The war on cash - is forcing 'no cash' shopping even legal?

In October 2020, Dutch finance minister Wopke Hoekstra announced he would keep an eye on the increasing number of the country's stores refusing cash payments during the pandemic.

Hoekstra explained that people should be able to choose how they want to pay for purchases and that he would evaluate whether government intervention was needed to safeguard this right.

Prior to Covid-19, two major retail chains in the Netherlands, Marqt and Vlaamse Broodhuis, had already adopted a cashless payment policy.

UNI Europa, the European services workers union, says this is part of a "war on cash" in Europe. They argue that, "The Covid-19 crisis has further accelerated this trend: large retail chains recommended cashless payments or even refused cash altogether, and payment operators have used unproven fears of contamination through cash to call for an increase in contactless payments limits."

Merchants across Europe are being 'allowed' to refuse cash in contradiction with the European Commission's 2010 recommendation "on the scope and effects of legal tender of euro banknotes and coins."

Eurozone member countries agree to abide by EU laws regarding currency and monetary policy. If there are violations of these regulations, intervention is needed to ensure universal cash acceptance.

EU institutions on cash

EU authorities have consistently defended the status of cash as legal tender in the EU and that it should be accepted as payment for debts.

The EC's 2010 recommendation explicitly states"The acceptance of euro banknotes and coins as means of payments in retail transactions should be the rule. A refusal thereof should be possible only if grounded on reasons related to the 'good faith principle' (for example the retailer has no change available)."

In a recent case before the European Court of Justice, advocate general Giovanni Pitruzella issued an opinion saying EU law defines banknotes and coins as legal tender and that this concept means the creditor of a payment obligation must accept them as payment "unless the contracting parties exercise their contractual freedom to agree on other means of payment."

Pitruzella also discusses the link between cash and "the exercise of fundamental rights" in cases where there is a social inclusion need for using cash. He notes that many people do not have a bank account, credit card or internet access. Cash is the only means of payment available to them and is necessary for their social and financial inclusion.

The European Central Bank (ECB) is the central bank for the 19 European countries that have adopted the euro. It has also declared its commitment to ensuring that cash is widely accepted and available both as a store of value and as a means of payment.

"The ECB and the national central banks – also known as the Eurosystem – have a fundamental responsibility, together with the banking sector, to ensure the smooth supply of cash and facilitate the use of cash in payments by people and businesses," states the ECB.

Like Pitruzella, the ECB also recognises the importance of cash for the "inclusion of socially vulnerable citizens" and says that "cash is an important part of your freedom to choose how to pay and essential for the financial inclusion of all groups in society".

France enforces cash acceptance

EU authorities have made it clear that cash is legal tender within the euro area, but it is up to member countries whether or not they enforce universal acceptance and access to cash.

Currently, the French government is one of the only countries to actually fine companies for not accepting cash payments.

The Bank of France explains that cash is protected under Article R642-3 of French Criminal Code which states, "Refusing to accept banknotes and coins that have legal tender in France at the value at which they are in circulation is punishable by a fine applicable to class two offences."

In April 2020, France's central bank reminded merchants that, pandemic or not, refusing cash could result in a 150€ fine and that, "For the most vulnerable populations, cash is often the only payment method possible".

Protecting cash amidst fierce cashless lobbying

Pro-cashless lobbying efforts, mainly coming from private financial institutions, have stepped up in recent years.

Banks and other companies providing financial services are interested in the transaction fees they receive from cashless payments and offer incentives to merchants and consumers to stop using cash.

As Medium's Luke Anderson remarks, "Visa launched its 'cashless challenge' last year, promising thousands of dollars in rewards to shops committing to refuse cash from their customers."

These tactics have become even more aggressive since the start of the global pandemic as companies have falsely claimed that banknotes and coins spread the coronavirus.

In response to this attack on cash, government officials across the world, like in France, have intervened to protect the right to use cash.

At the end of 2020, the People's Bank of China (PBOC) issued fines ranging from $77 to $77,236 [€65-€65,000] to public and private institutions for denying citizens the right to pay cash.

In the United States, there is no federal law that companies must accept cash, but cities and states have been passing local laws doing just that.

Alarmed by the growing number of stores refusing cash during the pandemic, state representative Alex Valdez and state senator Robert Rodriguez from Colorado recently introduced a bill that would compel businesses across the state to accept cash payments.

Taking EU law one step further

The recent opinion issued by advocate general Pitruzella clearly states that cash is legal tender in Europe and as a general rule, must be accepted for payment.

This may push other European countries to follow France's lead and pass national legislation that outlaws and punishes the refusal of cash payments by merchants.

Furthermore, the European Commission could explicitly stipulate that member countries must ensure that citizens have the right to access and use cash.

In a November 2020 note to the European Retail Payments Board, the ECB argued that, "If the principle of universal acceptance of cash were to be endangered, regulatory measures would need to be initiated to uphold the public's trust in the usage of cash, freedom of choice and to avoid that certain groups of society and unbanked people are disadvantaged."

With an increasing number of stores refusing cash payments, it seems that "the universal acceptance of cash" is indeed endangered and further intervention is therefore needed to ensure that Europe continues to serve as a model for the social and financial inclusion of all its citizens.