Someone counting money (Photo by Alexander Mils on Unsplash)
How many people don’t have a bank account? And just how difficult has it become to live without one?
These questions are becoming increasingly important as more businesses refuse to take cash in cities across the U.S. People without bank accounts are shut out from stores and restaurants that refuse to accept cash.
As it happens, a lot of people are still “unbanked”: roughly 6 million in the U.S., the latest data shows, which is about the population of Wisconsin. And outside of the U.S., more than a billion people don’t have a bank account.
I am a business school professor who researches society’s transition from cash to electronic payments. I recently visited Seattle and was amazed by the mixed signals I saw in many storefronts. Numerous shops had one sign proudly proclaiming how welcoming and inclusive they were — next to another sign saying “No cash accepted.” This tells people without bank accounts that they aren’t welcome.
Why not have a bank account?
Why would someone want to avoid using banks? Every two years, the Federal Deposit Insurance Corporation surveys households about their connections to the banking system and asks people without bank accounts why they don’t have one. People can respond with multiple answers. In 2021, the top reason — with over 40% of respondents choosing it — was that they didn’t have enough money to meet the minimum balance.
This is consistent with data showing that poorer households are less likely to have bank accounts. About one-quarter of those earning less than $15,000 a year are unbanked, the FDIC found. Among those earning more than $75,000 a year, almost every person surveyed had some type of bank account.
The second- and third-most common answers show that some people are skeptical of banks. Roughly one-third of survey respondents agreed that “Avoiding a bank gives more privacy,” while another one-third said they simply “don’t trust banks.”
Rounding out the top five reasons were costs of dealing with a bank. More than one-quarter of respondents felt bank account fees were too high, and about the same proportion felt fees were too unpredictable.
While many middle-class and wealthy people don’t pay directly for their bank accounts, fees can be costly for those who can’t maintain a minimum balance. A recent Bankrate survey shows basic monthly service fees range between $5 and $15. Beyond these steady fees, banks earn $4 to $5 each time people withdraw cash from an ATM or need services like getting cashier’s checks. Unexpected bills can result in overdraft fees of about $25 each time an account is overdrawn.
Being unbanked in America
The FDIC calls people without a bank account “the unbanked.” People with a bank account but who primarily rely on alternative services such as check cashing outlets are called “the underbanked.”
The latest FDIC data shows almost 6 million unbanked and 19 million underbanked U.S. households. Given that 2.5 people live in the average household, this means there are over 15 million people living in a home with no connection to banks, and 48 million more in homes with only a tenuous connection to banks.
Combining the two figures means roughly one out of every five people in the U.S. has little or no connection to banks or other financial institutions. That can leave them shut out from stores, restaurants, transportation and medical providers that don’t take cash.
The true number of unbanked people is likely higher than the FDIC estimates. The questions on being banked or unbanked are supplemental questions added to a survey given to people at their homes. This means it misses homeless people, transients without a permanent address and undocumented immigrants.
These people are likely unbanked because you need a verified address and a government-issued tax-identification number to get a bank account. Given roughly 2.5 million migrants crossed the U.S.-Mexico border in 2023 alone, there are millions more people in the cash-only economy than the FDIC estimates.
How many people globally are unbanked?
While the U.S. has relatively high rates of people with bank accounts, the picture is different in other parts of the world. The World Bank has created a database that shows the percentage of each country’s population that has access to financial services. The World Bank’s definition of being banked is broader than the FDIC’s, since it includes anyone who uses a cellphone to send and receive money as having a bank account.
Overall, the World Bank estimates about one-quarter of the world’s adults don’t have access to a bank or mobile-phone account. But that varies dramatically by region. In countries that use the Euro, almost everyone has a bank account, while in the Middle East and North Africa, only about half the population does.
A more inclusive economy
Many of us swipe our credit cards, tap our phones or insert a debit card to pay without thinking. However, there are at least 6 million people in the U.S. and almost 1.5 billion worldwide who are unbanked.
When businesses stop accepting cash, the unbanked are forced to use payment methods like prepaid debit cards. However, these prepaid cards are costly. For example, Walmart, one of the largest U.S. retailers, offers a reloadable basic debit card. The card costs $1 to buy and charges $6 per month in fees, in addition to $3 each time someone wants to load the card with cash at Walmart’s registers. Paying a minimum of $10 just to set up a debit card for a few purchases is a steep price.
