The New York City Council passed a bill Thursday that will slap hefty fines on businesses and restaurants that refuse to accept cash.

The bill imposes civil penalties: $1,000 for the first violation, and $1,500 for additional violations. Businesses that have a way to convert cash into cards -- say, laundromats -- are exempt, but they must not impose a fee for the cards or require a minimum deposit more than $1, and the cards cannot expire.

If the cash conversion machine malfunctions, the bill stipulates that the business must provide a way to accept cash and post notice next to the inoperative machine. The legislation also gives food and retail businesses leeway not to accept bills larger than $20.

Studies show that non-white consumers have less access to credit -- in 2018, 15 percent of white people did not have access to a credit card compared with 32 percent of African Americans and 28 percent of Latinos in America. A 2017 FDIC study found that 6.5 percent of households in the United States were unbanked and did not use bank products at all.

"We in the Council have real concerns that an increasingly cashless marketplace could have a real-world discriminatory effect on the most vulnerable New Yorkers," said the bill's sponsor, Councilmember Ritchie Torres, in a phone interview. "There are some people, especially senior citizens...who prefer cash as a habitual method of payment. There are some who prefer cash because it's more predictable. Or they're concerned about privacy."

"Whatever the reason is, the consumer should have the power to choose their preferred method of payment," Torres added. "It's not only about privacy and equity, it's also about consumer choice."

Similar bans now exist in Philadelphia, San Francisco and New Jersey and Massachusetts. The bill, which passed with 43 votes in favor and three votes against, would go into effect nine months after Mayor Bill de Blasio signs it into law. A de Blasio spokesperson said Thursday that "the mayor supports the bill."

Popular cashless restaurants in New York include By Chloe, Dos Toros and some of the establishments in the vast Momofuku and Danny Meyer Union Square Hospitality Group empires.

“We understand the positive intent of the legislation, and while only a small percentage of restaurants have gone cashless for the operational and safety benefits, this ban will pose challenges to those businesses that will have to begin accepting cash,” said Andrew Rigie, Executive Director of the NYC Hospitality Alliance industry group, in a statement. "Regardless of the cashless ban, our elected leaders need to support polices that get more New Yorkers banked, because technology is advancing and mobile payments are the way of the future."

Cashless evangelists like Meyer have said the trend was efficient and kept their workers safe from late night robberies.

"We know that some have raised concerns about the socioeconomic implications of operating a cashless business," Meyer wrote in a LinkedIn blog post in 2018. "By not accepting cash, a restaurant may be excluding prospective guests who do not have a bank account. And we might be inconveniencing guests who simply don’t have their credit/debit on them at the time. That’s certainly not our aim. We take these hospitality concerns very seriously and carefully weighed them when initially embarking on this process. But as an organization devoted first and foremost to our employees, we determined that the benefits for our team—particularly their safety—outweighed the unintended side-effects for a small segment of our guests."

When Sweetgreen began to go cashless in 2016, the salad chain's founder told the New York Times at the time the move was to speed up service by 10% because workers didn't have to spend time counting money, and to reduce the threat of theft or robbery. Customers who have to order via apps also tend to spend more money on their food. Sweetgreen stores started accepting cash again last year after criticism.

The National Retail Federation said retailers shouldn't be micro-managed by local governments, especially when most small transactions are cash purchases.

“Retailers should have the right to choose which payments to accept and decide for themselves whether going cashless makes sense for their business. Instead of micro-managing the decisions of retailers, state and local governments should allow merchants and customers to determine the appropriate market for payment methods," said National Retail Federation Senior VP and General Counsel Stephanie Martz in a statement. "These proposals are a solution in search of the problem since cashless stores are fairly uncommon and many businesses actually prefer cash payments in order to avoid credit-card transaction fees. The majority of small purchases are still made in cash, and we don’t expect that to change anytime soon."