Alert: Philadelphia to Ban Cashless Stores

Mayor Jim Kenney has signed off on a bill that will require Philadelphia stores and restaurants to accept cash as a form of payment, this despite the growing trend of businesses accepting only credit cards and payment applications. The amendment to the “Fair Practices Ordinance: Protections Against Unlawful Discrimination” section of the City Code goes into effect on July 1 and imposes fines of up to $2,000 for each violation. The full text of the bill is available here.

Supporters of the bill argue that cashless retail is discriminatory in a city where the poverty rate is 26 percent and six percent of the population does not have a bank account. “Until we can resolve the hurdles facing the unbanked, we need to remove any obstacles that could prevent them from enjoying all amenities of this city, amenities that are readily available to those fortunate enough to have a debit or credit card,” said city spokesman Mike Dunn.

Retailers and restaurants are increasingly adopting the cash-free model to improve efficiency, avoid the added costs of handling cash, and reduce the risk of robbery. “This decision comes despite our continued concerns about how this legislation might impact innovation in our retail sector,” acknowledged Dunn.

Amazon had warned city officials that a ban on cashless stores would affect the company’s plans to open an Amazon Go cashierless store in Philadelphia. Councilman Bill Greenlee, one of the bill’s sponsors, says the wording of the bill could allow Amazon to open its brick-and-mortar locations, as the bill does not apply to “retail stores selling consumer goods exclusively through a membership model that requires payment by means of an affiliated mobile device application.” “I think that can be interpreted to deal with the Amazon situation,” Greenlee said. Amazon, on the other hand, has indicated that the language may be inapplicable to their model, as the company’s Prime membership is not required to access the Amazon Go stores.

The bill does allow for some other exemptions. Garages and parking lots, wholesale clubs like Costco, and rental companies can continue to be cash-free. Online sales are also excluded.

Philadelphia will become the first major U.S. city to ban cashless stores, though New Jersey lawmakers recently approved a bill instituting a state-wide ban, and Massachusetts has had such a law in place since 1978.

Contact
If you have any questions or would like to discuss these issues, you can call Bill Matthews at 215.569.4281, wmatthews@klehr.com. Mr. Matthews is the Chairman of the firm’s Corporate and Securities Department who concentrates his practice in securities, mergers and acquisitions and general corporate counseling for a wide range of clients, from family-owned businesses to emerging growth businesses to public companies. 

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