The next time you see a sign in a shop or restaurant window stating “No cash accepted,” you’re really looking at a business excluding many unbanked and underbanked people. Insisting that all businesses accept cash is a simple way to ensure everyone is financially included in the modern economy.
Article written by Jay L. Zagorsky, Clinical Associate Professor of Markets, Public Policy and Law, Boston University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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That would be fine except we then get charged 3% for the “privilege”.
No Thanks
There are so many times i see people using debit card and credit cards at the convenience store buying a pop I don’t think these kids realize that let’s see you’ve got an extra anywhere from 3 to 5% fee thrown on there for using the card if it’s a credit card you got the interest so that $2 pop ends up costing them 250 275 in the long run schools are so concerned about teaching all this gender equality and stuff that they forget to teach them young people anymore how to do something simple like balance of checking book and understand how finances work not all there are some younger people that are really good at that stuff but from what I see in everyday life and at work so many of the people 25 and younger have no clue.
Cashless gas stations and 7-11 type stores between midnight and 0600 during prime crime time seems fine to me.
Cash is legal tender for all debts in the US. If it is offered and refused the debt is considered paid.
Lots of folks in the comments absolutely not understanding the “cash is legal tender for all debts etc etc” quote.
It’s up to the states to decide. If there is no state regulation a private non governmental business can dictate whether they want to accept cash or not.
Personally I feel this is a generational issue. I am a 40 year old that leans conservative. I know plenty of people that don’t use cash at all. Don’t use an atm at all. Invent used an ATM in perhaps 12-16 years and when I did it was because my dry cleaners only accepted cash at that time.
I find cash to be gross physically. I don’t want the last unknown degenerates “soggy bills” being handed back to me as change.
Most people I know 40 and under don’t use cash either.
Retail purchase is not a debt.
Excellent point! I’d love to see the matter brought before a court! Maybe a business could require payment in actual gold or silver like the old days! Heaven knows neither the coinage or paper notes of today only “represents” value!
Cash is “legal tender” but what some people here are missing or skipping over is the next phrase “for all debts.” If I won’t sell it to you, there is no “debt” that could be later paid off with cash. If the National Park won’t let you in without paying up front with a debit or credit card, they are also not creating a “debt” that you can later pay with cash.
The US government will soon outlaw cash anyway and move to full electronic currency linked to social credit score like the CCP and some other countries. The EU globalists have talked about this. I don’t care if private businesses decide on their own whether they accept cash, but the government or banks shouldn’t mandate or try to influence no cash policies.
This Article never addressed that Cash uis LEGAL TENDER and has to be accepted. Of course since the will of the people was overturned in 2016 by the Deep state launching resist and ignoring the vote, and another Administration coming in and flaunting the rule of law at every point why should we be surprised that legal tender is not accepted?
It doesn’t HAVE to be accepted. It only means that United States coins and currency are Legal Tender and is a valid and legal offer of payment for debts when tendered to a creditor. There is no federal statute that mandates a private business must accept cash as payment unless that particular state has a law that states otherwise.
Cash does not need to be excepted according to the Federal Reserve website.
https://www.federalreserve.gov/faqs/currency_12772.htm
You really need to look at a country that is mostly cashless already, such as Sweden. Everything here revolves around your social security id and you bank, without a bank getting cash is difficult. There are a few non bank options for those visiting, but if you don’t have a Visa or MC you will finds many places won’t deal with you.
If you disagree with the author your comment will be deleted.
I NOTICED!!
“In 2021, the top reason — with over 40% of respondents choosing it — was that they didn’t have enough money to meet the minimum balance.”
Instead of complaining about no-cash businesses and reporting survey results, why didn’t the author actually check — ha ha — on the availability of low-cost bank accounts? For example, American Bank (ambk.com) offers a “Forever Free” account with $1.00 minimum to open, no minimum balance, no service fees, free online banking, a free debit card, unlimited bill pay with checks, no ATM fees, etc.
“The second- and third-most common answers show that some people are skeptical of banks.”
So it should be public policy to indulge foolishness in search of “a more inclusive economy”? Rubbish.
