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What Cashless Means for Your Business – Legal/Regulatory Perspective by Nancy Brooks

Driven by consumer preference for faster, more convenient, ways to pay, and merchant desires for secure transactions and increased data about customer preferences, digital/mobile payment transactions are on the rise.  “Cashless stores” – retails businesses and restaurants that no longer accept cash as a means of tender for payment, are cropping in the U.S. and abroad.  In fact, last January, a Wall Street Journal article announced, “The Cashless Society Has Arrived – Only It’s In China.”  More recently, in the U.S. some states and cities have considered banning cashless stores, because they may have a quasi-discriminatory effect because more immigrants and minorities may be adversely impacted by a cashless policy.  If you can’t open a bank account, it is challenging to obtain the accounts and access payment products necessary to make an electronic payment transaction. 

For merchants and payment service providers enabling digital/mobile payment transactions, it is important to be aware of laws and regulations intended to protect consumers in a digital environment, such as:  UDAAP (simple, clear disclosures), Data Privacy and Data Security laws, E-Sign (electronic communications), and recently effective amendments to Regulation E (prepaid accounts, P-to-P payments, digital wallet transactions).  Digital transactions can provide a wealth of consumer purchasing information that can be mined and analyzed for consumer preferences and trends.  However, data privacy laws will impact the extent to which a business can collect, use and store personal consumer data.  Finally, ensuring safety and soundness of the payment ecosystem is always a concern, which in the US, means paying close attention to anti-money laundering/”know your customer” laws, regulations, and regulatory expectations.

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