Cash Proves Resilient Even As Regulation to Ban Cashless Stores Builds Steam

With momentum building to ban cashless stores, a rough consensus seems to be emerging that the United States will never have the cashless society futurists have predicted for decades as first cards, then e-commerce, and now mobile payments took root.

To be sure, research released Tuesday by Square Inc. shows a fast-growing consumer preference for digital payments at the small and medium-size restaurants and retailers that use Square’s point-of-sale equipment. In just the four years since 2015, the percentage of transactions under $20 paid for with cash has slid from 46% to 37%, the company said.

Consumers are also increasingly willing to pay with cards for smaller and smaller transactions, Square’s data shows. Four years ago, half of buyers used a card for an $8 transaction. Now, half are using a card for a $4.50 purchase. And the trend toward cards for smaller purchases is spreading beyond metropolitan areas to suburban and rural locations, the company says. Yet, only 10% of Square’s merchants accept no cash at all.

Still, any urge to exclude cash is running into strong regulatory headwinds. Fearing that merchants that go cashless would discriminate against the poor, local governments are starting to require businesses to accept cash. So far, such bans have passed in San Francisco and Philadelphia. Two states, New Jersey and Massachusetts, also have such laws in place, with the latter’s ban in effect since 1978. Meanwhile, Chicago, New York City, and Washington, D.C. have legislation pending, as do Connecticut, Oregon, and Rhode Island.

Legislation on the federal level was also introduced last week by U. S. Representatives from Rhode Island and New Jersey.

The backlash against no-cash stores is such that Amazon.com Inc. in April announced it would permit cash transactions at the Amazon Go convenience stores it plans to open across the country. These stores are specifically wired and programmed to process transactions against cards on file maintained by customers. So far, Amazon has opened 10 stores but plans as many as 3,000 nationwide by 2021.

Even San Francisco-based Square, often seen as an iconic proponent of mobile-based transactions, argues in its research report that it’s neutral on the matter. “Today, a decade after Square started, cash is still an integral part of a small-business owner’s income, and an overwhelming majority of small-business owners will continue to accept cash, despite the fact that fewer customers are using it,” the company argues as it concludes its report.