Public policy should encourage people to get a bank account, not discourage it by forcing businesses to accept cash.
I have no idea why commenters think it’s a good idea to punish businesses that don’t accept cash. I guess people think they’re doing something noble instead of silly.
If you put money into a bank account, banks must report to the IRS if you withdraw or transfer $10,000 of it. That reason alone is why I no longer keep money in bank accounts. There are too many other places willing to hold it, and to pay you for the privilege.
The idea of a cashless Society is totally Orwellian!!!
That bar graph doesn’t match the statistics for North America mentioned in the article. Even factoring in Canada, assuming most Canadians have a bank account, if you look at the height of the bar for 24% unbanked global average, it’s way taller than the estimated 20%+ quoted in the article for the US. It says the source of the graph is the World Bank so this writer obviously does not agree with the World Bank, I guess?
I like to leave Google reviews for places that don’t accept cash saying I don’t shop there because they’re Un-American and fascist. It hasn’t changed anything yet I like to let them know. I encourage others to do the same!
If it’s against Federal law to refuse treasury notes, how come all US National parks are now refusing cash and only accept credit or debit cards for entry fees? Because career bureaucrats make the rules, not Congress.
Take a crowd in a cash only restaurant and then after you all eat tell them you only have cash. You think they will turn it down?
Would certainly make for an interesting scenario to play out! Being able & willing to pay for goods & services with Legal Tender, and having payment refused! Who would be in legal jeopardy then? Or, do the printed words “All Debts, Public & Private” mean nothing???
Section 31 U.S.C. 5103, entitled “Legal tender,” states: “United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes, and dues.”
_______________
This statute means that all US money as identified above is a valid and legal offer of payment. It does not mean that a private entity has to accept it. However, several states have enacted legislation that requires cash to be accepted by all businesses that accept in-person payments.
Thus, this matter is left for the individual states to decide.
How can individual states make that decision when money is controlled by the federal government? Seems that is a federal issue not a state issue
Exactly
A bridge should be named in your honor
I was refused entry into a national park because of no cash. I have a bank, it’s a park, we wanted to pay the admission. I am also a senior citizen, obviously, but was instructed thati had to provide identification, proof of age, proof of citizenship,and credit card to pay.
Meanwhile, this is the federal government doing this, “legal tender for all debts public and private” so we turned around the left. typical government, it’s not about restaurants, or someone fumbling for change, basically, we were deniedservice, discriminated against, prevented entry, because I refused to use VISA.
Cashless helps government, banks and big business, does nothing for individuals. Tell me what happens when, (not if) you lose electric power from hurricane, tornado, flooding, ice storms all natural, normal and not unusual. Can last for weeks. No power, no way to pay for anything.
Lots of small business, service people survive on cash from tips, etc. Government wants it all reported and taxed, but most of these people are already struggling, especially with increasing inflation. So, the rich will get richer, the low income will find life even more difficult. Even means that the phony “woke” will not have to deal with street people, can say “cannot help you cash is illegal”. What’s not to like?
No cash means one less incentive for robbery. No waiting in line while both a customer and a clerk fumble around making change. The cashier can’t skim the business. And do those stores with that policy really want or need the so called “unbanked” shopping in their stores? Sounds good to me.
Then the bank gets a 3% fee on every transaction. Many businesses around me have started passing that fee on to the customer. I had one try to charge me the fee when I was paying cash. I told them to take it off or I was walking out. They complied. I will not return. Cashless society is the vehicle to social score control.
So.. you want people who don’t have a bank, yet you’re in love with the debit/ credit cards. The U.S. withheld Russian money in a bank so that they couldn’t access it or pay for anything. Everyone cheered. No one realized that the govt. Can and will do the same to you. It’s no one’s business what I buy. When you use a card, the govt. Knows what you bought and spent. For me, it’s a big no.
No. No cash doesn’t mean no robbery. It just means that the government will be the robbers instead of a street criminal and it is based on your social credit score. A street criminal can only take the cash you have on you at the time. The government can take everything you have.
Government and the banks will BOTH be the robbers. While I haven’t read all the comments what will people use to buy things when the ELECTRICITY goes out? Banks are going to love this source of income for sure.
