Lawmakers in New York City and New Jersey are working to pass bills that would require retailers to accept cash, alleging that the growing cashless trend discriminates against low-income customers.
Low-income, minority and less-educated households are more likely to have no bank accounts or rely on financial products that come from outside the banking system. People who defend cashless commerce cite greater convenience for customers and lower risks for businesses.
Although mobile payments and digital banking products are on the rise, many Americans still do not use a credit or debit card. Roughly 7 percent of U.S. households, or 8.4 million, are unbanked, meaning that no one in the household possesses a checking or savings account, according to a 2017 survey by the Federal Deposit Insurance Corporation. Another 19 percent are underbanked, indicating that they have a bank account but still rely on financial products such as payday loans.
"Cash-free businesses are discriminatory by design," tweeted New York City Councilman Ritchie Torres, a Democrat, who introduced a bill last month that would prohibit retailers from refusing to accept cash payments. Businesses would be fined $250 for their first violation and $500 for each subsequent violation under the measure.
The fines would be 10 times higher in New Jersey, with businesses having to pay $2,500 for their first violation and up to $5,000 for subsequent offenses. The New Jersey Senate Commerce Committee voted Dec. 3 to advance the bill, which was passed by the state Assembly in June and will now be voted on by the full state Senate.
Chicago, Washington, D.C., and Philadelphia have considered similar measures, but none have been signed into law yet.
"We live in a society where it's not enough to stigmatize poverty," Torres said in an interview with food news site Grub Street. "We are also going to stigmatize the means with which poor people pay for goods and services."
National chains, including DryBar hair salons and Sweetgreen salad restaurants, and local shops alike are part of the growing cashless wave. Businesses say that their decisions to stop accepting cash are rooted in purely financial motives, such as discouraging would-be robbers, shortening transaction times at the register and reducing banking fees.
Danny Meyer — founder of Shake Shack and owner of Union Square Hospitality Group, which includes several New York restaurants — defended his restaurants' shift toward cashless in a blog post on LinkedIn.
"We might be inconveniencing guests who simply don't have their credit/debit on them at the time," he wrote. Still, the benefits "outweighed the unintended side-effects for a small segment of our guests."
However, some business owners have hinted at more discriminatory intentions behind going cashless. Tony Zazula, owner of the now-closed Commerce restaurant in New York, explained his reasons for going cashless in a 2009 interview with the The Wall Street Journal.
"If you don't have a credit card, you can use a debit card. If you don't have a debit card, you probably don't have a checking account. And if you don't have a checking account, you probably shouldn't be eating at Commerce to begin with," Zazula said.
A vote on the bill in New Jersey had been delayed since September due to pushback from Amazon, which is working to expand its cashless Amazon Go stores, according to a report by The Philadelphia Inquirer. The company recently selected the Long Island City neighborhood in Queens for its second headquarters, increasing its presence in New York City. An Amazon spokesperson declined to comment on the proposed cashless ban.
Credit card companies, which receive a fee on each transaction, have been actively working to speed the transition to a cashless society. Last year, Visa declared a "war on cash" and offered $10,000 to small businesses if they stopped accepting it.
"This credit card company-led initiative underscores that the intended beneficiary of a cashless practice is not necessarily the customer," reads an ordinance proposed last year in Chicago that targets cashless businesses.
Proponents of a ban argue that cashless businesses also discriminate against children without bank accounts, as well as people who would rather use cash for data security reasons. Last month, Marriott revealed that the personal details of 500 million customers had been accessed by hackers, including credit card information. The data breach was one of the largest in history.
"There are New Yorkers who are uncomfortable with businesses collecting huge quantities of private information about your life and would rather pay by cash," Torres said in an interview with New York Public Radio.
"That's a legitimate concern, and that's applicable to people even at the higher income scale."