New York City became the third U.S. city to ban cashless-only payments in restaurants and stores with the passage Thursday of a measure to prohibit merchants from refusing to accept cash. San Francisco and Philadelphia have similar bans, as does the state of New Jersey.
Originally proposed by New York City council member Ritchie Torres in 2018, the measure now goes to Mayor Bill de Blasio’s desk for signing.
Among the ordinance’s provisions is a prohibition against charging cash customers a higher price than that for another payment method. Online, phone, or mail-order transactions are exempt. Penalties for violations are $1,000 for a first instance and no more than $1,500 for subsequent violations.
For its part, the Retail Council of New York State issued a statement of cooperation. “Our members welcome every shopper, from the people who want to pay with cash to the people who want us to be wired with the latest technology,” Ted Potrikus, president and chief executive of association, says in an email. “We’re sensitive to the concerns that the City Council put on the table and are happy to be working with them to make this work for everyone.”
Measures banning cashless merchant locations often are viewed as a way to protect consumers who prefer to use cash or have limited credit and debit card options. Torres told the New York Times that consumers should be able to choose if they want to pay with cash or not.
Cash inclusion should be part of the payments industry’s objectives, suggests Krista Tedder, head of payments research at Pleasanton, Calif.- based Javelin Strategy & Research.
“The ban on cashless payments will assist consumers who do not have access to, or do not want to use, digital currency everywhere they go,” Tedder says in an email to Digital Transactions News. “The payments industry will need to innovate solutions that move beyond digitizing everything. Having services which include cash needs to be a priority to ensure everyone is able to participate in the economy. Capabilities need to be cash loads for prepaid products, cash deposits for digital wallets, cash withdrawals from digital wallets or P2P activity at ATMs without having a card. Consumer choice in how to pay, including cash, is a seen as a positive step of payment innovation.”
Bans on cashless-only acceptance come as electronic payments continue to grow. Total card payments hit $7.08 trillion in 2018 on 131.2 billion transactions, according to the 2019 Federal Reserve Payments Study, up from $5.52 trillion on 101.5 billion transactions in 2015. In a separate Fed report, the 2018 Diary of Consumer Payment Choice that is based on payments diaries consumers complete found that debit cards surpassed cash as the most-used payment type for the first time.