More businesses go cashless, but exclude part of the market in doing so.

WHAT HAPPENED: A New York City councilman introduced legislation that would ban cashless stores.

Why it matters

  • Going cashless has seen an upswing in New York City, and is now embraced at establishments ranging from the salad spot Sweetgreen and Dos Toros taqueria to Everlane, Bonobos and United Airlines. Amazon Go forgoes cash and cashiers altogether, with plans to open up to 3,000 stores by 2021—Starbucks also tested a cashless storefront in Seattle in 2018 and relies heavily on its mobile app and payment system. Though part of the cashless revolution, cryptocurrencies and mobile payments like Apple Pay and Amazon Pay haven’t caught on on a mass scale, but more companies are turning to Square for credit and debit card purchases. Banks like Visa are even providing monetary incentives for businesses to reject cash completely (these same banks have a lot to gain from 2-3% swipe fees).
  • Businesses have reason to rescind cash: Cards streamline the payment process, cut down the time it takes to train new employees, and make working at a business safer, preventing robberies and the otherwise necessary armored truck cash transfers. Dos Toros, for instance, found that since launching in 2009, the percentage of customers paying in cash fell from 50% to just 15% in 2018. But the move also necessarily excludes customers—in New York, almost 12% of residents lack a bank account, meaning they are unable to pay with credit cards (which requiring a good credit score) or debit cards (which necessitate maintaining a balance minimum), higher than the national average of 7.5%. Similar proposals to New York’s have also appeared in Philadelphia and Washington, D.C.—Chicago’s initiative failed in 2017. So far, only a few companies have worked to mitigate this effect—United and Walmart sell prepaid cards for customers without bank accounts—but even if brands crave efficiency, they will inevitably shut out some consumers.