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Amazon warns it may rethink plans to open a Philly store if the city bans cashless retailers

Proponents of the bill, which passed City Council and was sent to Mayor Jim Kenney, say cashless stores effectively discriminate against poor consumers who do not have access to credit or bank accounts.

An Amazon Go store in San Francisco. Amazon warned Philadelphia that a council bill proposing a ban on cashless stores would affect its plan to consider the city for a retail location.
An Amazon Go store in San Francisco. Amazon warned Philadelphia that a council bill proposing a ban on cashless stores would affect its plan to consider the city for a retail location.Read moreAP

Online retail giant Inc. has warned Philadelphia officials behind closed doors that a proposal to ban so-called cashless stores would affect the company’s plans to open a brick-and-mortar location here, city officials said Thursday.

Officials revealed Amazon’s warning the same day that City Council sent Mayor Jim Kenney a bill that seeks to protect the city’s poorest consumers, but is also supported by the “world’s largest” ATM operator and groups advocating for low-wage workers. The proposal passed by a 12-4 vote on a day when Amazon scrapped its plans for a second headquarters in New York City, citing local opposition.

The proposed ordinance, in a city where not all government offices accept cash for payments, would prohibit most stores from refusing to accept cash or charging cash-paying customers a higher price. Violators could be fined up to $2,000.

Amazon, perceived as a threat by many brick-and-mortar retailers, plans to open as many as 3,000 Amazon Go cashierless stores across the country over the next few years.

During the Council meeting, Councilman Allan Domb said Amazon called the Commerce Department “several times” to say that if the bill passed, the company would not consider opening a cashless store in Philadelphia. Domb, owner of a prominent Center City real estate business, said an Amazon Go store could create 100 jobs.

Mike Dunn, a city spokesperson, confirmed that Amazon had contacted the city about the proposed ban.

“Amazon did indicate they were considering Philadelphia among their options for Amazon Go, and that this bill would impede that plan,” Dunn wrote in an email. “To be clear though, the firm had not specified the likelihood of their coming or timing.”

Amazon, which did not submit public testimony about the legislation last week, declined to comment.

As technology gives consumers more ways to pay, including through smartphones, some stores have gone cashless to improve efficiency, avoid handling cash, and reduce the risk of robbery. In Philadelphia, that includes the salad chain Sweetgreen, coffee shop Bluestone Lane, and locations at Franklin’s Table, a food hall at the University of Pennsylvania.

Proponents of the bill argue that cashless stores effectively discriminate against poor consumers who do not have access to credit or bank accounts, especially in a city with one of the highest levels of poverty in the country. Nearly 6 percent of the Philadelphia region was unbanked in 2017 and roughly 22 percent was considered “underbanked,” according to the Federal Deposit Insurance Corp.

“This is more of like a pause," said Councilwoman Maria Quiñones-Sánchez, a Democrat from the 7th District, who sponsors the bill. “We don’t want to stop the business model, but clearly we don’t want people to walk into certain businesses and feel like they’re not welcomed.”

‘Amazon is a bully’

Philadelphia was one of 20 finalists for an Amazon second headquarters. The tech giant, based in Seattle, had promised tens of thousands of jobs and billions of dollars in investment to the winning city, and state and local governments offered billions in tax incentives to lure the company. Ultimately, Amazon chose both Crystal City in Arlington, Va., and Long Island City, Queens, for corporate campuses.

“Amazon is a bully. That’s why they’re almost getting kicked out of New York,” Quiñones-Sánchez said earlier Thursday when asked about Amazon’s warning regarding the Philadelphia bill. “You’re coming into a city that has a 25 percent poverty rate. You have to be considerate of that population.”

Amazon has opened cashierless stores in Seattle, San Francisco, and Chicago. The stores allow consumers with an “Amazon Go” app to grab items they need and leave, eliminating the need for a traditional checkout process. The stores can detect when products are taken from shelves and add them to a virtual cart, according to Amazon. After the customer leaves, Amazon charges the user’s online account.

The Philadelphia bill excludes some retailers from the cash requirement. Among those are “retail stores selling consumer goods exclusively through a membership model that requires payment by means of an affiliated mobile device application.”

Councilman William Greenlee, an at-large Democrat and another sponsor of the proposed ordinance, said that language could allow Amazon to open one of its stores in the city.

“I think that can be interpreted to deal with the Amazon situation,” he said. “There are things that can be done in regulations that might address that, too.”

Mayor’s call

Kenney must act on legislation by the first Council meeting that occurs at least 10 days after a bill’s passage. This typically gives the mayor two weeks. Kenney can sign or veto, or take no action on legislation, in which case a bill becomes law without his official endorsement.

The Kenney administration supports the intent of the proposed ban on cashless stores, but has some concerns, said Chief of Staff Jim Engler. Engler said the Mayor’s Office and Law Department would review the bill.

“We want businesses to be as inclusive as possible,” Engler said before the Council meeting. “I think we’ve expressed some concerns, specifically through our Commerce Department, about how this would impact innovation in the retail sector, and I think that’s something we need to be conscious of. And we’ve really worked as an administration to try and get more people to be banked.”

The city itself doesn’t always take cash for services, Engler acknowledged, saying it “varies from department to department.” He said the administration would determine how to comply with a cash requirement if the ordinance is adopted.

Business groups including the Pennsylvania Restaurant and Lodging Association oppose the proposed ban, arguing that “it is a business’ right to decide whether or not to go cashless and should not be a government decision.”

On the other side are companies like Cardtronics, which bills itself as the world’s largest ATM operator.

“Consumers have lots of payment options in the U.S. from digital to cash, and we think that cash should be included, not excluded, from those many choices,” said Crystal Wright, a spokesperson for Cardtronics, which operates roughly 1,300 ATMs in the Philadelphia region.

The bill is also backed by the Restaurant Opportunity Center of Pennsylvania and Philadelphia Jobs with Justice, a “coalition of labor unions and student, community, and faith groups.”

New Jersey lawmakers recently approved a bill that would ban cashless stores in the Garden State. Gov. Phil Murphy can sign or veto the measure. Amazon spoke to New Jersey lawmakers about its concerns with that bill, too, but has not publicly opposed the legislation.