For many of us, it’s hard to remember the last time we paid for a meal using cash. We are slowly but surely moving towards a cashless society. This is evident in the way we make routine dining purchases. Research by TSYS reveals that 40% of Americans pay with credit cards, 35% with debit cards, and 11% with cash. Interestingly, of the Americans between the ages of 25-34, only 5% pay with cash. TSYS also found that 99% of consumers with a disposable income of $100,000 or more will use a credit or debit card for purchases. The support of cashless payment options such as Venmo, ApplePay, GooglePay, Bitcoin, and Square will only continue to increase the number of Americans who opt out of paying in cash. Those in favor of cashless restaurants believe that it will increase efficiency, safety, accuracy, and aid in data collection. Even so, there are always both pros and cons…Let’s take a look at both.
Restaurants continually seek operational methods that will increase efficiency. Going cashless can afford restaurants the opportunity to process transactions quickly, which keeps lines moving during busy hours and shortens ticket times. According to an article from eater.com, cashless payments can save an average of seven seconds in deposit transaction time. Seven seconds may seem trivial, but that time adds up and can prove quite beneficial during rushes. If employees are spending less time counting coins, digging for loose change dropped under the counter, or running to the office to grab change – it means they are spending more time with the customer, ensuring an overall better customer experience. Additionally, cash-based transactions can lead to tedious and mistake-prone bookkeeping. Going cashless allows for automated transactions and real-time financial updates.
Safety & Fewer Errors
Cashless transactions reduce errors such as miscounting change or misplacing bills. In addition, it eliminates the possibility of register skimming, theft from within. And, let’s face it, most outside thieves are not interested in holding up a restaurant for a soda or burger. The most coveted product of theft is cash. Removing cash from the register and safe immediately curtails this type of theft.
The digital era has afforded businesses the opportunity to collect a wide range of customer data which in turn provides worthwhile insight into consumer habits. Going cashless aids restaurateurs in compiling helpful consumer information. They are then able to better serve customers by incorporating appropriate apps, online purchase opportunities, and loyalty reward programs.
Inconvenience & Discrimination
Although most transactions are cashless, there are customers who opt to pay in cash. In fact, many consumers can only pay in cash. This can be an inconvenience. Surprisingly, a small percentage of restaurant customers are “unbanked”. This refers to those who for personal reasons choose not to use banks or to those who are unable to establish bank accounts. For this population, cashless operations can seem discriminatory or exclusive. Restaurant owners who choose the cashless route essentially isolate themselves from this customer segment. Subsequently, a Shake Shack in New York recently reversed their decision to go cashless due to a large number of customer complaints and foregone cash sales.
Increased Prices, Employee Morale, & POS Failure
Unfortunately, going cashless usually means raising prices to cover the credit and debit card fees incurred. Customers who are willing to pay in cash if it means paying less, often become frustrated. Cashless restaurants may also dampen employee morale, specifically waiters who no longer receive cash tips. Low employee morale often leads to high employee turnover and poor customer service. Finally, technology is not fail-proof. If the power goes out, systems crash and reset randomly, and things simply break. Restaurants that are completely cashless don’t always have backup. In this case, if there is any POS failure, all business ceases.
Whether you choose cash or plastic, everyone has got to eat! Cash versus cashless will most likely be an ongoing conversation. In an increasingly competitive market, it’s important to consider the community you are serving.