Legislation banning shops from refusing to accept cash has moved swiftly this year. New Jersey put its ban on cashless businesses into effect this week, and several other states—including New York—are advancing similar laws.
The movement comes from lawmakers’ concerns about preserving convenience and access to businesses for consumers who prefer to operate in cash or don’t have bank accounts. But it's running head-on against retail models like Amazon Go, which are built from the ground up to operate without cash.
Amazon already operates a cashless bookstore in Paramus, N.J., and reportedly plans to open up to 3,000 cashierless Amazon Go stores across the U.S. in the next few years, including in key markets like New York, California and Washington, D.C., all of which are devising bills to ban cashless stores.
Seamless shopping—which speeds transactions and reduces staffing costs for merchants—is popular in parts of Asia, and Amazon Go’s stores in Seattle and San Francisco routinely draw crowds of consumers curious to test the process. Customers simply select products from an array of convenience store items and exit, with payments automatically handled within the Amazon Go app. They must check in by scanning the app at a turnstile, but there is no checkout process — a complex array of cameras and sensors determine what items each shopper has picked up.
Through a spokesperson, Amazon issued an official “no comment” on the escalating legal restrictions on cashless stores, which are the primary model Amazon has pursued for its expanding brick-and-mortar locations.
The situation is creating some odd bedfellows.
The National Retail Federation, one of the most vociferous opponents of payment card networks’ swipe fees, now finds itself defending retailers who want to rely solely on credit and debit cards.
“Retailers have been fighting with the card networks for years over swipe fees, and if anything merchants have been encouraging consumers to use cash, not give it up,” said Craig Shearman, an NRF spokesperson.
But NRF overall disapproves of legislation that dictates how retailers run their businesses.
“Retailers should be allowed to make the choices that work best for them,” Shearman said.
While a few stores are moving away from accepting cash to streamline operations, it’s still very uncommon for stores to turn down cash, according to Shearman.
“This concept of retailers going cashless isn’t widespread enough to warrant any legislation, in our opinion,” Shearman said.
Laws banning cashless businesses are in effect in Massachusetts, New Jersey and Philadelphia, with New York, Connecticut, Rhode Island, California, Oregon and Washington, D.C., the latest to consider similar bills.
Where can Amazon go from here
Amazon could already be working on alternative approaches to accepting payment at its cashless stores.
In emerging economies, companies like
In the U.S., Amazon could devise a similar system to get around local laws banning cashless stores with relative ease, according to Richard Crone, a principal with Crone Consulting LLC.
“Customers with no payment card or bank account could insert cash into a kiosk and get a QR code they could use to pay at Amazon Go,” Crone said, noting that he doesn’t have specifics of any such arrangement Amazon is considering.
Many people with no payment cards already use similar workarounds to pay for utilities, e-commerce orders and Netflix subscriptions through providers including
The cashless
“The data shows that the majority of U.S. consumers, including those who are unbanked, have smartphones, and thus they would have access to a couple of different methods for exchanging cash for a code to make electronic payments at a cashless store,” Crone said.
ATM operators may provide solutions too.
“Cardtronics’ business model is facilitating cash access for financial institutions and we’re exploring ways to provide cash access to fintech companies through our retail-based ATM network,” said Crystal Wright, a spokesperson for Cardtronics, the nation’s largest independent ATM network.
