After almost 10 minutes of standing in line at a coffee shop, Ritchie Torres realized he only had cash in his pocket — a form of payment no longer accepted by this store.
"It was a humiliating experience," he said. "I remember wondering aloud, how could a business refuse to accept cash, which is legal tender?"
Torres is a City Council member in New York. He says his constituents, especially seniors, have also complained about a spurt of cashless stores. So Torres led the charge on a bill to ban businesses from rejecting cash, which New York's city leaders passed almost unanimously last month.
A similar ban is slated for a hearing in Washington, D.C., on Feb. 13. In the past year, Philadelphia, San Francisco and the state of New Jersey have also banned cashless stores — a rare case of governments fighting a tech trend before it spreads far. Massachusetts has required establishments to accept cash since 1978.
"A cashless economy is not an inclusive economy," said Tazra Mitchell, policy director at the research and advocacy group DC Fiscal Policy Institute.
Excluding people from paying with cash means "essentially discriminating against people who are low-income, people who are homeless, also undocumented," she said.
Getting a credit or debit card often requires a form of ID, a utility or another bill, money to deposit and a financial history. Mitchell said that in Washington, D.C., nearly a third of residents rely on cash every day because they don't have a card or even a bank account.
In fact, as cities have cracked down on the cashless economy and spurred new conversations about whom it leaves out, some of the biggest names that tried going cashless — Amazon's automated convenience store Go and salad chain Sweetgreen — have reversed their policies in favor of accepting cash.
"Going cashless had ... positive results, but it also had the unintended consequence of excluding those who prefer to pay or can only pay with cash," Sweetgreen officials wrote in a Medium post.
These reversals show that the market is working to respond to its communities, said National Retail Federation General Counsel Stephanie Martz. She said new laws are "a solution in search of a problem" as the number of businesses to go cashless is very small — in part because each card transaction comes with a fee the business has to pay.
Credit card companies, which get a cut every time a card is swiped, have rewarded the cashless trend. For example, in 2018, Visa paid $10,000 each to 50 businesses that stopped accepting cash.
And some store owners have argued, cash is inefficient. For example, it slows down the line, requires armored cars, and attracts break-ins or skimming by workers.
And indeed, cash is becoming less popular among U.S. shoppers. The Federal Reserve found in 2018 that cash had stopped being the No. 1 payment choice — overtaken by debit cards.
But cash is still the most common way people pay amounts under $10 or $25 — especially among those older than 55 and younger than 25. And some people prefer cash for privacy reasons — to protect their purchase history from being tracked by advertisers or banks.
Cash also might carry potential psychological and financial benefits for consumers.
Cash is "going to feel much more painful to give up because we can see it outflow from our hand," said Avni Shah, assistant professor of marketing at the University of Toronto. Her research found that when people pay in cash, they are more mindful of their spending — willing to spend less to begin with — but they also value their purchases more and feel more loyal to the seller.
"With cash, we can feel this emotional attachment and we value what we have a bit more," she said.
Shah acknowledged that different businesses may have priorities other than loyalty, such as convenience and speed of getting the customer in and out of the store. Opponents of the bans on cashless establishments have argued that businesses should be able to make these decisions for themselves.
"We don't think that in five years laws that ban stores from going cashless are going to look smart," Martz said, envisioning a near future where everyone has access to digital payments thanks to advances in financial technology. In that future, she argued, banning businesses from going cashless could hamstring them from becoming more efficient.
But Torres and Mitchell said cashless laws are there to balance technological progress with an economy that's fair and inclusive.
MARY LOUISE KELLY, HOST:
Should restaurants and stores be allowed to reject cash as a form of payment? Washington, D.C., thinks maybe not. The city is considering a ban on cashless businesses. Similar bans have already been passed in several parts of the country. NPR's Alina Selyukh reports it's a rare case of governments getting ahead of a tech trend before it spreads.
ALINA SELYUKH, BYLINE: After almost 10 minutes of standing in line at a coffee shop, Ritchie Torres realized something.
RITCHIE TORRES: I only had cash in my pocket.
SELYUKH: And this coffee shop no longer accepted cash, only cards or mobile payments, which he didn't have on him.
TORRES: It was a humiliating experience. And I remember wondering aloud, how could a business refuse to accept cash, which is legal tender? When you open a dollar bill, it reads, this note is legal tender.
SELYUKH: Torres is a city council member in New York. He says his constituents have also complained about a spurt of cashless stores, especially seniors. He wrote a bill to ban businesses from rejecting cash. Last month, the New York City Council passed it almost unanimously, joining Philadelphia, San Francisco and the state of New Jersey. A similar ban is up for a hearing in Washington, D.C., next week.
Here's Tazra Mitchell with the research and advocacy group DC Fiscal Policy Institute.
TAZRA MITCHELL: A cashless economy is not an inclusive economy because whenever you exclude people from being able to use cash at businesses, you're essentially discriminating against people who are low-income, people who are homeless, also undocumented.
SELYUKH: Getting a credit or debit card is not easy for everyone. You have to have an ID, often a utility or another bill and money to deposit, a financial history. Mitchell says in D.C., nearly a third of residents rely on cash every day because they don't have a card or even a bank account.
The Federal Reserve has found the use of cash is declining. Two years ago, for the first time, it found cash had stopped being the No. 1 payment choice. But it's still the most common way that people pay smaller amounts under 10- or $25. That's particularly true for people over 55 and under 25.
TORRES: Whatever your reasons, you as the consumer should have the power to choose your favored method of payment.
SELYUKH: The biggest names to try going cashless have been Amazon, with its automated convenience stores, and the salad chain Sweetgreen. They and other businesses argued cash is inefficient. It slows down the line, requires armored cars, attracts break-ins or skimming by the workers. More and more people are now paying with their phones, and credit card companies are rewarding the trend. They get a cut every time a card is swiped. Visa paid a $10,000 award to 50 businesses that stopped accepting cash.
STEPHANIE MARTZ: We don't think that in five years, laws that ban stores from going cashless are going to look smart.
SELYUKH: Stephanie Martz is the general counsel of the National Retail Federation, which has actually been fighting with credit card companies over their fees. Martz argues the cashless trend is not really that big. Not many stores have gone cashless. And some of the loudest proponents have now reversed their policies. That includes Sweetgreen and the cashier-less Amazon Go shops, which now both accept cash.
MARTZ: Some stores have gone cashless. Others have gone cashless and have gone back to accepting cash. And I think that's a real indication that the market is working, and retailers and restaurants are being responsive to what their customers want and need.
SELYUKH: Of course, this also happens to coincide with new laws starting to ban the cashless practice. Either way, Martz envisions a near future where everyone has access to digital payments, thanks to new technology. And in that future, banning stores from going cashless could hamstring them from becoming more efficient. But Torres and Mitchell argue cashless laws are there to balance technological progress with an economy that's fair and inclusive.
Alina Selyukh, NPR News. Transcript provided by NPR, Copyright NPR.