October 24, 2019

Lawmakers and consumers challenge cashless retailers

Some retailers who experimented briefly with cashless operations have reversed their decisions ­as a result of complaints from consumers, or as local and state governments enact laws to protect those without bank accounts.

As the cashless debate continues across the U.S., several cities and a few states have enacted laws that prohibit retailers from refusing to accept cash. Groups largely shut out by cashless retailers are low-income minority populations. More than 8 million American households – 6.5 percent of the population – are unbanked.

But it’s not just lower-income groups without credit or debit cards that favor cash transactions at the checkouts. As massive data breaches among giant retailers and financial institutions proliferate, some consumers prefer cash transactions in order to protect their privacy and financial integrity. Others favor cash because it allows them to better budget and track their expenditures.

Equal opportunity legislation

The politics of cash is definitely a hot topic. Consider the following:

  • Philadelphia enacted a “payment of choice” law in February.
  • New Jersey passed legislation in March that requires most retailers to accept cash.
  • San Francisco passed a similar bill in May.
  • In New York City, where 12 percent of the population is unbanked and another 25 percent underbanked, legislation is in the works.
  • The fight for laws to protect the unbanked continue in Chicago.
  • Similar legislation is under study in Washington, D.C., another city with a large low-income population.

In some states, going cashless is not even an option because of long-standing laws that protect the rights of all consumers to pay their bills however they wish.

  • Massachusetts has prohibited retailers from refusing cash payments since 1978.
  • Pennsylvania passed a law in 1984 that businesses cannot refuse services to people who don’t have credit cards. The 2019 Philadelphia law underscores equal rights for consumers at the checkouts.

Failed experiments

A high-profile business that tried cashless operations is Sweetgreen, a health-conscious salad restaurant with 91 stores in eight states and expanding rapidly. Sweetgreen announced in December 2016 that it would go cashless in order to speed up customer service and reduce the risk of robbery. In April 2019, however, the chain said it would resume taking cash at all locations by the end of this year.

“Going cashless … had the unintended consequence of excluding those who prefer to pay, or can only pay with cash,”Sweetgreen said in a statement. “Ultimately, we have realized that while being cashless has advantages, today it is not the right solution to fulfill our mission.”

Even Amazon Go, a grab-and-go convenience grocery chain with no cashiers, is offering cash payments in some cities, citing legislation that protects cash-only consumers. The company plans to accept cash at all of its stores over time.

Advanced retail technology

Retailers experimenting with cashless operations cite overhead costs and security concerns that come with cash management. And yet retail operations, no matter the size and scope of the business, can operate economically and safely with Cash Process Automation  that lowers the cost of accepting cash and increases security at all levels.

In light of the trend toward laws that protect consumers payment preference, it’s essential to embrace innovations that make cash more efficient and secure for businesses.

Coming next: The Cost of Cash retail study provides insights that will help guide you as you form short- and long-range plans for your retail operations.