New Fed paper explores the impacts of cashless businesses

August 19, 2019

A new Federal Reserve Cash Product Office paper, “Cash Me If You Can: The Impacts of Cashless Businesses on Retailers, Consumers, and Cash Use” reviews why some businesses consider going cashless, and how these decisions impact financial inclusion and consumer choice.

This paper draws on survey data from the Federal Reserve’s annual Diary of Consumer Payment Choice to help the Cash Product Office understand consumer cash use and anticipate its ongoing role in the payments landscape.

“This paper highlights one of the areas within our dynamic and ever-changing economy that could impact both the overall use of cash as well as the choices available to consumers when paying for goods and services,” said Alex Bau, director of Data and Policy Analysis in the Federal Reserve’s national Cash Product Office. “As retailers seek to manage and control the costs associated with accepting a range of customer payment options, we encourage a discussion about the benefits and risks of cashless businesses so that both consumers and retailers can make thoughtful decisions about what they do at the register.”

The paper points out that some small- and medium-sized businesses across the U.S. have chosen to eliminate cash as a payment option as one way to reduce operational costs associated with cash handling. While it is not illegal under U.S. law to refuse cash as a form of payment, some states and cities have passed legislation that require all retailers to accept cash. Some policymakers have argued that refusing cash effectively excludes unbanked and underbanked consumers from purchasing goods and services. The legal landscape remains mixed, and a few retailers have eliminated their plans to go cashless.

Other key observations from the research paper include:

  • Cashless businesses span a variety of industries, including airlines, restaurants, sports stadiums, and general merchandise stores.
  • Cashless operations help businesses save on cash handling costs, reduce exposure to theft, and increase the speed of transactions.
  • The benefits of cashless operations come with an apparent risk of financial exclusion, denying some consumers access to goods and services.
  • Cities like San Francisco and Philadelphia have passed ordinances requiring brick-and-mortar businesses to accept cash and ensure that consumers who lack access to other forms of payment are able to pay cash for goods and services.

The Federal Reserve’s Cash Product Office will continue to monitor the legal landscape around cashless businesses and, more generally, trends and changes in the retail space to understand their impact on consumer payment behavior and cash use.


Marshall Eckblad
Federal Reserve Bank of San Francisco
(415) 977-3843


The Federal Reserve Bank of San Francisco, with branch offices in Los Angeles, Seattle, Salt Lake City, and Portland, and a cash processing office in Phoenix, provides wholesale banking services to financial institutions throughout the nine western states. As the nation’s central bank, the Federal Reserve System formulates monetary policy, serves as a bank regulator, administers certain consumer protection laws, and is fiscal agent for the U.S. government. Follow us on Twitter at twitter.com/sffed.