pay with cash. . . To accomplish our mission, everyone in the community needs to have access to real food.”).
 McCart, supra note 8.
 Cash is a more private form of payment than cards because it cannot be tracked and does not create a record of purchases that could be breached. See Privacy When You Pay, Privacy Rights Clearinghouse (Apr. 02, 2019), https://www.dataversity.net/cash-the-ultimate-privacy-protection/ (describing privacy and data security risks of electronic forms of payment).
 See Meyersohn, supra note 22 (quoting business owner describing cash requirement “burdensome regulation”).