March 14, 2024

Five years ago, Philadelphia became the first major U.S. city to pass a ban on cashless businesses, requiring most local retail operations to accept cash. This move was aimed at curbing the trend toward eliminating cash transactions, a direction considered by several businesses, including Amazon, which had plans to establish cashless stores in the city.

However, there are exceptions to the rule.

While the majority of Americans have shifted toward using credit and debit cards for their transactions, approximately 14% still rely predominantly on cash — a significant decrease from 24% seven years ago. Businesses are motivated to reduce the burdens associated with cash transactions, including the costs of storage, accounting, and secure transport. Managing paper currency can add $4 to $15 in overhead for every $100 in cash earnings, per the IHL Group’s findings.

In Philadelphia, roughly a quarter of the population is “underbanked” or “unbanked,” according to the city’s Prosperity Now Scorecard, meaning they have little to no relationship with a financial institution, making cash a main form of payment for them.

If a business doesn’t accept or adds extra steps to paying with cash, it can cause challenges and stigma for those unbanked, said Raheem Stevenson, Drexel University’s director of financial empowerment and a former bank executive in Philadelphia. A lack of relationship with financial institutions disproportionately affects Black and Hispanic Philadelphians.

“We find that being discouraged from accessing a business is not just a one-generation impact,” Stevenson said. “I think it would have a tremendous impact on a consumer just being discouraged, especially when you think about trauma-informed awareness when it comes to finances.”

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