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State legislators in New Jersey recently passed a bill that will make it illegal to run cashless stores in the state, according to PYMNTS. The proposed law would apply to point-of-sale (POS) purchases and excludes mail, telephone, and online sales, as well as payments at car rental companies.
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The bill would fine violators $2,500 for a first-time offense and $5,000 for the second, with additional violations set to be considered unlawful practices under the state’s Consumer Fraud Act. If the bill gets passed, it will make New Jersey the second state in the US to outlaw cashless retailers, following Massachusetts.
Payments firms, retailers, regulators, and consumers have expressed mixed views on the issue of going cashless.
- Those opposed to the bill argue that they made their business cashless to increase efficiency or safety. Some retailers in New Jersey — including Amazon, which operates a location of its cashless Amazon Books store at a mall in New Jersey — have expressed opposition to the bill. Some pointed out that they went cashless as a safety measure to reduce the risk of robbery, and other businesses have made the same argument: Last year, quick-service burger chain Shake Shack received backlash for making a New York City location cashless — causing it to abandon the cashless model — but the three main benefits it cited were employee safety, restaurant efficiency, and overall speed. Further, retailers’ decisions to stop accepting cash could be tied to the fact that US consumers are gradually becoming less reliant on cash: 29% of US adults in 2017 said they didn’t make purchases using cash during a typical week, up from 24% in 2015. For payments firms that collect per-transaction fees on card swipes or digital payments, retailers going cashless is in their best interest. Visa is a huge proponent of cashless payments, hosting challenges that reward small businesses in the US for cashless initiatives, and has highlighted benefits of cashless payments like the safety it provides merchants and the speed of contactless payments specifically — which take an average of one to two seconds to process compared with six to seven seconds for cash.
- But advocates of the regulation assert that cashless businesses can isolate customers who don’t have access to cards. This legislation reflects a similar position authorities in other markets where cash is declining faster than it is in the US have expressed — including China and the UK — stating that accepting cash is illegal and can put certain people at risk. In the US, 25% of the population is un- or underbanked, a segment that will ultimately perpetuate cash usage and necessitate cash acceptance among retailers. Meanwhile, other people might want the option to pay in cash: 67% of respondents to a Cardtronics study said they don’t like when stores or restaurants don’t accept cash, and the same share thinks there should be laws restricting merchants from rejecting cash payments.
See Also:
- PayPal hits $164 billion in total payment volume
- Mastercard’s latest earnings showed solid growth to end the year
- PayPal Credit has reached $50 billion in total payment volume
Source: Business Insider