What happened

The New Jersey law mandates that a “person selling or offering for sale goods or services at retail shall accept legal tender when offered by the buyer as payment” and “shall not require a buyer to pay using credit or to prohibit cash as payment in order to purchase the goods or services.”

As defined by the law, “at retail” includes any retail transaction conducted in person and excludes any telephone, mail or internet-based transaction. Violations of the new law begin with a first-time offender fine of $2,500, doubled to a $5,000 fine for a second offense, with additional violations possible under the state’s consumer fraud statute.  

“Many people don’t have access to consumer credit, and any effort by retail establishments to ban the use of cash is discriminatory towards those people,” Gov. Phil Murphy said in a statement about the new law.

The law provides exemptions for rental vehicle companies as long as they accept certified or cashier’s checks as well as card payments; any person selling goods or services at an airport (provided that at least two persons selling food at each terminal within the airport accept cash as payment); any parking facility owned by a municipality; and any parking facility that accepts mobile payment, provided it does not accept payment by any means other than mobile payment.

Opponents of the law argued that it takes away a business owner’s choice of how to receive payment. “The preference for retailers to run a cashless business is often based on efficiencies, and in some cases as a safety measure,” Michael Wallace, vice president of government affairs at the New Jersey Business & Industry Association, said in a statement.

With the enactment, New Jersey became the second state to mandate the acceptance of cash payments, joining Massachusetts. The Massachusetts law, enacted in 1978, prohibits retailers from “discriminat[ing] against a cash buyer by requiring the use of credit.”

Philadelphia became the first major city to pass a ban on cashless transactions earlier this year, although it featured an exemption for “transactions at retail stores selling consumer goods exclusively through a membership model that requires payment by means of an affiliated mobile device application.”

Other cities—including New York, San Francisco and Washington—are considering similar measures.

To read the New Jersey law, click here.

Why it matters

These laws are intended to protect consumers who do not have cards and those who are underserved by banks as a result of their socioeconomic status. Nevertheless, the inconvenience and security risk of cash has led to cash bans by some businesses, prompting a response from legislators in states such as New Jersey and cities such as New York, Philadelphia and San Francisco.