No cash actually makes robbery easier. Ones and zeros can be manipulated by anyone who knows what they are doing. With cash, one has to pull out a gun or a knife and be physically near the source of cash (bank lobby or person with a wallet). With cashless currency, anyone can rob you from anywhere in the world with just a few keystrokes.
More robberies take place with stolen bank accounts and credit cards than will ever take place with cash. You are joking of course.
With paper currency the law-abiding citizens have privacy and a security not provided by a digital currency.
I have never been mugged for cash but I have had my credit card number stolen and data breaches happen often.
I typically use cash for smaller purchases and the freedom to have that choice is extremely important.
Fumbling around for change…. please.. More times than I can count, i’ve been stuck in line behind people who’s credit/debit cards don’t work, they forget a code etc. etc. holding up the line… credit and debit cards get stolen too….. ….
My dollar bill needs to again be “legal tender for ALL debts, public and private.” No compromise is acceptable.
Don’t forget the two type of people who deal in cash: illegally resident foreigners and drug dealer and uses, who don’t want anybody to know they exist and have money.
hey jasper i dont use a bank for most. i am not a crook. use should meet honest people.
Yup.
Getting rid of cash would almost completely kill the drug trade and create a difficult situation for paying illegals.
Get rid of cash
And the Patriots who are against Big Guberment control!!
Bull pure bullsheet
You forgot the third: It’s a legal purchase, such as a garage sale. And none of your business if I feel like trading cash for something I need.
Exactly.
Absolutely correct, Sir!!!
Fear mongering! Good citizens who do not want to pay continuing higher bank and transaction fees and have digital money manipulated and controlled by one central entity use cash.
Not to mention everything you do and every organization that you want to contribute money to is registered. This makes it easy to discriminate and exclude.
I use cash. If you want to use a credit card or cash, it’s your right, but don’t tell me I can’t use cash! Your example already tells of the danger by assuming anyone who uses cash is an illegal foreigner or drug dealer. Let’s look at your credit card bill and make inferences about what kind of person you are. That’s the danger of knowing all of your transactions.
Jasper is a paid troll, parroting back liberal talking points. Must be a graduate student and an overpriced university. Sad.
As if a foreigner couldn’t get a debit card on their country before they come here. Heck if they don’t have one the government of the USA will probably give them an EBT.
How exactly is of anyone’s business how someone else uses their own money to buy their own things?
You sir are an idiot.
That’s not true some of us are old School and prefer to use cash. I like to know we’re my money is going and not to depend on someone I don’t know to do it for me
The Liberal Ideology supports a cash-less society. The cult cannot compete with society and have to establish another form of control to feel accomplished. They hate themselves and they system that supports freedom, liberty + pursuit of happiness.
I’m a 40 year old conservative millennial. I haven’t used an ATM since my 20s and I personally dislike carrying cash. Cash is gross as in physically it’s dirty paper and who knows what degenerate has had it jammed in his nether regions before I would be handed it back as change at a convenience store. Most people in my age range across the political spectrum do not carry cash and do not use ATMs. To each their own but for me I find it more inconvenient and especially now that many retail food establishments (fast food) and grocery stores have self check out getting stuck behind an elderly individual or somw degen trying to insert cash just slows down the whole process. Nothing personal.
Come on, there’s no need to descend to this kind of bullshit thinking. Unless that’s all you got.
No cash accepted in a restaurant? No tip from me, then. And I will let the manager know. Or, I just will not patronize the restaurant. Congress need to pass legislation requiring all retailers, restaurants, and taverns/bars to accept up to $80-100 or so in cash payment per paying party, plus gratuities, fees, other add-ons.
No. Don’t let the government into more aspects of our lives.
Read every Reserve note. All debts public and private.
Not one comment on the reasons why NO CASH signs are appearing….CRIME! CASH on hand = risk employees life when drug addict/zombie tries to rob them.
I thought they already did on the money it states “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE” by not accepting cash they are in violation of some federal law could be the federal reserve act itself, the must give you the option.
Lots of data breaches with debit, not so with cash
Illegal not to accept cash. What is wrong with this country allowing banks to operate illegally
It’s literally written on every single dollar bill.
ABSOLUTELY!!! There should be legal consequences & ramifications for those businesses that refuse to accept cash! It’s an ILLEGAL and therefore CRIMINAL act!!!