The Washington PostDemocracy Dies in Darkness

As restaurants go cashless, a backlash is building. Will D.C. intervene?

After pulling out money to pay for food last week at Surfside in Northwest Washington, customers Aaron Bateman and Roxann Barr hear from cashier Obed Amaya that the restaurant does not accept cash. (Jahi Chikwendiu/The Washington Post)

Aaron Bateman pulled out a few bills to pay for a taco lunch in the nation’s capital. To his surprise, his money was no good in the city where money is printed.

Surfside, a 24-hour Mexican eatery in Dupont Circle, doesn’t take cash. No cash means no register for robbers to empty out, no bills for workers to slip into their pockets and no change-counting holding up lines.

The global cashless movement has reached Washington, where a growing number of fast-casual establishments and other spots are saying no to greenbacks in favor of plastic and mobile payments. Sweetgreen, the national salad chain founded by Georgetown University graduates, went cashless in most of its locations last year. Other cashless spots include a Menchie’s frozen-yogurt shop downtown, the posh Barcelona Wine Bar on 14th Street NW and the Bruery beer store at Union Market.

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Critics of no-cash policies say they shut out the 1 in 10 District residents who don’t have bank accounts and undocumented immigrants who can’t easily sign up for cards. Some people also pay in cash so they can better track their spending or to avoid having their card information stolen.

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Heeding these concerns, several lawmakers in the District have introduced a bill to require retailers to accept cash.

“By denying the ability to use cash as a payment, businesses are effectively telling lower-income and younger patrons that they are not welcome,” said D.C. Council member David Grosso (I-At Large).

His bill is among the pockets of resistance forming against the cashless trend, which has taken hold in countries such as Sweden and India where mobile payments are gaining popularity.

Similar legislation was unsuccessfully introduced in Chicago last year. Massachusetts has an obscure 1978 pro-cash law on the books, but the state retailers association says it doesn’t seem to be enforced and state officials haven’t offered guidance.

Companies going card-only say it makes good business sense.

Washington restaurateur Bo Blair, whose company Georgetown Events operates eight fast-casual and three sit-down restaurants in the District, decided to experiment going cashless when opening Surfside in Dupont Circle in 2015.

Usually, cost-conscious small businesses operate cash-only to avoid card processing fees.

But cash also has hidden costs, Blair said: Armored vehicles taking money to banks. An extra hour for workers to close out the register. Employees swiping money from the till. And some of his places had been robbed.

“Not having to worry about employees stealing or getting robbed is a huge lift off our minds,” Blair said.

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Few Surfside customers complained and long lunch lines moved quickly, so Georgetown Events stopped taking cash at its seven other fast-casual spots, including the Jetties sandwich shop, where about 80 percent of customers were already paying with their cards. The company did not make the shift at full-service restaurants where bartenders and servers like taking their cash tips home at the end of a shift.

Bateman, who tried to pay in cash at Surfside, said he was lucky his girlfriend brought her debit card with her so they could pay. The 22-year-old Norfolk cook, who was on vacation, said he likes paying in cash so he doesn’t have to constantly check his bank account to avoid overdrafts.

“You have your money in your hand and know what you can do with it,” Bateman said. “It’s a little bit better money management, unless you are on top of your account like every five minutes.”

After placing his order at Surfside, Richard Selgado said he prefers paying with his debit card.

“Some places, you don’t know your surroundings. I’ve been in situations where I dropped money and people pick it up and don’t tell you,” said Selgado, a 26-year-old Prince George’s County resident. “I wish a lot of places are like this.”

Sweetgreen, with a dozen locations in the District and scores more in Maryland, Virginia, New York, California, Pennsylvania, Illinois and Massachusetts, is perhaps the most high-profile business to go cashless. The company has declined requests for comment on the District bill that would force it to accept cash, but officials previously said going cashless helped process as many as 15 percent more sales an hour and led to more people paying with the company’s app.

“We believe digital payments are the future, and we want to help lead that charge, not lag behind,” Sweetgreen founders wrote in a 2016 Medium post announcing the cashless switch.

Other restaurateurs say refusing to take cash is disrespectful to their customers.

“Not everybody is able to buy a smartphone,” Amsterdam Falafelshop owner Arianne Bennett said in an email. “Not everybody is in a position where they can get a credit card. Not everybody is even in a position where they have a stable bank account to be able to use the debit card. But they are hungry too, and have $10 in their pockets and they would like to spend their legal American form of tender, known as cash, with you.”

“As society and technology evolves,” she said, “we must ask ourselves always, not just ‘can we’? But ‘should we’?”

An Amsterdam Falafelshop franchise in the Boston area went cashless in 2016, but the company intervened a month in. Instead, the franchise put up signs on its counter advising, “While we prefer digital methods of payment, we will of course accept your cash.”

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Cava, a fast-growing Mediterranean chain with roots in the Washington region, has debuted a number of cashless options including preordering online and paying in the store with an app. But the company’s leadership says the costs of continuing to take cash are worth it to avoid frustrated customers.

“Whether it’s for underbanked reasons, for privacy reasons or for budgetary tracking reasons, we want to accommodate them,” said Cava chief executive Brett Schulman.

The decision to go cashless also has broader implications in the global battle between the credit-card and ATM industries.

Perhaps unsurprisingly, Visa has been a major booster of the cashless movement. The credit card company in March awarded 50 businesses $10,000 each for rejecting cash payments and has released reports touting the benefits of a cashless society.

The International Currency Association launched a “Cash Matters” initiative last year to push back against cashless policies, mostly in Europe. The initiative is also supported by the ATM Industry Association, which declared the bill before the D.C. Council “a historic development in the nation’s capital in the long war against cash waged by the card brands.”

“When card brands diminish human choice in the payments sector, they corrode a part of freedom itself in the wider economy,” said Mike Lee, the ATM group’s chief executive.

Advocates for poor people and immigrants say keeping cash as an option is essential for people without bank accounts.

Nationwide, 7 percent of households had no checking or savings accounts in 2015, according to the most recent federal survey. It was more than twice as high for black people and Latinos.

The most common reason for not having a bank account is the fees imposed on customers who can’t meet a minimum balance or other requirements. Some don’t trust financial institutions, and others don’t have a choice.

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Leonard Edwards, a 58-year-old resident of Petworth in Northwest Washington, said he lost access to his bank account when arthritis prevented him from working and he fell behind on child-support payments. Instead, he pays high fees to cash checks and use temporary debit cards.

He does not go out to eat much, but when he does he pays cash and was surprised some restaurants wouldn’t take his money.

“It’s just a way to keep low-income and poor people out,” Edwards said. “We don’t have credit cards or money in the bank just sitting around. It’s just another hurdle for poor people to maneuver around in the system we live in.”

About 11 percent of District residents did not have bank accounts in 2015 and an additional quarter were considered underbanked — meaning they use services such as payday loans, check cashing or pawnshops for money.

Some advocates for the “unbanked” say the focus should be on giving them more payment options. A partnership between D.C. government and financial groups called Bank on DC has helped open 11,000 accounts since 2010, said Tanya Bryant, a spokeswoman for the city’s financial-regulation agency.

The Cities for Financial Empowerment Fund works with Bank on DC and other groups to provide low-cost checkings accounts. “If someone is buying a salad or something, and it’s $6, and they need to swipe instead of using cash, the real underlying issue is they don’t have a bank account with debit-card functionality,” said David Rothstein a principal with the fund. “That’s where the real problem is. It’s less about the use of cash, and it’s more about financial inclusion.”