Restaurants and shops that refuse to take cash may soon disappear from New York City.
The commerce committee took public testimony on a new bill to end cashless retail last week–and is now about to begin finessing a version fit for the wider City Council.
The bill was referred to the Committee on Consumer Affairs and Business Licensing after its introduction in July by Councilman Ritchie Torres, a sophomore member representing the Bronx’s 15th District. Accumulating 18 other co-sponsors, the bill’s stated purpose is to prohibit retail establishments from refusing to accept cash payments, specifically ones that sell food or consumer goods.
“When you open a dollar bill, it reads ‘This note is legal tender for all debts, public and private.’ Those words remind us that cash is the universal currency. It’s the great equalizer,” said Torres during the hearing. Not everyone has access to debit or credit, but every one of us has access to cash.”
On Valentine’s Day people packed themselves to capacity in the 14th-floor chambers of 250 Broadway. A dozen were slated to provide testimony, while a larger share of the room was simply there to watch and listen, a peppering of reporters among a pool of primarily financial industry analysts.
In his prepared remarks, Torres tied the problem to the city’s deeper, historical inequities. Among New York’s neighborhoods, minority-majority ones are often those serviced least frequently by banks, with residents more likely lacking personal accounts or credit necessary for card holdership. The disparity is a legacy of “redlining” that directed much urban investment since the mid-1930s that avoided majority-black neighborhoods.
Today, one in nine New Yorkers lacks a bank account, with one in four households considered “underbanked,” higher rates than are seen nationally, according to the FDIC. These rates differ by borough, with neighborhoods in the Bronx like the one where Torres’s constituency lives particularly hard-hit. Twenty-one percent of households there lack any kind of banking account, nearly double the percentage in Brooklyn, the next worst affected.
“The history of redlining, the history of financial racism in America is well-documented,” Torres said. “But imagine if you were a New Yorker who has no documentation, or no permanent address, or no credit history or an abysmal credit history. Or you live in a neighborhood where there are no traditional banking options, only predatory finance. Or you fall victim to fees when attempting to purchase a pre-paid card. Given the sheer prevalence of underbanking and poverty in New York City, I worry deeply about the cashless economy and the real-world exclusionary effect it will likely have on the most vulnerable New Yorkers.”
Framing the issue in this lens, he felt it is effectively discriminatory not to accept cash payment for meals and services.
Testimony came from multiple fronts, with the Retail, Wholesale and Department Store Union coming out in favor of the proposal. Michelle Gauthier of Mulberry & Vine, a Tribeca restaurant, was one of those testifying against the bill. Her business went cashless nearly three years ago, she said, “solely for the benefit of my employees.”
“The management of cash can be an incredible burden,” she testified. “We close at 9 p.m. and my employees were consistently getting out around 11 dealing with the cash drawer and reconciliation. Once I went cashless, my employees were getting out by 9:30.”
Eliminating lunch-rush bank runs, speeding up lines and simplifying bookkeeping were among the benefits she cited with the new policy. Gauthier said it had been one of the best business decisions she has made.
“It saddens me that a decision that was made for the best interests of my employees could be misconstrued as classist or discriminatory,” she testified. “Many of my employees are the same people I’m supposedly discriminating against, yet they agree whole-heartedly with my decision to go cashless.”
“You can adopt a cashless business model with the best of intentions,” Torres responded. “Our concern is that it could have the effect of disadvantaging underbanked New Yorkers.”
Leo Kremer of Dos Toros Taqueria, a fast-casual chain, drew attention to the costs of doing business in New York City. Its $15 minimum wage puts pressure on their bottom line, and the transition to cash-free business was a way to reduce overhead. Kremer noted there are costs to handling cash, from hardware like registers, safes and bags, to logistics like hiring armored transport. There are employee costs as well, from training to making workers stay late for the cash count, as well as risks to job security posed by register discrepancies.
“For a business, running an efficient operation is the difference between staying open and shutting down. If you’ve walked around New York City, you’ll see many vacant storefronts. Business survival is not a given, and we feel that new laws should not be introduced to make running a healthy business even more challenging than it already is,” he explained. “I think it’s worth pointing out that Massachusetts has an existing rule against being cashless, and it’s one additional reason, when we decided to expand into a second market, we chose Chicago rather than Boston.”
While a few states and municipalities around the country are looking at adopting a similar policy, the Commonwealth has the only ban on cashless businesses currently on the books. It adopted that back in 1978.
Kremer also cited safety as a consideration. Dos Toros locations had twice been robbed prior to the company’s shift away from cash. Kremer said its stores haven’t had the same problem since.
Legislative affairs director Casey Adams of the Department of Consumer Affairs provided input on some of the practicalities of the bill. On the whole, he acknowledged that financial underrepresentation is a problem the city is taking steps to mend, adding that the department was supportive of the bill’s aims. But there would be language to work out first, as the bill as written remains unclear in parts.
“We’re leaving the door open to hearing more from people who have more direct experience here. High denomination bills are just one example that’s very common for these kinds of businesses. Their other concern of course would be someone who wants to come in and pay with all pennies, for example,” said Adams. “We believe that businesses should accept cash, that they shouldn’t send the message to underbanked and unbanked New Yorkers that they can’t access goods and services at those businesses. We’re also saying that the businesses that actually accept cash, or don’t accept cash, and work with consumers every day, and the workers who are asked to handle that cash in those businesses, may have concerns of which we’re not yet aware.”
The bill is still being redrafted before the five-member commerce committee takes it back up. If given their blessing, it will head back to the City Council for possible consideration. A third of the Council has already signed on as co-sponsors.