Prior to 2019, just one state – Massachusetts – had legislation on its books mandating that retailers accept cash payments. Since February 2019, four major jurisdictions have passed such legislation. DWT has previously written about bills passed by New Jersey and Philadelphia, but since our last update, San Francisco and New York City have also joined the list.
In January 2020, the New York City council overwhelmingly passed a ban on cashless retailers. The statute, like the new laws in New Jersey, Philadelphia, and San Francisco, requires that retailers accept cash with limited exceptions.
New York City Cashless Ban Exemptions
New York City’s law contains a notable exemption for businesses that maintain devices allowing consumers to convert their cash into a prepaid card product, provided that there not be a fee to obtain such a card. Cash-conversion machines have become increasingly common at athletic venues. The law also contains exceptions for online, phone, and mail transactions, and also allows retailers to refuse bills in denominations of greater than $20.
The latter exception reflects a business decision already available to private businesses under longstanding guidance from the U.S. Treasury Department, which notes in an FAQ that:
Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.1
Protections for Underbanked Consumers
Like the other cashless ban bills passed during 2019, the main impetus behind the law was the protection of unbanked and underbanked consumers in New York City, and fears that hackers will be better able to steal personal data tied to digital transactions. Ritchie Torres, the Bronx Democrat who sponsored the bill, has repeatedly emphasized the discriminatory effects that cashless businesses may have – described in further detail in our previous post on the New Jersey legislation.
Joining that argument with another of-the-moment consumer protectionist argument, Councilman Torres has also pointed out that the bill is about "reining in the excesses of the digital economy."2
Other Proposed Cashless Bans
This legislative movement has shown no sign of slowing down. The Chicago and Washington, D.C. city councils continue to discuss their own versions of such laws, and the Cash Always Should be Honored (CASH) Act was recently proposed in the U.S. House of Representatives.
DWT will continue to monitor developments in this space with regard to these legislative activities, as well as industry trends, including the use of kiosks and machines to exchange cash for prepaid cards.
1 Legal Tender Status, U.S. DEP’T OF TREASURY, https://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspx.
2 Ed Shanahan & Jeffery C. Mays, New York City Stores Must Accept Cash, Council Says, THE NEW YORK TIMES (January 23, 2020), https://www.nytimes.com/2020/01/23/nyregion/nyc-cashless-ban.html.