Does government have any limits on the restrictions it can place on a private company? Or are those limits confined only by the outcome of legislators’ votes?
These are questions some California lawmakers might find themselves wrestling with this year. A bill introduced in the Senate in early February might test the comfort level some have on the boundaries of government.
Senate Bill 926, authored by Sen. Jerry Hill, a Democrat from San Mateo, would require retailers to accept cash in an era when many are going cashless. Fines would be $25 to $500 for each violation. Online businesses would be exempt under the law, as would car rental companies, provided they take cashier’s or certified checks. Businesses would also be allowed to refuse to take bills larger than 20s.
Hill’s office says the law is needed to lift “a barrier for would-be customers who cannot participate in cashless transactions.” He believes “retail stores and businesses that operate exclusively with cashless transactions” are committing “economic, racial and age discrimination.”
goods and services from such places if they only have cash for payments,” says Hill.
We acknowledge the point.
California wouldn’t be the first state to ban cashless transactions. Massachusetts and New Jersey already prohibit cash-free retail transactions. San Francisco banned them last year.
But this doesn’t mean the question of legislators’ limits has been sufficiently settled. If government can decide that a business must accept cash or be subject to monetary fines, what else can it dictate? How far is too far?
Business owners’ objections are more practical than philosophical. Joaquin Cordova, owner of a Los Angeles store that’s gone cashless, says currency “can be easily stolen from registers,” and “leads to longer checkouts.”
There is also a safety factor, he told the California Globe.
“I had been robbed here twice in 2017 when I still accepted cash,” said Cordova. “I went cashless the next year, and I have had no robberies or a drop in business.”
Last fall, an entire cash register was stolen after hours from a San Francisco ice cream shop. The small-business owners decided it would be smart to drop cash sales.
“We don’t know if they’re going to come in again during business hours when we have our family there,” co-owner Marion Valenzuela told the local media.
Popular restaurant chain Tender Greens comes to mind, too. The company explained they were going cashless in 2018 to cut down on wait times, administrative work, and wasted staff time.
But they were told they couldn’t. Operating a cashless business in the city is against the law.
Hill said he was inspired to write SB 926 after walking into a San Mateo restaurant last year, according to CalMatters.
“I saw there’s a sign there that said ‘we don’t accept cash.’ That kind of shocked me and surprised me,” Hill said. “That seemed almost like they were discriminating against those who did not have the ability to pay an electronic transaction, and for me that raised a flag.”
Again, we acknowledge the point. But does Hill, as a policymaker, have the right, and the legitimate authority, to outlaw a practice simply because he doesn’t like it? Is the intervention justified if a majority of elected officials agree with him, and a governor feels the same way?
Not surprisingly, the restaurant that motivated Hill to write the bill, Sweetgreen, reversed its policy without government intervention — but probably not without some pressure from the private sector.
Marie Napoli, a lawyer and civil rights advocate, told City Lab last year that bans on cashless commerce would likely fail in the Supreme Court if businesses chose to challenge the law.
“The clash between businesses’ right to refuse service, and other compelling interests have resulted in allowing these forms of discrimination to continue,” Napoli said.
Travas Clifton, owner of ModCup Coffee Co. in Jersey City, NJ, chose to go cashless as a business decision, when, USA Today reported, “he realized 80% of his business’s transactions were being paid for with a credit or debit card.”
Yet he continued to accommodate cash patrons. Clifton’s baristas would pocket customers’ money after using “their own credit or debit cards to complete the sale.”
But his choice was ultimately taken from him by the state.
“I find it very un-American that the government can come in and tell me what form of payment I accept for what I do,” he told USA Today.
Will that argument come in second in Sacramento to the needs of a small segment of consumers? It will be interesting to see where the lines are drawn.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.
What Gives California The Right to Force Businesses to Accept Cash?
Kerry Jackson
Does government have any limits on the restrictions it can place on a private company? Or are those limits confined only by the outcome of legislators’ votes?
These are questions some California lawmakers might find themselves wrestling with this year. A bill introduced in the Senate in early February might test the comfort level some have on the boundaries of government.
Senate Bill 926, authored by Sen. Jerry Hill, a Democrat from San Mateo, would require retailers to accept cash in an era when many are going cashless. Fines would be $25 to $500 for each violation. Online businesses would be exempt under the law, as would car rental companies, provided they take cashier’s or certified checks. Businesses would also be allowed to refuse to take bills larger than 20s.
Hill’s office says the law is needed to lift “a barrier for would-be customers who cannot participate in cashless transactions.” He believes “retail stores and businesses that operate exclusively with cashless transactions” are committing “economic, racial and age discrimination.”
goods and services from such places if they only have cash for payments,” says Hill.
We acknowledge the point.
California wouldn’t be the first state to ban cashless transactions. Massachusetts and New Jersey already prohibit cash-free retail transactions. San Francisco banned them last year.
But this doesn’t mean the question of legislators’ limits has been sufficiently settled. If government can decide that a business must accept cash or be subject to monetary fines, what else can it dictate? How far is too far?
Business owners’ objections are more practical than philosophical. Joaquin Cordova, owner of a Los Angeles store that’s gone cashless, says currency “can be easily stolen from registers,” and “leads to longer checkouts.”
There is also a safety factor, he told the California Globe.
“I had been robbed here twice in 2017 when I still accepted cash,” said Cordova. “I went cashless the next year, and I have had no robberies or a drop in business.”
Last fall, an entire cash register was stolen after hours from a San Francisco ice cream shop. The small-business owners decided it would be smart to drop cash sales.
“We don’t know if they’re going to come in again during business hours when we have our family there,” co-owner Marion Valenzuela told the local media.
Popular restaurant chain Tender Greens comes to mind, too. The company explained they were going cashless in 2018 to cut down on wait times, administrative work, and wasted staff time.
But they were told they couldn’t. Operating a cashless business in the city is against the law.
Hill said he was inspired to write SB 926 after walking into a San Mateo restaurant last year, according to CalMatters.
“I saw there’s a sign there that said ‘we don’t accept cash.’ That kind of shocked me and surprised me,” Hill said. “That seemed almost like they were discriminating against those who did not have the ability to pay an electronic transaction, and for me that raised a flag.”
Again, we acknowledge the point. But does Hill, as a policymaker, have the right, and the legitimate authority, to outlaw a practice simply because he doesn’t like it? Is the intervention justified if a majority of elected officials agree with him, and a governor feels the same way?
Not surprisingly, the restaurant that motivated Hill to write the bill, Sweetgreen, reversed its policy without government intervention — but probably not without some pressure from the private sector.
Marie Napoli, a lawyer and civil rights advocate, told City Lab last year that bans on cashless commerce would likely fail in the Supreme Court if businesses chose to challenge the law.
“The clash between businesses’ right to refuse service, and other compelling interests have resulted in allowing these forms of discrimination to continue,” Napoli said.
Travas Clifton, owner of ModCup Coffee Co. in Jersey City, NJ, chose to go cashless as a business decision, when, USA Today reported, “he realized 80% of his business’s transactions were being paid for with a credit or debit card.”
Yet he continued to accommodate cash patrons. Clifton’s baristas would pocket customers’ money after using “their own credit or debit cards to complete the sale.”
But his choice was ultimately taken from him by the state.
“I find it very un-American that the government can come in and tell me what form of payment I accept for what I do,” he told USA Today.
Will that argument come in second in Sacramento to the needs of a small segment of consumers? It will be interesting to see where the lines are drawn.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.