New York City moves to ban cashless stores
New York City is joining San Francisco and Philadelphia in banning stores and restaurants from rejecting cash as a form of payment.
The city council approved a bill by a vote of 43-3 Thursday that prohibits the practice and and prevents New York City retailers from charging customers who pay with cash more than those who don’t. Violators could face penalties of as much as $1,500. The bill still needs approval from Mayor Bill de Blasio, who supports it, according to a spokeswoman.
A growing number of businesses embraced the so-called cashless movement, arguing that it improves safety at stores and eliminates risks associated with employees taking cash to the bank. In 2017, Visa upped the ante by offering 50 restaurants that agreed to ditch cash a $10,000 reward to spend on marketing and point-of-sale technology.
But the movement has faced criticism from advocates for low-income consumers who say a store’s decision to stop accepting cash can exclude people who don’t have access to credit and debit cards.
“There’s a rising tide of businesses that refuse to accept cash and will only accept credit or debit,” Councilman Ritchie Torres, who sponsored the bill, said on Thursday. “We in the council have real concerns that an increasingly cashless marketplace could have a real-world discriminatory effect on low-income communities, especially communities of color, that lack access to credit or debit.”
The vast majority of stores still accept both cash and card — with 92% of Square's sellers in New York City accepting both forms of payment, according to a 2019 study by the payments company. Mastercard said in an emailed statement that it believes electronic payments deliver great value to retailers and consumers and is focused on providing customers with “the choices and services they want when they need them.”
That’s because cash remains the most popular payment method for purchases in the U.S., accounting for 32% of all purchases, according to data compiled by the Federal Reserve. Debit and credit cards are close behind, accounting for 31% and 28% of purchases, respectively.
The New York City legislation won’t come without costs, Felipe Chacon, an economist at Square, said in an interview. “There are real costs to moving physical money around, and that will have an impact,” Chacon said. “It will either show up as a hit to profit or it will show up on whatever they’re charging as a price increase.”
Still, the trend away from cash and paper currency is undeniable. Spending on the networks of Visa, Mastercard, American Express and Discover has continued to climb in recent years, reaching a record $18.7 trillion in 2018, according to data compiled by Bloomberg Intelligence.
Visa respects “those who still wish to accept or pay with cash, while simultaneously using this as a moment in time to help expand access and help everyone — from merchants to underbanked consumers and municipalities — better realize the many benefits of digital payments,” the company said in an emailed statement.