By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
Just a short post, conveying some good news in a skirmish in the ongoing war on cash: a victory for all us who buy things in New York City.
The New York City Council approved legislation on Thursday that bans stores, restaurants, and other retail establishments from refusing to accept cash.
Businesses that don’t comply will be smacked with fines ranging from $1000 to $1500.
According to USA Today :
“No longer in New York City will brick-and-mortar businesses have the right to refuse cash and effectively discriminate against customers who lack access to credit and debit,” Ritchie Torres, the bill’s chief sponsor said in an emailed statement. “The marketplace of the future must accommodate the needs of vulnerable New Yorkers.”
There was little dissent over the measure that Torres introduced in November 2018 and which was approved by a 433 margin. according to the Daily Mail.
By making this move, New York joins other cities and states that have prohibited cashless businesses, including New Jersey, Philadelphia, and San Francisio. Massachusetts has long set the standard here, with a provision dating to 1978 that requires business to accept cash, according to The New York Times. Chicago is now mulling a similar measure.
New York is resisting what USA Today extols as a growing trend:
A growing number of restaurants and other retailers have stopped accepting cash in order to speed up transactions, reduce the risk of theft and accommodate the increased use of credit and debit cards, as well as digital wallets like Apple Pay and Google Pay, to buy services and products
No Bills Larger Than $20
The measure allows businesses to refuse to accept bills larger than $20.
The measure will take effect ninety days after city mayor Bill deBlasio signs it. de Blasio has thirty days in which ti decide whether or not to sign the legislation, and he has said he supports the bills intent, and intends to put it through a review process. Given the overwhelming support for the measure in the city council it is extremely unlikely he will veto the bill.
As the Daily News reports:
Mayor de Blasio’s administration expressed support for the “cashless ban” during a February 2019 hearing on an earlier version of the bill. The legislation was since amended to allow stores to refuse larger bills after the administration noted some businesses worry about accepting them because they can put the store and employees at risk.
Casey Adams, then an official with the Department of Consumer Affairs, said during the hearing that a restaurant owner estimated that “accepting cash would force him to increase prices at least 10%.” But the administration still supported the essence of the bill.
We believe that businesses should accept cash,” Adams said during the hearing. “They shouldn’t send the message to underbanked and unbanked New Yorkers that they can’t access goods or services at those businesses.”
Cash Bans Disproportionately Hurt the Poor
Many press accounts mention the exclusionary impact of the move towards cashlesss transactions on those who lack access to a bank account, a credit or debit card. According to in the Daily Mail:
In the introduction for the motion Thursday morning, Rafael L Espinal, chair of the Committee on Consumer Affairs and Business Licensing, said he wanted to ‘draw attention to some unintended consequences of cashless technologies’.
‘In a modern financial hub like New York City it might be easy to assume everyone has easy access to banking facilities and technologies that allow cashless transactions – unfortunately this is not the case,’ he said.
Espinal said that cashless-only stores are marginalizing disadvantaged groups, because many residents in New York don’t have access to a bank account.
‘Across the city there are large populations who are disconnected from formal banking institutions. In 2013 close to 12% of the city’s population were completely unbanked,’ he said.
This is not the only service for which the City Council wishes to ensure access by the underbanked. According to the New York Times;
But New York City officials have also targeted ride-sharing and meal-delivery apps, as well as facial recognition for building entries — all in an effort to blunt the impact of advancing technology on those who are unable to use it because of financial circumstances, unwilling to for philosophical reasons or vulnerable to its darker aspects.
Another problem with cashless payment systems mentioned by the New York Times is their vulnerability to hacking by cybercriminals who steal personal data.
Cashless Transactions Benefit Banksters, and Allow Monitoring of Our Economic Lives
Yet I’ve yet to see anyone unpack two insidious aspects of the war on cash: to see the monster glowering, smacking its lips, and chowing down on each and every cashless transaction.
