Be Careful What You Wish For

Posted On: 4/29/2019

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We recently learned that Philadelphia has enacted a law that prohibits retail establishments from refusing to accept cash as payment for a purchase. With Mayor James Kenney's signature, the City of Brotherly Love has become the first major U.S. city to require retailers to serve customers who wish to pay in U.S. currency. The measure, which passed the City Council on a 12 to 4 vote, was signed into law by the Mayor on February 28.

Similar laws are currently under consideration in New York City, Washington, DC, Chicago and San Francisco. At the state level, New Jersey recently enacted a measure requiring cash acceptance at retail. The Senate passed it unanimously, and the House, by a 71-2 vote. It now awaits Governor Murphy's signature.

These new laws recognize that cash remains important in American life, both to ensure non-discriminatory access to goods and services regardless of socioeconomic status, and to preserve the convenience and accessibility to goods and services for the general public afforded by the freedom to pay with cash. While this legislation isn't new – the Commonwealth of Massachusetts has had a law to this effect on the books since 1978 – the recent publicity surrounding tests of Amazon Go cashless stores has sparked interest and concern, and I'm sure we will be hearing more about local and state reaction to these new retailing concepts.

One point should be made clear: the U.S. Treasury has explained the stipulation that our currency is "legal tender for all debts, public and private" only applies to debts (the purchaser has received the product or service), and it is not a violation for someone to decline to enter into a cash transaction.

I am in favor of maintaining U.S. currency as a universal payment option to be valued and preserved throughout America, but I also support free enterprise. For that reason, I don't think it's a good idea to encourage government to outlaw a particular means of doing business arbitrarily. I am concerned by the automated teller machine industry's enthusiastic endorsement of restrictions on cashless retailing, which it apparently sees as competing with ATMs. I don't think it's a good idea for any industry to applaud laws that injure its competitors. A precedent for outlawing a particular payment system that's in no way fraudulent is likely to have unanticipated consequences, some of which may impede progress.

As operators and company owners, we all must be alert for attempts by people in one line of business to get the government to restrict the other simply because those people would find it convenient not to be bothered by them. This invites the camel to stick its nose under the edge of the tent.

I wonder what this law might mean for somebody with half a dozen ePort-only premium ice cream and beverage vending machines in an upscale public area? Or those who will be using the new digital wallet offered by ViViPAY to make a purchase or play a videogame?  (the ViVipay financial ecosystem will give unbanked people access to services that are tied to a bank -– something they have not had access to previously). Other examples might be found.

The vending industry has been trying for four decades to get the cash out of its machines, and now it appears that it may be pushed back in. We need to think long and hard about what side we are on, and what the consequences might be for our industry. Must we pick a side?  If we must, let it be the side of liberty.

On a related note, many innovations have come along over the past five decades to give the amusement industry cashless payment options beyond tokens. One of these is the debit card system, not only for payment to play but for redemption and collection of important management data. These systems are not new, although they continue to add features and functionality, and they have proven popular in new FECs. But, according to leisure entertainment industry veteran Frank Seninsky (click here to read his column), only an estimated 20% of entertainment centers are using debit card systems today. That's progress; 20% is a level of acceptance at which a technology starts to gain traction. The new locations get the POS systems, but there are thousands of FECs, including bowling alleys with more or less extensive games and other attractions, that still are using coins – even for cranes. What happens if cash payments are mandated in these locations?

In my humble opinion, reducing dependence on cash and increasing the speed, accuracy depth of transaction data has a lot of benefits – but seeking to forbid its use seems ill-advised to say the least. The industry today faces many challenges beyond the big one: competition for our patrons' dollars. One might think that the ATM industry's long struggle for equitable treatment by government at all levels would have made it wary of efforts to encourage more or new intervention in private transactions.