Cashierless Amazon Go stores are planning to accept cash

Amazon Go convenience stores will begin to accept cash, according to a report this morning from CNBC, which Amazon confirmed. The retailer didn’t say when cash would be added to existing stores as a payment option, however, only that it was planned. The issue with the cashierless, automated Amazon Go stores is that they require customers to use a stored bank or credit card associated with their Amazon account to make a purchase. This can be discriminatory toward the unbanked and underbanked, who typically pay with cash.

CNBC points out the change comes at a time when many cities are enacting legislation that would ban cashless stores — that is, stores in some markets will be required to accept cash as a means of catering to the unbanked who account for around 8.4 million (6.4 percent) of U.S. households.

Philadelphia last month became the first city to ban cashless stores, the report notes, followed by the state of New Jersey. Other cities are considering this, as well, including New York, San Francisco and Chicago.

Amazon may be trying to get ahead of the legislation by working to accept cash in its cashierless stores before these laws spread across the U.S.

But it remains to be seen how Amazon will implement cash payments. Will it actually staff its cashierless stores with a cashier, or will it go the self-checkout route, where a machine takes the cash payment through inserted bills and then dispenses change?

In either case, the need to accept cash payments could dampen the store’s performance, as it could create lines and bottlenecks in the stores and slow the stores high performance. If self-checkout machines were used, there’s overhead in stocking them with cash, maintenance and helping customers when the machines inevitably break down. But a dedicated cashier could mean an expanded headcount, and the costs associated with additional employees.

According to one analysis, Amazon Go’s Seattle store has been generating four-five the number of inventory turns per year compared to typical retailers, and its annual sales per square foot of the selling area was $2,700. These figures are expected to grow as more customers shop the stores, along with other tweaks Amazon may make to drive more sales. But this level of performance is possible because of the automation.

CNBC caught wind of Amazon’s plans through a tip from an insider who sent the site a recording of an Amazon employee meeting, where Amazon’s senior vice president of physical stores, Steve Kessel, was responding to a question about the “discrimination and elitism” at Amazon Go stores.

The retailer confirmed his response, where he said Amazon was “planning additional payment mechanisms.” Specifically, Amazon said customers would be able to check out, pay with cash and receive change.