The rising adoption of contactless payments in retail and the restaurant industry is igniting a backlash in multiple cities and states as the business payment model requires customers to use mobile apps, credit or debit cards and is increasingly eliminating cash payment as a consumer option.

The backlash is related to concerns that millions of unbanked and underbanked consumers will be shut out from the establishments.

In New York, activists from the Retail Action Project plan to march on an Amazon bookstore in New York's Herald Square during the Wednesday evening rush hour and attempt to make a purchase with cash. They will be accompanied by City Council member Ritchie Torres, who has sponsored legislation that would ban cashless stores in New York City. 

Public hearings are scheduled Thursday on the proposed law, which would require retailers and restaurants to accept cash payments. Chelsea Connor, spokesperson for the Retail, Wholesale and Department Store union, which is part of the protest movement, told Mobile Payments Today in a phone interview that cashless stores present a disproportionate challenge for members of her union, communities of color and low-to-moderate income consumers in New York in general.

"A number of our members basically go unbanked," said Connor, who said African American and Latino populations generally are at much higher risk of not having access to a bank account or credit card, which would effectively lock them out of cashless retail establishments.

Protestors argue the expansion of cashless retailers like Amazon Go are going to either lock these consumers out of additional retailers, or place an undue burden on them due to the fees required for stored value cards or other loadable devices to provide access to mobile or contactless purchases.

A spokesperson for Amazon declined to comment on the issue, but the company has said in the past it plans to open an Amazon Go store in New York. Amazon Go has opened in Chicago, Seattle and San Francisco but has not faced near the same level of political backlash. Amazon has also announced plans to open part of its new headquarters in Long Island City, Queens, and reportedly is reconsidering the move after local backlash to the subsidies and potential impact on local rents. 

The New York backlash comes after previous efforts to ban cashless operations in Chicago, Washington, D.C., and more recently in New Jersey and Philadelphia. Massachusetts has a 21-year-old law that requires retailers to accept cash.

In Philadelphia, Councilman Bill Greenlee is proposing a bill that would require retailers to accept cash payments. The Philadelphia bill, like others, would provide exceptions from the law, including wholesale clubs, parking, internet, phone and mail transactions.

Earlier this month, state legislators in Trenton, New Jersey, passed a measure that would require retailers to accept cash.

"Many people do not have access to consumer credit and any effort by retail establishments to ban the use of cash would be discriminatory toward those people," said Assemblyman Paul Moriarity said in an announcement of the bill’s passing. "The U.S. dollar is legal tender and should be accepted at any retail establishment in N.J."

Limited access

According to a Federal Deposit Insurance Corp.report released in October about 48.9 million U.S. adults in 24.2 million households were considered underbanked in 2017, representing 18.7 percent of all U.S. households. The term underbanked in the survey represents a family with an FDIC-insured account, but also uses financial services outside of traditional banks.

The report showed 6.5 percent (14.1 million) of U.S. households were unbanked in 2017, which was the lowest percentage since the financial crisis.

The National Retail Federation said fears about cashless retail are overblown, and retailers are not moving toward eliminating cash in significant numbers. Among the factors preventing that is a two-decade fight NRF has with credit card companies over the fees from accepting credit and debit cards.

"There's really not a need for legislation, because of the fact that cashless is so much the exception to the rule," J. Craig Shearman, vice president, government relations at NRF, told Mobile Payments Today in a phone interview.

Cover photo: iStock