Tender is the might: Why New York and other cities are mandating that stores accept cash

It wasn’t so long ago that businesses spurned credit cards because of swipe fees.

• In 2013, 58% of small businesses reported they were regularly asked by customers to start accepting credit cards, according to a WePay survey cited in Forbes at the time.

These days, it’s not plastic, but rather cash, that seems to be the scourge of payments. You often can’t even use cash to pay for those peanuts and Cracker Jacks at the ball game, since most MLB stadiums have gone cashless.

Buck-ing the trend: Don’t throw out that cash register yet.

• In 2019, San Francisco passed a requirement for businesses to accept cash, as did the states of New Jersey and Rhode Island.
• New York City passed a law that requires businesses to accept cash in 2020.

Not everyone is complying, according to New York’s Department of Consumer and Worker Protection.

• It has received 600 complaints about businesses not accepting cash since the city’s law took effect in November 2020, according to data it provided to Retail Brew on Aug. 8.
• The agency had conducted 219 inspections of businesses and issued 164 violations.
• Businesses were fined a total of  $161,095.

Taking their licks: In 2008, Van Leeuwen Ice Cream started as a food truck in New York City and now has 19 locations citywide, stores open (or opening soon) in six other states, and national retail distribution at national chains, including Walmart and Target Whole Foods.

In 2021, Van Leeuwen was fined $12,750 for violating the city’s cash-acceptance policy, after the city received “a half-dozen” complaints about it, according to the New York Post.

Van Leeuwen did not respond to a request for an interview.

So I (Andy) visited Van Leeuwen’s East Village location on August 17. After photographing a sign on the door that declares “We’re cashless,” I went in, ordered a small bowl of pistachio ice cream, and tried to pay with a $10 bill. True to the sign, but in violation of a New York City law that had been in effect nearly 21 months, the counter employee said they were “card only” and did not accept the cash. The employee, who was very friendly, noted seeing me photographing the sign and insisted I take the ice cream for free. (I didn’t.)

A photo of a  sign explaining its “cash-free” policy in 2017 (before the ban) said it ensured customers “faster service” because servers weren’t making change, and that it was “better for the environment” because of “less fuel and emissions from vehicles moving cash.”

Twitter user @aclubsandwich, who posted the photo of Van Leeuwen’s sign, had this take: “cashless restaurants/retail shops are classist.”

Unbanked of America: Credit cards and Apple Pay are convenient, but for many, they’re also a luxury.

• An estimated 9.4% of New York City households (301,700) are unbanked, New York City’s Department of Consumer and Worker Protection found in 2021.
• The national average of the unbanked was 5.4%, as of 2021.

Melissa Autillo Fleischut, president and CEO of the New York State Restaurant Association, said her group was opposed to the cashless ban when it came before New York’s city council.

“The association usually wants the operators to be able to decide what’s best for their business and to keep regulatory authorities and government authorities out of it,” Fleischut told us.

But the debate about the regulation was “pretty eye-opening” for her, especially the data about the unbanked.

“The bottom line is we don’t want any customer to be turned away if they want to be a paying customer in our establishments,” Fleischut told us. “We need all our paying customers right now.”

Pay attention: Joel Bines, a retail industry consultant and managing director at the consulting firm AlixPartners, and author of The Metail Economy, questions how the debate over cashless typically is framed.

“The problem with the debate is it’s framed in a classist argument for the people that want to maintain cash and it’s framed in an efficiency argument for the people that want to get rid of cash,” Bines told us. “But it’s never framed in a strategic capacity.”

And when it is?

“The way I frame this discussion with CEOs and boards that I talk to is, ‘I want you to name me another industry where a winning strategy would be making it more difficult for your customers to do business with you.’” Bines said. “And that’s usually the end of the debate.”

But if everyone saw it that way, lawmakers might not need to introduce bans on cashless businesses.

“For it to have reached the level where politicians feel as though they need to step in and protect consumers from the retail and restaurant businesses is just absurd to me,” Bines said. “Because if making it harder for your customers to buy stuff from you is part of your long-term strategy, then please tell me about it so that I can short your stock.”