When Bluestone Lane decided to go cashless, the people running the coffee franchise were thinking of efficiency.
“Cash takes time,” said Andy Stone, vice president of brand marketing and events at the company, which was inspired by cafe culture in Australia. “In New York, nobody wants to be waiting in line.” There’s also the counting of cash, the moving and transferring of it in actual trucks, which can be vulnerable to theft. And, Stone noted, the transparency question. “Whatever comes into the system, comes into the system. It’s better for society if we pay more taxes.”
Bluestone is far from the only business allowing solely plastic or digital payments in a country where, a Federal Reserve report last fall estimated, credit and debit cards were used in 48 percent of consumer transactions in 2017. But in the past several months, local and state governments have moved to resist this trend, citing concerns that a cashless economy could discriminate against the roughly 6.5 percent of US households—disproportionately young, low-income people of color—without bank accounts, and hike up the cost of goods to account for credit card fees.
In early March, Philadelphia became the first major US city to ban cashless businesses. A couple of weeks later, the state of New Jersey followed suit, becoming the second state to ban virtually all cashless businesses after Massachusetts, which has had a policy in place since the 1970s. Now cities like New York, Washington, DC, and San Francisco are considering similar moves. The regulations reflect a national push to fight back against corporations and tech firms critics say are only serving to widen already-yawning economic disparities.
“This should be the law of the land,” said Paul Moriarty, the New Jersey assemblyman who led his state’s successful push to ban cashless enterprises, "just as the US dollar is legal tender and is supposed to be accepted for all debts.” Moriarty’s legislation garnered almost unanimous support in a state that includes Newark, one of the most underbanked cities in the country.
But it’s not only low-income families he’s accounting for. Moriarty also pointed out that going cashless could allow businesses, and customers, to be exploited or juiced by financial institutions. Visa, it should be noted, has been offering restaurants $10,000 to go cashless.
The New Jersey Chamber of Commerce, which opposed the state's bill, has argued the law will impose unfair limitations on small business owners. “I don’t believe government, state or federal, should tell business owners what they can or can do,” said Michael Egenton, executive vice president of government relations at the Chamber. “Business owners know their customers best.” And the influx of automation and technology, he said, needs to be understood.
Amazon, under growing scrutiny for its monopolistic business practices and anti-union history, has also been a vocal advocate for cashless retail, reportedly threatening to pull out of plans to open more (at least until now, cashier-less) brick and mortar stores in Philadelphia ahead of the ban there, for example. Local officials in San Francisco, however, have targeted the company and its automated stores in considering their own potential ban. Amazon reportedly had plans to open upwards of 3000 outposts in the next few years.
Diana Elliott, a senior research associate at the Urban Institute, a think tank in Washington, DC, said businesses might have various incentives to go cashless and had little doubt those that did would burden millions of Americans operating on the margins of the system. She pointed out that the proportion of people who have no credit score or means of obtaining a credit card is no small number—26 million consumers were "credit invisible" in 2010, according to a report by the Consumer Financial Protection Bureau.
“I think any time you have a practice that leaves out a chunk of the population, it’s problematic,” she said. “You have whole sections of cities where people can’t operate in a cashless way.”
This was certainly the case in Philadelphia, where a quarter of the city residents live under the federal poverty line, and may lack access to credit cards and financial institutions. Bill Greenlee, the city councilman who pushed through Philadelphia’s cashless ban (which takes effect in July), said understanding the constraints of thousands of people in his city inspired his effort. “It bothered me, particularly because Philadelphia has people from all backgrounds, and these places basically said your business is not welcome here,” he told me. “Even if that’s not intentional discrimination, it’s still discrimination.”
Greenlee said he was also surprised by the amount of public and media attention on the issue. But the nascent trend against cashless retail speaks to the larger movement in the US toward questioning powerful institutions and their ostensibly utopian practices, as well as grassroots efforts to level the economic playing field.
It's also a departure from what’s happening in other countries. Sweden, for example, has been charging toward a fully cashless economy, with plenty of growing pains along the way. In India, a “demonitization” effort targeted at black-market money and tax evasion led to a hike in digital payments and use of apps like Paytm.
Even so, it’s increasingly clear from both domestic and international case studies that without better financial access and literacy, attempts by retailers to go completely cashless will marginalize a segment of the population that's already struggling to make ends meet. “I see a growing gap between rich and poor and a country that was once proud of its growing middle class,” Moriarty said. “Poor people these days are homebound because without a credit card it’s difficult to travel.”
“You’re pretty much at the mercy of plastic," he added.
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