Mar 7, 2022 - News

The proliferation of cashless businesses

Illustration of a dollar bill with a pixelated no symbol over George Washington.

Illustration: Brendan Lynch/Axios

At Little Brother Coffee & Kolaches on South Congress, don't bother trying to buy an espresso with cash.

Details: Same with the kimchi fries at Chi'Lantro BBQ. And when you get your favorite snickerdoodles from Tiff's Treats, you're going to have to reach for a card.

  • More and more Austin businesses now inform customers that their cash will not be accepted.

Why it matters: Fewer people use paper money in their daily lives, though cashless businesses can impact millions of "unbanked" Americans who lack credit or debit cards.

  • The rate of "unbanked" households is highest within communities of color, lower-income earners and those with disabilities, according to the FDIC.

Flashback: Austin's Human Rights Commission in January 2020 — the pandemic before-times — recommended prohibiting stores and restaurants with at least five employees from refusing to accept cash.

  • But the Austin City Council never took it up, and then COVID struck — leaving many in those early months wary of exchanging potentially contaminated cash.
  • A host of businesses had already been turning away cash for security reasons, especially as customers increasingly turned to their phones and cards for everyday transactions.
  • Cash was "on the ropes but the pandemic accelerated a decline that's been underway,” Axios' Kate Marino observed last year, with ATM activity in sharp decline around the globe.

What they're saying: "People on the lower end of the economic spectrum are being squeezed out," Garry Brown, a member of the city's Human Rights Commission, tells Axios.

  • "When I started seeing the proliferation of establishments that took only credit, it worried me since a lot of people don't have a credit card or debit card," Brown said.
  • "Frankly, is someone from the East Side going to go to a restaurant on the edge of Rosedale? Maybe not, but that doesn't mean we shouldn't help those folks in some way," Brown added.

On the other hand: Going cashless is more efficient for businesses, wards off theft and can lower operational costs, economist Jay Zagorsky wrote in 2016.

By the numbers: In Texas, 11.4%of Black households, 14.5% of Hispanic households and 2.5% of white households were unbanked in 2019, per the most recent stats from the FDIC.

What they're saying: The FDIC's 2019 survey lists the two top reasons respondents cited for not using banks, both nationally and in Texas as "not enough money to meet minimum balance requirements" and "do not trust banks."

Our thought bubble: New York City and San Francisco prohibit businesses from refusing to accept cash — but the business-oriented Texas Legislature would likely slap down any such step by Austin.


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