First, by insisting on cashless forms of payments, businesses allow those glowering banksters to siphon off a small portion of every transaction in the form of their fee for using these cashless payments systems. They already get their pound of flesh from me in so many ways, why should I also allow them a bite – even a tiny one – out of my bagel? But this aspect of the creeping financialization of everything isn’t mentioned in the press accounts discussing the New York City move.
Second, by forcing us to go cashfree, businesses and restaurants make our preferences apparent to financial overlords. and other who hoover up financial data. (Mis)use of same is not the exclusive purview of cybercirminals. Why should my sushi habit or or my coffee preferences be yet another thing that can be assessed and analyzed, and monetized behind the scenes? Shouldn’t these be secrets that can be limited to me and the businesses that I patronize?
Kudos to the city Council for requiring New York City businesses to accept cash.
Here’s hoping Australia follows suit. I’m not sure what the state of the legalities is here, but it’s not uncommon to see ‘card only’ businesses in cities here.
Mind you our payments system is, I gather, a lot better than the US, generally speaking. I personally seldom carry cash, and sometimes people react with genuine surprise when I tender a note or coins instead of a card.
What about the cash ban that the RBA is trying to ram down our throats.
New York may be on strong legal ground here with this decision. Consider – The US Supreme Court has stated in law that money is free speech in the Citizens United v. Federal Election Commission case, right? Then it could follow that any bar, restaurant or retail refusing to accept cash is therefore guilty of restricting free speech which happens to be against the First Amendment. And which of these establishments wants a picket line outside them saying that they are against the First Amendment before it even goes to trial?
I do remember seeing Mitch McConnell hawk “Money is free speech” in front of the senate on CSPAN some years ago. I think you got a solid idea here.
The First Amendment applies only to government, not private businesses.
The first amendment has absolutely nothing to do with it. I used to teach economics way back when, and the lesson on money would start with the question “What makes this dollar bill ‘money’?” The answer, printed in small caps on its face, is the sentence “this note is legal tender for all debts, public and private.” So if a merchant refuses your money when its time to pay the debt indicated on your bill, it has by definition waived any possible legal action to enforce that debt (but, of course, nobody should expect any american court to respect the plain language of the Statutes and the Constitution).
What is it about the usa that they insist on cheques and cash. As a European who travels, it is so much easier to use an electronic payment method at home and abroad. Should the barter system also be enshrined in law. Having no cash reduces theft, the risk of running out, cost of banking etc. Contactless works in most places and countries, I can track my expenditure. Rather than insisting on keeping cash, look at why is there is portion of the population that is unbanked and solve that as opposed to the symptoms.
Your questions were all addressed in the article. Electronic payment may be easier but there are many poorer people who don’t have credit cards or debit cards. Plus everywhere you use your electronic payment method is a potential vector for having your payment info stolen. Plus cash allows you some measure of anonymity.
Cash also allows anonymous transactions without a middleman collecting a fee.
As a former bank employee, I can tell you that “what happens in Vegas” only “stays in Vegas” if you pay in cash. I could see every single little thing people paid for when they used their card and some people had very interesting histories…
Get rid of cash and kiss a little more of your freedom goodbye.
lyman a.b. — your response to Robert is perfect as far as I’m concerned. Thanks for saving me the trouble.
Most press accounts of the city council’s action focussed on how it helped the poor. But the other things I discussed – reducing the opportunity for cybercrime, protecting privacy, depriving banksters of the bite they take from every transaction – benefit everyone who opts for using cash.
I appreciated your adding those two paragraphs at the end. Thank you. It would be nice to have a pol have the courage to promote these important points. I have to guess once they get into office they lose the ability to say anything sounding anti-govy.
Forced cashlessness would make my money hostage to whatever entity it was “stored” in. They could charge me a portion of my own un-cash money any time I wanted to spend any of it from their strong hands.
And every electronic transaction would be thoroughly recorded and data-captured. And other reasons against forced-cashless which I am too tired to think about right now.
But if you like being one of Marlin Perkins’s bears, ;you go right ahead.
