In an attempt to help lower‐income consumers, Philadelphia has just become
the first major U.S. city to ban cashless stores, placing it at the forefront of a debate that pits retail innovation against lawmakers trying to protect all citizens’ access to the marketplace.
As with other regulation that allegedly helps the poor (e.g., restrictions on pay‐day lending), this new regulation is misguided.
Some stores, in response to this ban, will keep accepting cash but raise prices. Other stores will close their Philadelphia locations entirely. Both effects harm lower‐income consumers in particular.
Regulation adds costs, so it normally exacerbates rather than ameliorates poverty.
A better way to help “the unbanked” is to reduce regulation of debit cards and other non‐cash payment mechanisms.