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New York City Bans Cashless Businesses

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(Updated: 5:34 p.m. EST, Jan. 23 2020)

Topline: The New York City Council voted in favor of a bill Thursday prohibiting businesses from going cashless, becoming the third city to enact such policies in the last year as governments work to help more financially vulnerable people participate in local economies. 

  • Businesses that violate the new law would be fined $1,000 for the first offense, and would rack up $1,500 for each subsequent offense.
  • Some businesses would be exempt, like laundromats where customers convert cash into fee-free cards for use at that establishment.
  • A spokesperson for Mayor Bill de Blasio told the New York Times that the mayor supports the bill’s “intent,” but plans to review it before signing it into law
  • Cashless businesses are problematic for the “unbanked” or “underbanked,” meaning people who do not have bank accounts or easy access to debit or credit cards, according to Bloomberg.
  • Some businesses prefer the cashless model, since it frees them up from having to count and secure money, and prevents disciplinary action against employees for cash discrepancies.
  • According to a 2015 city-funded Urban Institute study, 12% of New Yorkers do not have bank accounts, compared to 8% across the rest of the U.S.

Crucial quote: The bill “will ensure the digital economy is inclusive of all of us, including the most vulnerable New Yorkers,” said Councilman Richie Torres, the bill’s sponsor, at a Thursday news conference.

Chief critic: The National Retail Foundation, a trade group which told the Times that retailers should “decide for themselves whether going cashless makes sense for their businesses.”

Key background: Torres first introduced the cashless ban bill in 2018. It ignited a firestorm of national coverage and sparked debates weighing the convenience of cashless businesses against excluding those without access to credit and debit cards. Philadelphia and San Francisco introduced similar bans in 2019, while New Jersey enacted one statewide. Despite the increase in laws, the Federal Reserve found that in 2018, debit cards surpassed cash as the most popular payment type.

Surprising fact: Massachusetts has required businesses to accept cash and credit since 1978.

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