Philadelphia has become the first US city to ban cashless stores and restaurants, amid backlash from critics that legal tender-free shopping is discriminatory.

Retailers who've adopted the practice may argue that eradicating cash makes for more convenient shopping, but many believe the policy actually discriminates against those without bank accounts or credit cards.

Siding with the critics, Philadelphia Mayor Jim Kenney signed a motion last week banning stores in the city from enacting a cashless service.

As of July 1, any businesses failing to comply with the law will face fines of up to $2,000.

Philadelphia Mayor Jim Kenney signed a motion last week banning stores in the city from enacting a cashless service

Critics say the cashless policy actually discriminates against those without bank accounts, credit cards or those who just prefer using cash

There are exemptions to the statue, with parking lots, garages, and businesses who sell goods through a membership model - such as gyms - able to continue operations as normal.

Cashless policies are increasing in popularity in cities across America, as business owners say the switch from tangible cash to digital payment deters theft and increases efficiency.

But with more than eight million households without bank accounts in the US, opposition to the practice believe it's prejudicial.

Mayor Kenney (above) signed the motion to protect the interests of every day Philadelphians

Philadelphia councilman Bill Greenlee, who co-sponsored the bill, believes the new law will help re-level the playing field.

'I can go into a coffee shop across from City Hall that's cashless and get my coffee and muffin, but the person behind me that has United States currency can't get the same cup of coffee. It's a fairness issue; it creates an us-and-them kind of situation,' he said to CBS.

'We are not asking them to do something they don't know how to do. They accepted cash before,' Greenlee added.

According to the New York Times, New Jersey, New York, San Francisco and Chicago are all considering adopting similar laws.

In Philadelphia, Councilman Allan Domb said Amazon issued a warning that they would re-consider implementing an Amazon Go store in the city if the bill passed.

The Bezos-owned company plans to open up 3,000 cashless stores across the country by 2021. Amazon Go stores have no cashiers and only accept digital forms of payment.

Jeff Bezos' Amazon issued Philadelphia a warning for if the bill passed. They allegedly threatened to withdraw plans for an Amazon Go store in the city

City spokesman Mike Dunn confirmed Amazon told the city the legislation would 'impede' plans for a Go store.

Other stores likely to be affected by the shift include the likes of Sweetgreen. Currently a card-only store, the salad-chain will be forced to re-calibrate if they want to continue business in the area.

In 2018, Shakeshack announced plans to go cashless across the country.

But after a short-lived trial period, the fast-food chain about-turned on the idea after customer backlash.

The city of Philadelphia says it's open to work with businesses concerned by the new law to bring about amicable resolutions. However, their main concern remains protecting the people of Philadelphia.

'Our priority has to be the folks who live here now, who were paying taxes,' Councilman Greenlee said.