Business

No cash allowed: Stores refusing to accept money

Sophia Ling, of Norfolk, pays Amsterdam Falafelshop employee Trecell Ellis using a credit card.
Dina Rudick/Globe Staff
Sophia Ling, of Norfolk, pays Amsterdam Falafelshop employee Trecell Ellis using a credit card.

At Amsterdam Falafelshop in Kenmore Square, you can choose hummus or tahini for your $7 sandwich. And you can pick from a dozen toppings, from pickled cauliflower to fresh feta and olives.

What you can’t do is pay with cash.

As technology allows us to make purchases with a barcode scan or an iPad click, more and more retail outlets, restaurants in particular, are experimenting with no-cash policies, from the salad chain SweetGreen to Amsterdam Falafelshop to Clover Food trucks. They join parking garages and state toll roads in shunning cash payments in favor of credit cards or scanners.

Advertisement

Why hunt for a greenback when you can open an app?

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

But there’s a significant hitch to this trend: Refusing to accept cash is illegal in Massachusetts. A state law on the books since 1978 states that no retailer “shall discriminate against a cash buyer by requiring the use of credit.” Federal law leaves the choice up to states.

The section of the Massachusetts law is so little known that the Office of Consumer Affairs and Business Regulation makes no mention of it on its website, and several consumer watchdogs said they’d never heard of it. The attorney general’s office, which is tasked with enforcing the law, did not provide details about it.

Barbara Anthony, former undersecretary for the consumer affairs office, said the rule raises legitimate concerns as a younger generation increasingly opts for new forms of payment and retail outlets begin to reinvent the cash register. The trend may be in its infancy, but it’s never too early to consider the ramifications of credit-only policies.

“You want to make sure in the process of this transition to a cashless economy that consumers are not obligated to assume credit,” Anthony said. “We probably need some kind of sensible regulation around these transactions to protect consumers.”

Advertisement

The exact number of businesses outlawing cash is hard to pinpoint. Many are small startup establishments — a new breed of mom-and-pop stores that tend to be tech savvy and attract younger customers.

Amsterdam Falafelshop owner Matt D’Alessio said he stopped taking cash in December when he realized more than 85 percent of his customers — a mix of tourists and Boston University students — paid with plastic and that he could save employee time and payroll costs by eliminating cash registers and trips to the bank. (He still takes cash at his Somerville location.)

SweetGreen, the New York-based salad chain with five shops in Massachusetts, began testing cashlessness at those restaurants earlier this year, but stopped shortly after the Globe inquired about the policy and whether it aligned with the law.

Karen Kelley, president of Sweetgreen, said its cashless policy was put into practice to save employees more than 100,000 driving miles and the cost of gas for armored cars, as well as about 500 pounds of paper a year.

“We’ve now adjusted plans in our five Boston test stores to be in compliance with Massachusetts retail law,” Kelley said. “As we grow, we learn, and as we learn, we adjust: It’s all part of our mission to do right by our customers and our employees.”

Advertisement

Not all cashless outposts are young upstarts. Several downtown Boston parking garages have gone cash-free; tolling on Massachusetts highways will be all-electronic in the fall — with those who lack transponders receiving a bill in the mail — and the MBTA has said it wants to phase out paying with cash on trains and buses.

The question is whether these operations count as retail establishments.

Ryan C. Kearney, a lawyer at the Retailers Association of Massachusetts, said there is no catchall definition for the term “retail” in state law, but the courts have generally defined a retailer as a “person (or business) who sells, offers or exposes for sale, or has in his possession with intent to sell, tangible goods or services.”

Association president Jon B. Hurst said garages and the Massachusetts Bay Transportation Authority might not be considered retail. “I’m guessing not,” he said.

Edgar Dworsky, a consumer advocate and founder of the website Consumerworld.org, said that beyond legalities, cashless policies create additional costs for business owners, along with privacy and identify-theft concerns.

Retailers pay a fee every time a customer swipes a card and often recover those costs by raising prices, passing the costs on to consumers. That’s partly why so many small businesses — think the North End’s Modern Bakery — have held fast to strict, old-world, cash-only policies.

“However you pay should be OK,” Dworsky said. “But cash should be an option.”

The National Retail Federation agrees. Vice president J. Craig Shearman said cash helps retailers hold down prices because the fees they pay credit card companies are typically baked into merchandise prices, making them higher.

Cashless policies may also disproportionately affect low-income consumers, who may have a harder time getting credit and tend to use cash more often.

“Turning down cash is not something we would recommend,” Shearman said. “The credit card industry has been very successful at brainwashing consumers into thinking plastic is the same as cash. It’s not.”

But because the rules are murky, so is the question of enforcement. Despite being tasked with enforcing the law requiring a cash option, Attorney General Maura Healey’s office issued a statement offering little guidance.

“Our office hopes that we can encourage new technologies while striking a balance that allows all consumers to fully participate in our society,” the statement said. A spokeswoman declined to comment further.

At Amsterdam Falafelshop, D’Alessio said complaints about his policy are few and far between.

“I think it’s not fully legal what we’re doing,” D’Alessio said. “But it’s something not really enforced, either.”

Megan Woolhouse can be reached at megan.woolhouse@globe.com. Follow her on Twitter @megwoolhouse.