The House Financial Services Committee considered legislation, H.R. 2650 ("the Payment Choice Act of 2019"), to (i) prohibit retail businesses from refusing cash payments and (ii) encourage an increase in mobile banking and electronic payment technologies.

Under H.R. 2650, retail businesses would no longer be allowed to (i) refuse cash payments and (ii) charge customers using cash higher prices than customary for customers using other forms of payment. H.R. 2650 provides a private right of action to consumers who violate its provisions.

Both consumer advocates and industry representatives testified before the House Financial Services Committee on the issues of cash as a method of payment and mobile banking. Those who testified included:

  • New Economy Project Co-Executive Director, Deyanira Del Rio, who denounced the growth of cashless businesses, saying that they "reinforce inequities" in the U.S. and global economic structure. She supported H.R. 2650, stating that the NYC Council recently passed a similar bill – the "Payment Choice Act of 2019" – aimed at addressing the discriminatory effect cashless businesses have on groups facing longstanding systemic barriers to fair banking access.

  • Paypal Global Public Policy Head, Usman Ahmed, who urged policymakers and the payments industry to work together to increase mobile payments innovation, while ensuring consumer protection and security.

  • Economic Studies Fellow at the Brookings Institute, Aaron Klein, who recommended:

    • implementing requirements specifically for businesses conducting in-person, small dollar sales of core consumer goods to accept cash;

    • mandating that banks and credit unions make consumers' funds available immediately; and

    • additional research on how the retail payment system in the United States can provide access to low cost, secure digital wallets.

  • Consumer Reports Senior Policy Counsel, Christina Tetreault, who identified two areas of improvement in the payment industry: (i) amending the Electronic Fund Transfer Act to ensure equal, strong loss caps and guaranteed recredit time periods following unauthorized use of all non-cash and non-check payments and (ii) implementing "strong privacy legislation," explaining that the Gramm-Leach Bliley Act does nothing to curb data collection.

  • U.S. Faster Payments Council ("FPC") Executive Director, Kim Ford, who stated that the FPC supports the choice of payment methods and enabling a faster digital payment environment.

Commentary

A business does not turn away cash because it doesn't want customers. There are many reasons why a business may choose the manner in which it charges or accepts payment for services. It may turn away cash because of the possibility of theft, whether it is employee theft or robbery by outsiders. (Speaking as a former NYC nighttime cab driver, there are many situations in which it is quite desirable to be able to advertise that one is not carrying cash.)

Further, why isn't this a local issue? Why should the federal government mandate requirements for matters that are so inherently provincial? And why should there be a carve-out for internet businesses, which are becoming more and more the dominant power in retail. Perhaps instead of imposing additional obligations on local businesses, the federal government should consider ways to empower them.