Bi-Partisan Political Controversy Surrounding Cashless Stores
On January 30th, the U.S. House Committee on Financial Services held a hearing titled “Is Cash Still King? Reviewing the Rise of Mobile Payments.” The Committee headed by Congresswoman Maxine Waters (D-CA) held this hearing to determine whether businesses should be allowed or prohibited from refusing cash payments in stores. The policy rationale behind the debate is whether cashless stores would have the unintended consequences of harming marketplace access for low-income Americans who do not have a bank account.
On January 30th, the U.S. House Committee on Financial Services held a hearing titled “Is Cash Still King? Reviewing the Rise of Mobile Payments.” The Committee headed by Congresswoman Maxine Waters (D-CA) held this hearing to determine whether businesses should be allowed or prohibited from refusing cash payments in stores. The policy rationale behind the debate is whether cashless stores would have the unintended consequences of harming marketplace access for low-income Americans who do not have a bank account.
In response to the emerging trend of cashless merchants, two Congressional bills have been introduced. H.R. 2650 titled the “Payment Choice Act of 2019 sponsored by Rep. Payne (D-NJ) has 34 co-sponsors and proposes to prohibit retail businesses from refusing cash payments. Rep. Payne argues for Americans to have a choice of how to pay for goods. Also H.R. 2630 sponsored by Rep. Cicilline (D-RI) titled “Cash Always Should be Honored Act,” proposes to make it unlawful for any physical retail establishment to refuse to accept cash as payment.
Late last year Pew Charitable Trust released a study titled “Rise of Cashless Retailers Problematic for Some Consumers” that showed cash remains a vital payment option; at least here in the U.S. While the study listed how proponents of going cashless cited issues such as security, efficiency and an improved customer experience, the study stated “Cash made up nearly 40 percent of in-person transactions in 2017, according to the Federal Reserve, and, although its usage continues to decline, cash is still the most widely used payment type. Further, a Pew survey of consumers in 2018 about their payment experiences found that 78 percent used cash at some point in the previous month; for 14 percent (more than 35 million adults), cash remains the primary method of payment.” The study explored other elements of who is using cash and who isn’t.
The Committee heard from the following witnesses:
Ms. Deyanira Del Rio, Co-Executive Director, New Economy Project,
Mr. Usman Ahmed, Head of Global Public Policy, PayPal,
Mr. Aaron Klein, Fellow, Economic Studies and Policy Director, Center on Regulation and Markets, Brookings Institute,
Ms. Christina Tetreault, Senior Policy Counsel, Consumer Reports,
Ms. Kim Ford, Executive Director, U.S. Faster Payments Council
We expect this to continue to be a point of contention as our society progresses towards modernization. States such as Massachusetts, New York, New Jersey, Pennsylvania and California have and continue to debate this issue, especially with their concerns on lower income access to the marketplace. If you are a technology stakeholder and you are needing guidance in how to navigate federal and state policies on this issue, contact Lanton Law.
Amazon’s Hand Scanning Points to the Need for Biometrics Policy
Recently, we have learned of Amazon’s new hand scanning idea to revolutionize consumer interactions via fintech. The idea would involve creating a payment system that would biometrically scan a user’s hand to transfer payment from the user to Amazon, instead of via a credit card, phone application or cash. New point of sale terminals equipped with this technology would be placed in brick and mortar stores so that customers can “travel lighter” by not having to worry about carrying physical payment forms.
Recently, we have learned of Amazon’s new hand scanning idea to revolutionize consumer interactions via fintech. The idea would involve creating a payment system that would biometrically scan a user’s hand to transfer payment from the user to Amazon, instead of via a credit card, phone application or cash. New point of sale terminals equipped with this technology would be placed in brick and mortar stores so that customers can “travel lighter” by not having to worry about carrying physical payment forms. There are early indications that Visa will be working with Amazon on this idea, along with potentially Mastercard, J.P. Morgan, Wells Fargo and others. While this theoretically sounds like a logical fit for where technology and banking or “fintech” is moving, are there laws in place that govern biometrics?
Surprisingly, there is not a lot of established law on the issue of biometrics. We first started hearing about biometrics in 2014 with a Congressional bill titled the “Biometric Information Privacy Act,” also known as H.R. 4381. Sponsored by Representative Stockman (R-TX), the bill called for penalties to a business entity, governmental entity or person who knowingly (1) fraudulently obtains personal physiological biometric information relating to an individual; or (2) discloses personal physiological biometric information without permission from the individuals to which the personal physiological biometric information pertains. That bill did not get much traction.
Congressional members have recently taken a cautious tone when dealing with Amazon’s cutting edge technology. For example, in late 2018 Rep. Jimmy Gomez (D-CA) joined by Senator Edward Markey (D-MA), Reps. Luis Gutiérrez (D-IL), John Lewis (D-GA), Judy Chu (D-CA), Ro Khanna (D-CA), Pramila Jayapal (D-WA), and Jan Schakowsky (D-IL) sent a letter to Amazon Chairman, President, and CEO Jeff Bezos, requesting information about Amazon’s facial recognition technology, branded and sold as “Amazon Rekognition. The letter expressed concern of the technology’s potential impact on communities of color. And while there are no federal rules outlining biometrics, we do see federal agencies speaking with the tech community on utilizing biometric technology for future unspecified projects.
State policy on this issue has been a bit of a mixed bag. While Illinois, Washington and Texas have biometric laws on the books, other states are following suit. Florida, Arizona, Massachusetts, Connecticut and New Hampshire to name a few are states that are debating biometrics, while California is about to undergo implementing its CCPA otherwise known as the California Consumer Privacy Act protections. We wrote a prior blog on the specifics of the new California law, which we believe will be a precursor to similar policies being developed in the near future.
In conclusion, we expect fintech to continue to be ahead of the law as companies like Amazon push forward to create marketplace solutions that provide convenience and a relatable user experience. The question becomes whether policymakers are comfortable with the pace of expansion and the awkwardness of proceeding with little to no regulatory oversight on something as personal to us as our biometrics.
Contact Lanton Law for additional information or for strategies on how to deal with unsettled legal and policy within biometrics.