Will Philadelphia’s Cashless Store Ban Stifle Payment Innovation?

In July, Philadelphia will become the first major U.S. city to institute a ban on cashless stores, raising the question of how retailers will approach next-gen payments methods if more municipalities follow suit. The ban won’t apply to transactions that take place at wholesale clubs such as Costco and BJ’s that operate through a membership model, parking garages or lots, or rental car companies.

Cashless concepts would enable both retailers and credit card providers to better track consumer spending data. However, a key argument against cashless stores is that they are discriminatory against lower-income shoppers who often pay with cash. After Philadelphia Mayor Jim Kenney signed the bill into law, his spokesman noted that 26% of city residents live below the poverty line, and many don’t have a bank account.

The National Retail Federation (NRF) opposes the new Philadelphia law and similar proposals, saying businesses should be able to decide which payment methods to accept.


Despite the law’s inclusion of a provision designed to accommodate the checkout-free Amazon Go, Amazon had threatened to scrap plans to bring the concept to Philadelphia if the law was passed. It remains to be seen if the e-Commerce giant will keep its word. In total, Amazon forecasts opening 3,000 Amazon Go convenience stores in metropolitan areas by 2021, already having opened 10 across the U.S.

Retailers first need to determine where else a cashless ban could potentially be instituted before taking any serious action. Under a 1978 law, Massachusetts became the first, and remains the only, state that requires businesses to accept cash. Legislators in the state of New Jersey and the cities of New York, San Francisco, Chicago and Washington, D.C. are considering similar bans. In the case of Amazon Go and other cashierless checkout companies that operate test locations in San Francisco, these companies would likely have to ask for exemptions of their own.

While payment cards have slowly become a fixture of American society, consumers used cash for approximately 30% of all payments in 2017 — still the most of any option — according to the Federal Reserve Bank of San Francisco. Cash outranked debit cards (27%), credit cards (21%) and other payments (22%), including checks.

“Innovation and frictionless shopping experiences are one thing and will make your shopping experience a bit more efficient,” said Brandon Rael, retail strategist and customer experience consultant in a RetailWire discussion. “However, it’s clear that we are not fully prepared as a society to go completely cashless. An option for Amazon and other retailers to consider is to provide the capability for people to deposit cash into the retailer’s payment system, similar to what Starbucks does with their app, however, in this case with cash on-site.”

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