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New York City bans stores from refusing to accept cash

The backlash against going cashless
The backlash against going cashless 06:32

It's increasingly trendy for restaurants and stores to refuse cash in favor of only accepting cashless payments — such as Apple Pay or credit cards — but that will soon be illegal in New York City.

The City Council on Thursday passed a bill that bans local businesses from not accepting cash. The bill also prohibits enterprises from penalizing customers who pay with cash by charging them higher prices. Businesses that violate the law could face fines of up to $1,500.

Intentional or not, cashless retail has a discriminatory and exclusionary effect on New Yorkers who lack access to credit and debit cards, according to city councilman Ritchie Torres, who introduced the bill forbidding cashless-only payment. The practice of banning cash has sparked outrage against retailers like trendy restaurant chain Sweetgreen, which had moved to a cashless policy in 2016, citing improved employee safety and speed of service. 

Last year, Sweetgreen said it would again start accepting cash, explaining that the policy "had the unintended consequence of excluding those who prefer to pay or can only pay with cash."

The new New York law will protect consumers who might lack access to banking services, but also reinforces the rights of those who want to pay with hard currency, Torres said.

"Even if you have access to credit and debit, there are some New Yorkers, especially senior citizens, who prefer cash because it's a familiar or habitual form of payment," Torres told CBS MoneyWatch. "Whatever their reasons, consumers ought to have the right to choose their preferential method of payment."

Torres acknowledged that cashless transactions can help businesses run more smoothly, but said the bill "strikes a balance between equity and efficiency."

The bill will take effect within nine months after Mayor Bill de Blasio signs it into law. 

Cash conversion machines

The law includes an exemption for businesses with machines that convert cash into a card that never expires, does not charge a fee and doesn't require a minimum deposit greater than $1. "Having the ability to install machines allows business to preserve their electronic approach," Torres said.

Nearly 1 in 4 New York households are unbanked or underbanked. Nationally, about 6.5% of American households lack any bank accounts, while another 18.7% are underbanked, according to the Federal Deposit Insurance Corporation. Underbanked consumers may have a traditional bank account, but often turn to sources of financing outside the banking system, such as payday loans.

"We in the City Council have real concerns that an increasingly cashless marketplace would have a real-world discriminatory effect on low-income communities — especially communities of color that lack access to credit or debit," Torres said at a press conference ahead of the vote Thursday. 

He said the law protects those New Yorkers who are undocumented or homeless and face "deeply entrenched barriers to accessing credit." 

"People would hide in bathrooms" 

While there's no formal tally of the number of cashless businesses in New York City, data from Square, a credit card processing system, shows that Americans are making fewer cash purchases than four years ago. From 2015 to 2019, the share of purchases under $20 made with cash declined from 46% to 37%.

Some business owners are pushing back on the legislation, claiming it could slow the pace of service, reduce profits and jeopardize the safety of employees who are required to handle cash at night. Restaurant owner Michael Ryan said safety concerns motivated him to go cashless at his West Village taqueria Flip Sigi in 2015. 

"People would hide in bathrooms, and managers who were there alone late at night with cash were robbed," he said.

It also made sense from an efficiency and cost perspective. "Managers were spending 20 hours a week counting money and going to the bank," Ryan said. 

Ryan said he'll likely invest in a cash machine that allows patrons to load their cash onto a card that can be used for payment. 

Other cities and states, including New Jersey, Philadelphia and San Francisco, have approved similar bans. Massachusetts has since 1978 required all retailers to accept cash.

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