Philadelphia Is First U.S. City to Ban Cashless Stores
Philadelphia Is First U.S. City to Ban Cashless Stores
Lawmakers move to maintain access to marketplace for
lower-income consumers; Amazon and other businesses express concern about
limits on innovation
Businesses that have gone cashless point to greater
efficiency and improved safety. But critics say they worry about people who
don’t have credit or debit cards.
Businesses that have gone cashless point to greater
efficiency and improved safety. But critics say they worry about people who
don’t have credit or debit cards.
By Scott Calvert March 7, 2019 11:05 a.m. ET
Philadelphia is the first major U.S. city to ban cashless
stores, placing it at the forefront of a debate that pits retail innovation
against lawmakers trying to protect all citizens’ access to the marketplace.
Starting in July, Philadelphia’s new law will require
most retail stores to accept cash. A New York City councilman is pushing
similar legislation there, and New Jersey’s legislature recently passed a bill
banning cashless stores statewide. A spokesman for New Jersey Gov. Phil Murphy,
a Democrat, declined to comment on whether he would sign it. Massachusetts has
gone the farthest on the issue and is the only state that requires retailers to
accept cash.
The measures seek to blunt a nascent trend that could
rapidly accelerate thanks to Amazon.com Inc.’s power to shape nationwide retail
trends. They represent an attempt to strike a balance between equity for
lower-income consumers and merchants’ eagerness to embrace technological
advances.
Businesses that have gone cashless point to greater
efficiency for employees, who don’t have to make change or count cash at
closing time, and improved safety because workers don’t have to carry large
bank deposits.
But backers of measures forcing stores to accept cash say
they worry about people who don’t have credit or debit cards. Supporters also
say some consumers prefer to pay with currency for privacy reasons.
“I think it’s more the future than a fad, and that’s why
there is a need for a legislative response,” said New York City Councilman
Ritchie Torres, a Democrat, who is sponsoring legislation to ban cashless
stores.
Cold, Hard and Here to Stay
As stores around the country go cashless, data indicates
that consumers use cash for around 30% of all payments, down from 33%in 2015.
Mercedes-Benz Stadium in Atlanta said starting Sunday it
will be the first NFL stadium to go fully cashless. The stadium, home to the
NFL’s Falcons and Major League Soccer’s Atlanta United, said requiring fans to
use plastic or make mobile payments will speed up transactions and reduce
lines. Officials also cite safety benefits and say it will make it easier to
lower food prices.
For fans who prefer to carry cash or who either don’t
have a credit or debit card or don’t want to use one, 10 kiosks around the
arena will convert cash to a prepaid debit card with no transaction fee.
Philadelphia City Councilman William Greenlee, a
Democrat, said he was inspired to introduce the bill after noticing some Center
City sandwich shops had gone cashless.
“Most of the people who don’t have credit tend to be
lower income, minority, immigrants. It just seemed to me, if not intentional,
at least a form of discrimination,” he said. Now, he said, stores will be
required “to do what businesses have been doing since Ben Franklin was walking
the streets of Philadelphia.”
Philadelphia Mayor Jim Kenney, a Democrat, signed the
bill into law last week. His spokesman noted that 26% of city residents live
below the poverty line and many don’t have a bank account. Cash can be loaded onto
prepaid debit cards, but those come with various fees.
Sylvie Gallier Howard, a top official in the city’s
Commerce Department, told City Council members last month she hoped the ban
proves to be temporary. “Modernization is going to happen with or without
Philadelphia, and we want to be part of it,” she said.
A survey by the city found a handful of retailers don’t
take cash, including the salad chain Sweetgreen, at least one clothing store
and some eateries at a University of Pennsylvania food court. Sweetgreen and
Penn declined to comment on the legislation.
Before the City Council passed the legislation, Amazon
expressed concern about the impact on its ability to open cashierless Amazon Go
convenience stores in Philadelphia, city officials said. The company says on
its website that it has Go stores in San Francisco, Chicago and Seattle.
Customers, who must have Amazon accounts, swipe their smartphones as they enter
the store and are automatically charged for any items they take.
An Amazon spokesperson declined to comment.
The Philadelphia law has several carve-outs. The cash
requirement won’t apply to parking garages or lots; wholesale clubs like Costco
that sell to consumers through a membership model; or rental-car companies or
hotels where a credit-card deposit is often required for incidentals.
The law also has a provision meant to accommodate the
Amazon Go model, an aide to Mr. Greenlee said. It exempts “transactions at
retail stores selling consumer goods exclusively through a membership model
that requires payment by means of an affiliated mobile device application.”
But Amazon told the city that provision won’t apply to
Amazon Go because, while payment would be made via mobile app, a Prime
membership isn’t required to shop there, said a Commerce Department
spokeswoman.
The company has taken steps to broaden its customer base
to include lower-income consumers, such as by offering a discounted version of
its Prime membership service to Americans who qualify for Medicaid and other
government-assistance programs.
The National Retail Federation, which represents the
retail industry, opposes the new Philadelphia law and proposals like it, saying
businesses should be able to choose which payment methods to accept. Cashless
stores are uncommon in the U.S., and many businesses prefer cash payments
because they avoid the credit-card transaction fees, it said.
The measure is also opposed by the Chamber of Commerce
for Greater Philadelphia and the Pennsylvania Restaurant & Lodging
Association, while the city’s Commission on Human Relations and a number of
community groups support it.
Steven Cook, co-owner of Goldie, a falafel shop, said he
understands the impetus behind the new law but thinks the world is moving toward
a cashless society.
The Goldie shop at Penn will start taking cash due to the
legislation, and two other Goldie locations already accept cash, said Mr. Cook.
“I don’t think it’s great policy,” he said, “but it’s not going to be
make-or-break for whether our business is successful.”
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