As Cashless Stores Grow, Repercussions Grow

NEW YORK (AP) – Hembert Figueroa just wanted a taco.

So he was surprised to learn that the dollar bills in his pocket were not good at Dos Toros Taqueria in Manhattan, one of the many and many expanding establishments in the United States where customers can only pay by card or smartphone.

Cashless stores are provoking negative reactions among some liberal activists and policy makers who say the practice is discriminatory against people like Figueroa, who lack bank accounts or who rely on money for many transactions.

The metalworker Figueroa had to stand on his side, holding his taco, until a sympathetic cashier helped him find another customer willing to pay for his meal with a card in exchange for his money. ; species.

"I had money and I could not pay," he said.

The issue caught the attention of the media this week when Amazon retail giant caved to pressure from activists and agreed to accept cash in more than 30 cashless stores, including cash and cash. including its Amazon Go convenience stores, which have no cashiers, and its bookstores. Amazon refused to say when the change would occur.

No federal law requiring stores to accept cash, so legislators are working on this issue at the state and city level.

Earlier this year, Philadelphia became the first city to ban cashless stores, despite Amazon's efforts to dissuade it. New Jersey quickly adopted a state-wide ban and a similar ban is passed on to New York City Council. Before this year, only one country forced companies to accept cash: Massachusetts, which passed a law almost 40 years ago.

"The potential social cost of a cash-free economy in my opinion outweighs the potential benefits to businesses," said Ritchie Torres, a South Bronx city councilor in New York, who presented The law project.

Policy makers argue that, while cashless stores and restaurants are not widespread now, this practice could extend to more services, including some for low-income clients.

The Sam's Club, owned by Walmart, opened its first store in Dallas last year with technology that allows customers to scan and pay for items with their smartphones. Kroger has installed similar technology in approximately 400 stores across the country.

The stadiums of Tampa Bay, Florida and Atlanta have begun to move to cash without money, and the Barclays Center, where the Brooklyn Nets play, is now also without money.

"I wanted to stop this before it became a commonplace thing," said William Greenlee, Philadelphia City Councilor, who introduced the city's bill.

According to figures from the Federal Deposit Insurance Corporation, supporters of bans without cash fear that the technology is too fast for the 6.5% of US households – 8.4 million – not having a bank account.

Figueroa is part of the much larger group considered "underfunded", which means that they have a main bank account but regularly use alternative financial services such as check cashing. According to the FDIC, more than 24 million US households are underfunded.

The issue disproportionately affects African American and Hispanic communities. About 17% of African-American households and 14% of Hispanic households do not have a bank account, compared with only 3% of white households, according to the FDIC.

Figueroa, an immigrant from the Dominican Republic, only opened a credit union account two years ago. It took another year to accumulate enough funds to use his debit card regularly.

From time to time, he always resorts to a check caster where he needs money quickly, and much of his income comes from his weekend work as a busboy. He has no credit card or applications on his phone and has only made three online purchases.

Business owners who do not use money say they follow most of the customers who drop cash payments. Retailers are under pressure to meet the high expectations of their customers for fast, transparent service led by companies like Amazon, Uber and Grubhub.

Leo Kremer, co-owner of Dos Toros, the taqueria where Figueroa attempted to use cash, said that the volume of cash transactions in his stores had dropped from about 50% ten years ago to 15%. % last year. This has made the cost and logistics of handling the species particularly painful. Before spending any money, the premises of Dos Toros were robbed twice.

Nevertheless, Kremer said the company would adapt if it was legally required to accept cash.

"There is no bad guy on this issue. Everyone is trying to do the right thing and make sure there are no unintended consequences, "he said.

Critics say the ban on cashless stores is an overreaction.

There is no overall estimate of the number of non-cash stores in the US, but this remains a rarity. In New York, the trend seems to be gaining ground, mainly through fast-food restaurants, such as Dos Toros. Stores that require a minimum purchase for non-cash payments are much more common.

"To call it a trend is a bit exaggerated. A handful of retailers are trying this in certain situations here and there, but it's not something that the average customer expects to see in any shopping mall anytime soon, "said Craig. Shearman, spokesperson for the National Retail Federation. in Washington.

According to a study by the Federal Reserve in 2018, even in the entire US population, cash is still used in about 30% of transactions. The study found that most consumers preferred to pay cash for transactions of less than $ 10.

Indeed, Shake Shack abandoned his plan to open cashier-free stores after his first such store in Manhattan provoked a brutal reaction from customers. Instead, the hamburger chain is guarding the cashiers during the installation of order-picking kiosks in several stores.

In a testimony before a committee of the New York City Council, Kremer argued that companies that "systematically serve the non-trivialized and underfunded population do not go without money. It would not make sense to them. "

But financial experts who work with low-income people advise against making assumptions about buying preferences or the buying power of those who depend on money.

"I am uncomfortable with the idea that some people do not shop there, so it's fine to exclude them," said Justine Zinkin, CEO of Neighbor Trust Financial Partners, a non-profit financial consulting company affiliated with the Figueroa credit union.

Like many New Yorkers, Figueroa regularly spends between $ 10 and $ 15 a day for lunch. He says that he would return to Dos Toros with his debit card now that he was aware of the cashless policy.

"It was a good taco," he says.

Around him, the trade evolves quickly online and without money. Only on the map, Uber eviscerates the yellow taxis that he greets once or twice a month. He does most of his shopping at convenience stores and drugstores and has never availed home delivery services offered by chains such as Walgreens and CVS to keep Amazon at bay.

Even services like Citi Bike, the bike sharing company, require a debit or credit card. The service, which is affordable and even offers a monthly program of $ 5 for low-income residents of New York City, asks people without a debit or credit card to open an account in a credit union.

Mr. Zinkin pointed out that, in the digital era, there is an urgent need to find ways to better involve low-income people in the banking system, including by obliging banks to offer free accounts and encouraging them to do so. to open branches in underserved areas. According to a 2015 report by the New York City Comptroller's Office in the Bronx, where Figueroa lives, the borough has the lowest concentration of bank branches per household in the country, while check cashing is common . Nearly one-fifth of the Bronx households do not have a bank account and one-third are underfunded, according to 2013 figures cited in a study of the Urban Institute.

"We hope the spotlight will stop punishing small businesses to the financial services market," said Zinkin. "We do not want to be afraid of technology and hope that this technology will disappear."