Are retailers better off going cashless?
The foodservice and retail industries appear headed to a cashless future and, while proponents suggest that doing so will help businesses cut cash handling costs and reduce losses due to theft, it may also leave groups of consumers without a way to purchase goods and services.
The move to cashless transactions got its start in restaurants a few years ago, USA Today reports, and has since shifted to retail locations, as well. Cashless stores and restaurants will make up between 40 and 50 percent of all establishments within the next 15 years, according to an IHL Group forecast.
Retailers and other businesses, including Amazon, The Bar Method, Bonobos, Casper Mattress, Drybar, Indochino, Everlane and Reformation, currently operate physical locations that do not provide customers the option of paying by cash.
While consumers and retailers may like the ease of using non-cash forms of payment, particularly as more make use of mobile wallet technology, the concern is that merchants will discriminate against unbanked customers.
Legislation was proposed in New York City this week that would ban the practice of refusing cash as payment. Ritchie Torres, the city councilman from the 15th district in the Bronx who introduced the legislation, claims that cashless stores discriminate against poor people, many of whom are minorities.
“On the surface, cashlessness seems benign, but when you reflect on it, the insidious racism that underlies a cashless business model becomes clear,” Mr. Torres told Grub Street. “In some ways, making a card a requirement for consumption is analogous to making identification a requirement for voting. The effect is the same: It disempowers communities of color.”
The Guardian reports that studies have found 12 percent of New York City residents do not have bank accounts.
Because there are no federal laws that govern cashless stores, cities including Philadelphia and Washington, D.C. are considering legislation similar to New York. The state of Massachusetts has a ban on cashless stores, although a separate Guardian report claims it is rarely enforced. Legislators in New Jersey have also considered a similar ban.
Not everyone within retailing understands why stores are interested in operating cashless stores. For years, the industry has fought legal and public relations battles with banks and credit card companies over the high swipe fees charged for transactions.
- More retailers go cashless to cut costs, theft as holiday shopping ramps up – USA Today
- Meet the Politician Fighting to Make Cash-Free Cafés Illegal – Grub Street
- New York to consider banning shops from going cashless – The Guardian
DISCUSSION QUESTIONS: Why do you think retailers are pursuing cashless stores when so many complain about the fees charged by banks and credit companies? In the future, do you think the government or another source will develop a common currency that replaces cash for everyone?