New Jersey has followed the lead of Philadelphia and Massachusetts in banning restaurants and other brick-and-mortar retail businesses from refusing to accept cash as payment.
Gov. Phil Murphy signed the bill into law Monday, making the state the second in the nation to assure consumers that they can always settle their restaurant bills in cash. Massachusetts adopted a similar measure in 1978, and Philadelphia passed a law on banning cashless operations during the first week of March, with the legislation set to take effect July 1.
New Jersey’s law takes effect immediately. Violators will be subject to a fine of $2,500 for a first infraction and $5,000 for a second offense.
The law is aimed at businesses that intend to speed service, particularly during peak traffic times, by requiring customers to pay with a credit card swipe, a flash of their phone, or the use of a payment tag. The enterprises have found that exchanging cash with customers can slow the checkout process by seconds or minutes.
A number of fast-casual restaurant chains have adopted that model, including Sweetgreen, Blue Bottle Coffee, Shake Shack, Starbucks, Firehouse Subs and Dos Toros.
Opponents of a no-cash policy blast the practice as fundamentally discriminatory against low-income consumers who may not be able to afford a credit card or a smartphone. They cite a Federal Deposit Insurance Corp. study that found 6.5% of U.S. households did not have a bank account in 2017. The figures are higher for minorities: 16.9% for African-American households and 14% for Latino homes.
A bill similar to the ones recently passed in New Jersey and Philadelphia is pending in New York, whose namesake city served as a lab of sorts for developing cashless businesses.
Cash payments are only guaranteed for in-person transactions—e-commerce or remote ordering are not covered. The New Jersey law also makes exceptions for some businesses, such as rental car services.
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