The Progressive Case for Cashless Stores

Everyone should be concerned about unbanked populations losing access to an increasingly cashless economy

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Last year on November 26, Elgin Brack and his uncle Scott sat in an idling car outside of a Duane Reade in the New York borough of Queens. Around 3:30 a.m., Elgin got out of the car and allegedly entered the store with a gun, where instead of robbing the store of its cash, he reportedly got in an argument with the cashier and shot him in the head. Elgin and his uncle allegedly went on to rob four more stores at gunpoint.

Two days later, New York City Councilman Ritchie Torres introduced legislation requiring all stores and restaurants in the city to accept cash.

Councilman Torres’ bill—one of several similar efforts in states and cities—is trying to solve a real problem. Cashless stores and restaurants like Sweetgreen and Dos Toros are becoming increasingly common, but they theoretically discriminate against people who don’t have access to cashless payment methods like debit and credit cards, a group that is poor and disproportionately black and Hispanic. Most debit and credit cards require consumers to have a bank account, and with 14 million unbanked adults in the U.S.—people who lack a checking or savings account—that isn’t a reality for everyone. By requiring all stores and restaurants in New York City to accept cash, Torres hopes to ensure the unbanked won’t be effectively banned from these stores.

Unfortunately this new policy unnecessarily exposes front line retail and restaurant workers—a group that is also disproportionately poor and people of color—to the risks of carrying cash, burdens the businesses that employ the people Torres hopes to help by forcing them to take on the operational costs of cash, and fails to address the larger problem of unbanked people being unable to access the online economy.

Instead of trying to resist the transition away from using cash, we should be focused on making sure that unbanked people have cheap or free access to cashless payment methods to ensure that everyone can participate in the full economy—both physical and digital.

The unbanked problem

Everyone should be concerned about unbanked populations losing access to an increasingly cashless economy. In the United States, 6.5 percent of the population is unbanked, including 16.8 percent of black people and 14 percent of Hispanic people. Over 50 percent of those who are unbanked said they don’t have enough money to have a checking account.

While the unbanked population has been steadily decreasing (from 7.7 percent in 2013 to 6.5 percent in 2017), ensuring that this disadvantaged population continues to have access to the market should be of concern to both government leaders and the businesses that unbanked people should have access to.

To this point, many people have pointed out that brick-and-mortar retailers that don’t accept cash discriminate against unbanked people. So far, it appears the problem of access to brick-and-mortar businesses right now is mostly theoretical. In a February 2018 article in Eater, Christine Gianakis, the spokesperson for the NYC Department of Consumer Affairs, acknowledged that cashless establishments aren’t “something the DCA has received many complaints on.” The reality is that cashless businesses cater to customers who can already afford $5 coffees and $15 salads and, therefore, are unlikely to be unbanked to begin with.

Do we try to keep the status quo and force businesses to accept cash and its downsides, or do we work to accelerate giving unbanked people access to the cashless economy?

Still, just because a problem doesn’t currently exist does not mean it won’t in the future. Nor should we excuse a discriminatory condition even if it doesn’t appear to be currently causing harm. The question is, do we try to keep the status quo and force businesses to accept cash and its downsides, or do we work to accelerate giving unbanked people access to the cashless economy?

Unlike cases where unbanked people can’t buy things at cashless stores, examples of violent robberies of restaurants and stores are not hard to find. There’s the Target in Manhattan where robbers forced the manager to hand over more than $45,000 at gunpoint. Or the Sweetgreen (now a cashless store) in Union Square where Johnell Turner allegedly pulled out a gun and said, “You really don’t want to die for Sweetgreen.” Or the Baltimore cafe that went cashless after being robbed five times in four months.

In 2018, retail businesses in the United States experienced 5,753 robberies, 57 percent of which were armed robberies; 488 people died violent deaths that year as a result. Many of the people who died were retail sales workers, cashiers, and store managers—people who are often paid at or near minimum wage.