I agree 100% with your rant about privacy. Between using credit cards for public transport payment (instead of e.g. Oyster Cards in London — which also track the passenger, of course) and Uber/Lyft tracking travel by cars, and supermarket “loyalty cards” which track grocery purchases, now they want to track your casual dining purchases as well. (And also seek to keep out the lower-class, unbanked “riff raff”*.)
And if you don’t think they are selling or hoping to sell these data to insurance companies or divulging it to police without the necessary warrant, I have a Brooklyn Bridge to sell you (cash only accepted :).
*Per Basil Fawlty in the timeless “Gourmet Night” episode of Fawlty Towers.
Yes, I pay for all my cabs in cash, I don’t want a record of my having taken the ride.
Cash is one thing where the serial number really means nothing, and an interesting movie about money movement is Twenty Bucks from 1993, worth a gander.
I applaud cash being the last bastion of anonymity, long may it wave in front of hand for payment due.
I usually pay by credit card, but when I do use cash and after tendering the note to the cashier, and only if they take a counterfeit detection pen to it, does my opening occur that allows me to ask how many fake ones do you get a week?
They’re ‘experts’ of sorts, and nobody has ever asked them a question which speaks right to the heart of their expertise, yes indeed.
They always spill their guts, and I haven’t yet have a cashier tell me “oh, never”.
Most will tell you 2-5x a week.
Try it for yourself, inquiring minds want to know.
2-5 a week equals $40-$100. Plus the extra time and bookkeeping costs of cash make cashless attractive for shops, even after the bank costs are factored in. As for anonymity, cash isn’t as anonymous as you think if the cops take an interest in you. Corporate abuse of privacy in financial transactions should be taken care of via a legal framework.
I shop at the farmer’s market every week (summer and winter) and always use cash. Small farmers have such narrow profit margins that they need every penny and credit card use reduces their already small income.
Excellent point, this. It doesn’t only apply to small farmers, of course, but they are a perfect example.
Here is a heartwarming — or heartbreaking — story for you. Just before the Christmas [bah, humbug!] holidays I tipped a Cambodian woman at my local French market 50 euros… a pittance for me but a rather large amount for her, dear thing. She has a small, rather bedraggled stall of motley produce and makes perhaps 50 EUR per day if she is lucky.
On my return the other day she told me she sent the money back to Cambodia to pay for a friend’s operation of some kind. Needless to say I was terribly moved.
Just an example of how small cash gifts can make a real difference in this sad world. And much nicer not to have all these transactions tracked in some global database!
I’d like to see this extended to EZ Pass toll collection. One of the reasons I never got a transponder was because their network is basically run by the financial conglomerates.
Just last month, another Naked Cap reader and I were meeting for lunch in NYC’s Williamsburg neighborhood. We went from one restaurant to another filled with affluent, youngish, mostly white hipsters and refusing cash. Only on our fourth location did we find a bar which took cash, which I insist on using in such situations.
Afterwards I realized, “Who is working in the kitchens in those restaurants?”
To put it bluntly, Mexicans without papers and therefore likely without bank accounts and credit cards.
How, then, do those workers get paid? Either they’ve got phony Soc Sec numbers or their bosses are paying them in … cash.
So cashless restaurants are basically saying, “You’re welcome to work (be exploited) here, but not welcome to eat here.”
Kudos to NYC Council for taking this discrimination on.
Let’s not neglect that “cash”, physical fiat, is a means for large users/hoarders (e.g. “the banks”) of the Nation’s fiat, a public utility, to escape paying for it, i.e. negative interest.
But if we are ever to be free of banks and their hostage holding of the economy or at least the use of the public’s credit but for private gain, then surely all their explicit and implicit privileges/subsidies should be abolished.
So if “cash” is to be retained as a form of fiat, then the abuse of it by the banks and other large fiat users/hoarders should be precluded by some means such as:
1) date stamps to enforce negative interest
2) limits on the issue of new cash to accommodate individual citizens ONLY and then only to a reasonable extent.
Anecdote related to this: a coffee shop near me that I frequent went cashless a year and change back. However, a few months after this bill had been announced by the councilmember, they quietly reversed the policy. So it’s possible that a lot of the cashless business have already adjusted to this law as they saw the writing on the wall.
