Despite recent declines in the unbanked population, Evanston Ald. Devon Reid (8th) wants to force local stores to accept cash for all retail transactions.

The latest FDIC survey says 5.4% of people in the Chicago metro area were unbanked last year — down from 7.3% in 2019.

That’s slightly higher than the 4.5% nationwide rate of unbanked households. Lower-income and minority populations tend to have higher than average rates of non-participation in the banking system.

Unbanked rates specific to Evanston were not available from the survey.

Federal officials had feared that the pandemic would force more low-income individuals out of the banking system, but instead, the opposite happened, a trend that was seen worldwide.

The pandemic also accelerated the trend of government agencies using prepaid cards to make payments to recipients of government benefit programs.

No federal law mandates that merchants accept cash. New York City, Philadelphia, San Francisco, Washington, D.C., and the states of Colorado and New Jersey have adopted bans on cashless stores in recent years, but such legislation has failed in many other states, including Illinois.

Reid’s proposal does not cite any instances of Evanston stores refusing to accept cash. Reports indicate that two national retailers that tried the approach — Amazon Go stores and the Sweetgreen fast-casual salad chain — have reversed their policies.

In a survey last year by the Square online payment processing service, 85% of sellers who accept cash said they never plan to stop taking it.

A Gallup survey this summer indicates sharply fewer Americans use cash to make purchases than did so five years ago and 64% think it’s likely the U.S. will become a cashless society at some point during their lives.

Reid’s proposal would encourage residents to report refusals to accept cash to 311 and would impose fines of up to $1,500.

The proposal does offer one non-cash option for merchants — permitting them to install machines that exchange cash for pre-paid gift cards without charging a fee.

It also would allow merchants to refuse accept bills larger than $20s and to refuse to take cash payments for telephone, mail or internet-based transactions, unless the payment takes place at the store.

The City Council’s Human Services Committee is scheduled to take action on Reid’s proposal Monday night.

Bill Smith is the editor and publisher of Evanston Now.

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