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fireburn95 said:

Let's say it was your standard brick n mortar retail store. This employee would have to face customers.
Let's say the applicant is good, well qualified and apparently reliable.

Me? I probably wouldn't, at least not in a job where you face customers daily. We've all been in that situation where we are with someone random, and the only thought in our head is "is that a boy or girl? :o"
That's not really the reaction you want consumers to have. When you see a transgender, you often think immediately "this is a trans-person" even if you completely are accepting of their lifestyle. It's just that thought though and you feel like they would be more of a liability, even if they are completely hard working.

Your answer? be brutally honest and I do not mind if you tell me I am wrong.

The way you think sets you up for a discrimination lawsuit. If they are a qualified and excellent candidate and you deny them due to trans and not because there are equally or better candidates then you can be sued.