Starting in July, Philadelphia will become the first major U.S. city to institute a ban on cashless stores.
The new law passed last week won’t apply to transactions that take place at parking lots or businesses such as Costco that operate through a membership model.
Cashless stores are encountering a backlash in some areas across the country on charges they discriminate against consumers without bank accounts or credit cards. According to the Federal Deposit Insurance Corporation, 6.5 percent of households in the U.S. were not affiliated with a bank in 2017. The rate is seen as much higher in cities with immigrant communities.
Consumers avoid bank accounts for a variety of reasons, including avoiding monthly charge fees or minimum balance requirements. Undocumented immigrants and those with poor credit face challenges securing credit or debit cards.
“Most of the people who don’t have credit tend to be lower income, minority, immigrants,” William Greenlee, a council member in Philadelphia, told The Wall Street Journal. “It just seemed to me, if not intentional, at least a form of discrimination.”
Cashless store bans could derail the “walk in, walk out” payment experience pioneered in the U.S. by Amazon Go.
But many stores and restaurants have touted the benefits of only accepting credit and debit cards, including speeding transactions for consumers. Employees in stores and restaurants are freed up from counting and depositing transactions and theft risk is reduced, advocates claim.
The cashless push started with Sweetgreen, Bluestone Lane and other fast-food concepts. Bonobos, Casper Mattress, Indochino, Everlane and Reformation are among some retailers not accepting cash.
Cash purchases have also shrunk to 30 percent of all retail transactions last year from 40 percent in 2012 as credit and debit cards usage increases and digital payments options like Apple Pay spread.
Finally, cashless advocates said bans would impede innovation. Amazon had threatened to scrap plans to bring Amazon Go to Philadelphia if the law was passed.
Massachusetts became the first and remains the only state that requires businesses to accept cash under a 1978 law. The state of New Jersey and the cities of New York, San Francisco, Chicago and Washington are considering similar bans.
- Philadelphia Is First U.S. City to Ban Cashless Stores – The Wall Street Journal
- It's official: Philadelphia bans cashless stores, restaurants starting this summer – USA Today
- Philadelphia Bans ‘Cashless’ Stores Amid Growing Backlash – The New York Times
- Welcome to the Future — It’s Cashless – Sweetgreen/Medium
- Are retailers better off going cashless? - RetailWire