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As Society Becomes Increasingly Cashless, Is Massachusetts Ready?

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At the local burrito chain Boloco, the majority of customers pay with cards. Many even skip the wait in line by using the restaurant’s smartphone app or ordering kiosks, which allow the company to be more efficient, says CEO John Pepper. 

"There's a line of people. You don't feel like waiting the line and you just take control of your order yourself. You come take a seat," Pepper said.

This is the same company that got rid of pennies almost a decade ago so employees could spend less time fishing for change in the drawer. Going fully cashless would save even more time. Pepper’s other hope is that it will prevent robbery.

"So from a safety standpoint, cash to me seems like it's an outdated concept," Pepper said. "What we're really trying to figure out now is is the time and the risk and the hassle worth, you know, those 10 to 15 percent of customers. And why are they still using cash?"

He’s not alone. More fast-casual restaurant chains across the U.S., like Starbucks and Shake Shack, are testing the cashless payment waters in certain locations while other businesses are skipping cash altogether. The Amazon Go market is a new addition. And Sweetgreen, a nationwide salad chain, went completely cashless last year. But not in Massachusetts, the only state that prohibits retail establishments from discriminating against cash buyers.

Jay Zagorsky is an economist and professor at the Boston University Questrom School of Business. He predicts we’ll become a cashless society over the next 20 years, but he says it’s a bad idea — for three reasons.

"In a cashless economy, the poor tend to suffer. People who can’t afford debit and credit cards, they will be marginalized in a cashless economy. The second reason is that we lose privacy. If some high tech company is tracking my every purchase, they know exactly what I buy," said Zagorksy. "The third is national security. A cashless society really depends on a network of computers that run and communicate all the time. If we lose power, if our computers are hacked, if communication lines go down, telephones don’t work — a cashless society doesn’t work."

For many people, the notion of not using cash seems bizarre. After all, it’s printed on every bill, “legal tender for all debts, public and private.” But Zagorsky says the word “debt” reveals a potential loophole.

"If a customer has not incurred a debt — they've not purchased food, they've not pumped gas into their car, you can tell them, ‘we only accept credit cards’ before any services are rendered," he said.

There is no federal statute mandating that businesses must accept currency. But under Massachusetts law, retail establishments have to take cash. This leaves businesses like restaurants wondering if they qualify as a retail establishment, which is defined as any business that sells either a service or tangible personal property. While many would argue a restaurant provides a service, WGBH legal analyst and Northeastern University law professor Daniel Medwed said this definition could use some clarification.

"It may be somewhat ambiguous whether a restaurant qualifies," he said. "I think it’s incumbent upon the Legislature to give us some guidance here so that we all know whether restaurants must abide by these regulations in the era of the cashless economy. It’s up to the Legislature to handle this and create a uniform interpretation of 'retail establishment.'”

As a younger generation pays for stuff without ever opening a physical wallet — using apps like Venmo and Apple Pay — it’s easy to see that going cashless is where we are heading. But Attorney General Maura Healey said until banking changes, it’s out of the question here in the Bay State.

"I don’t think we should get to a space where folks are forced to operate without cash. Unless people have no-fee bank accounts, I don’t think that’s a conversation we should entertain," Healey said.

As for John Pepper of Boloco, he said he might test out cashless pay at its New Hampshire location. If Massachusetts law would explicitly allow it, he’d certainly consider trying it out in the state. But he’d want to come up with an alternative for cash-paying customers.

"I mean, I'd personally be trying to figure out how not to leave people behind," he said. "Maybe there's a way to load a digital card and carry that with them as well. But it allows them to still use cash."

There’s no sign the Legislature is preparing to determine whether restaurants are retails businesses and whether they can go cashless, keeping their cash registers in suspense. 

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