Until recently, cash was a required part of a functioning economy, and the crime surrounding it was an inevitable side effect. For most businesses, this remains the reality. But with a cashless economy, we have an opportunity to reduce the risk that retail workers are put in every day, and forcing businesses to accept cash would be an unmitigated step backward in improving the safety of retail workers.

Perhaps the most obvious case against cash is that it has become a relatively slow form of payment. It requires manual counting by both the customer and the cashier and the shuffle of giving change and putting it away. Chef Nelson German, owner of San Francisco restaurant AlaMar, estimates that transactions without cash are seven seconds faster than those without.

It may not seem like much, but for high-volume restaurants and retail stores, those few seconds can significantly impact their business. Sweetgreen estimates that since going cashless, it’s able to serve up to 15 percent more customers per hour. When a business depends on the lunchtime rush to meet its revenue plan, this can have a huge impact on its ability to survive and grow.

The reality is that the cashiers, dishwashers, and food preparers who work at restaurants are disproportionately poor and people of color. The more customers you can serve, the more staff you need. The more successful your stores, the greater your ability to expand and hire (and promote) even more workers. Any policy that negatively affects these small- and medium-sized businesses risks unintentionally harming the people who work there.

Cash isn’t digital

Amazon, Wish, Brandless, and the New York City government are all online experiences that require debit or credit cards. When looking at the disadvantages faced by unbanked people, the largest problem is that the modern economy is rapidly shifting online, where cash cannot be accepted at all. The inability to shop at discount stores like Amazon, Overstock, and Wish limits access to goods that are often cheaper than those in brick-and-mortar stores. Additionally, there is now a class of products that aren’t even sold in stores: a new breed of businesses like Dollar Shave Club, Everlane, and Brandless are offering superior products for less by skipping retail altogether and selling their goods directly online.

Government services themselves are increasingly being provided over the internet as well. In New York City, those of us who have a debit or credit card can conveniently pay parking tickets online. If you’re unbanked, you’re required to take the trip to pay your ticket in person, taking away valuable time people could use supporting themselves or their family.

While requiring stores and restaurants to accept cash certainly can’t hurt unbanked people, it seems unlikely to actually help them and risks distracting from solving the real problems they face in accessing the online economy.

Between a lack of access to cheap products, products that aren’t sold in stores, and government services provided online, it’s clear that the unbanked are increasingly being excluded from our economy in a much more significant way than not being able to buy a $12 burrito at Dos Toros.

Requiring cash acceptance at restaurants to combat unfair treatment of unbanked people is like putting a Band-Aid on a broken arm. While requiring stores and restaurants to accept cash certainly can’t hurt unbanked people, it seems unlikely to actually help them, and it risks distracting from solving the real problems they face in accessing the online economy.

Debit and credit cards issued by banks aren’t the only way that someone can make cashless transactions. Prepaid debit cards and other alternatives provide an easy and widely distributed alternative to traditional checking accounts. Many convenience stores already stock Visa and American Express gift cards that can easily be used in cashless transactions. Better yet, new services like Bluebird by American Express allow for anyone to have many of the benefits of a traditional debit card without the need for a permanent address or a social security number. In fact, this is already starting to happen: 26.7 percent of the unbanked population is already using prepaid debit cards of some kind.

While we’re still in the early stages of a transition to a cashless economy, policy makers like Councilman Torres should focus on ensuring unbanked people have access to the cashless economy. This could come in many forms: requiring cashless businesses to have vending machines for free prepaid debit cards, subsidies for access to debit card alternatives, or requiring banks to offer products that reduce or remove the barriers unbanked people are facing. By increasing access to cashless payment methods, we will both solve the problem of discrimination in cashless stores and address the much larger problem of access to the online economy.

What doesn’t help progress is a well-intentioned but misguided policy that solidifies our dangerous and inefficient reliance on cash and doesn’t actually address the core issues creating the disenfranchisement of unbanked people.