Some dollar  store chains and other retailers now are charging consumers for obtaining cash back on debt or prepaid card purchases—transactions that generally have been free in the past–the CFPB reported.

Obtaining cash back on such purchases may be particularly important in banking deserts and in areas where financial institutions charge significant fees, the bureau said. “Retailers are essentially filling a void in access to cash, which has historically been supplied by banks and credit unions in an affordable way,” the CFPB said.

“Many people living in small towns no longer have access to a local bank where they can withdraw money from their account for free,” CFPB Director Rohit Chopra said. “This has created the competitive conditions for retailers to charge fees for cash back.”

The bureau said it is concerned that reduced access to cash undermines the resilience of the financial system and deprives consumers a reliable way to engage in day-to-day transactions. The CFPB estimated that the typical cost to a merchant for processing a cash-back debit card ranges from a penny to about 20 cents.

The CFPB sampled eight large retailers–Dollar General, Dollar Tree/Family Dollar, Kroger, Albertsons, Walgreens, CVS, Walmart and Target—and evaluated their cash-back practices. All of those retailers offer cash back on purchases, but only Dollar General, Dollar Tree Inc., and Kroger Company stores charge a fee for the service. Among those national chains, the CFPB estimates those stores collect more than $90 million a year.

The CFPB found variations in the fees charged by those stores. For instance, Dollar Tree charges consumers $1 for cash back at Dollar Tree stores, but charges $1.50 at its Family Dollar Store. Kroger Co. stores have two tiers for its brands. In 2019, Kroger began charging a $0.50 fee for customers receiving $100 or less and $3.50 for amounts between $100 and $300. Kroger Co. acquired the Harris Teeter grocery chain in 2014, but it did not begin charging a cash-back fee at those stores until January 2024. Those stores charge $0.75 for amounts of $100 or less, and $3 for larger amounts. Kroger has two exceptions for the fees. Consumers using electronic benefits transfer cards are not charged a fee and people using their Kroger Plus cards are not charged for amounts under $100.

“Consumers with lower incomes or fewer banking choices encounter cash-back fees disproportionately,” the CFPB concluded. “Dollar stores are frequently located in small rural towns, communities of color, and low-income communities. These areas are also more likely to have fewer bank branch locations and more residents reliant on cash for daily transactions than others.”

These policy assertions notwithstanding, the CFPB did not assert that these stores had any legal obligation to provide cash-back services or that they had violated any laws in assessing fees for doing so.