Another issue related to both the underbanked and the fee skimming is that a lot of people with limited access to cashless payment systems only have cashless options with high fees. Think minimum wage employees paid to a charge card that doesn’t charge a fee for ATM withdrawals but does charge a hefty transaction fee if it’s used to make a purchase on a retail POS system. The whole thing ends up becoming a de facto poor tax.
Of course all citizens, including the poor, should be allowed to use their Nation’s fiat in electronic form, just as depository institutions do, via debit/checking accounts at the Central Bank itself and for FREE up to reasonable limits on account size and transaction rate.
That they can’t and all other privileges for depository institutions, including deposit guarantees, is a gross violation of equal protection under the law and the root of all sorts of injustice and evil.
This is good, but there are still a number of places that refuse to except cash. Uber and Lyft do, requiring use of the app. In addition, a number of parking lots/garages are card only (and entirely automated). Some are even going away with the cards, instead relying on apps. And this is happening on government owned lots.
I was criticized for using my credit card on a $10 auto safety inspection. Shops already complain, they don’t make money on the service and then you add on the transaction cost they lose money. I also prefer to use cash at bars and restaurants where theft is more likely to occur.
I like paying the top in cash. Less skim from the restaurant and the employee gets they money.
Yes, I also try to tip in cash. I agree that there’s greater likelihood that my tip goes to the employee rather than the establishment that way.
Glad some cities have done the right thing. It should be a Federal law.
Let alone the inhuman treatment of those with no credit cards or bank account, why do all of the promoters never mention what is supposed to happen when the power goes out and people need food and emergency supplies?
Anyone else remember the time (Pre Bill Clinton and all those Bank Mergers) when citizens were shamed for using credit cards excessively? These horrid Cashless promoters are literally promoting fees on the most vulnerable to buy basic needs. Where the Hell is Congress?
It is a federal law. Google sent me to, among other places, Forbes, which tells me:
Every dollar spent in cash hands merchants four to six cents more per transaction, often the entirety of their profit margin on things like groceries,
Plus, it saves the interest charges the merchant would pay to borrow money to make up for the lack of cash flow. Every dollar charged on a credit card may cost the holder .29 cents per year.
Otoh, holding physical fiat, aka “cash”, has costs of its own wrt security. Otherwise, why are Walmart and others so willing to act as cost-free providers of cash to their customers?
Several decades ago when I had a little mail-order side business my merchant card fees were higher than 4-6 cents per transaction. IIRC, they were more on the order of 4-6 percent once the monthly service fees were added in to the per transaction fees. Keep in mind that I was very much a bottom-tier merchant so if I wanted to accept cards I had no choice but to take whatever “deal” I was offered.
What about illegal transactions? How does one buy drugs these days? I haven’t for a number of years, but it certainly was always with cash. And gambling? I would argue that practically everyone has made at least one purchase they want no one to know about.
According to MMT, banks issue money every time they issue credit to a borrower. That “money” has no physical counterpart, no “legal tender” status, and no real security. It is not backed by a government. All is well while the Economy is expanding. When the Economy is contracting and varieties of fiat money are aggregated on their face value, cash begins to look good. Even if the Fed tinkers for awhile, value has to come from somewhere. Cash, so far, stores value.
I hate to tell you, but what you say is very confused. There is no difference, in terms of value, between a deposit in your checking account and physical cash.
In addition, deposits created via new loans, when deposited in a checking account, are government guaranteed up to $250,000.
And that cash in your mattress would burn up in a fire.
In the case of a bank failure would the guaranteed funds be paid out immediately or would the depositor have to wait for administrative and legal procedures to play out, which could take some time? In that case, cash would seem to have the value she claims.
Small banks are routinely merged into bigger banks over a weekend, with nary a hitch.
If we were to have the sort of failures worried about in the GFC and that never occurred, and banks on a widespread basis had a bank holiday, you can be assured most commerce would be shuttered until it was over.