As consumers continue to embrace cashless and contactless payments, some businesses are choosing to ban cash altogether. This trend, known as cashless commerce, offers many benefits to businesses, like added security.
There are, however, also several points to consider when determining whether or not going cashless is feasible for every business.
The move to cashless commerce
The list of businesses choosing cashless commerce continues to grow in recent years. Last January, Sweetgreen stopped accepting cash in its stores. Likewise, most airlines don't accept cash for in-flight purchases.
Danny Meyer, the founder of Shake Shack, shared a post on LinkedIn explaining why his company decided to go cashless. Here is an outline of the reasons he gave for his restaurant's decision to go cashless:
- Safety: Businesses that have a lot of cash on hand pose more of a safety risk. By removing cash, businesses also eliminate the likelihood of theft from customers or employees.
- Efficiency: Getting rid of cash can save employees a lot of time. They don't have to deal with managing a register, balancing their drawer at the end of their shift or handling large amounts of cash.
- Convenience: A cash-free business isn't just convenient for employees, but it's also more convenient for guests. It ensures that guests spend less time waiting in line and will have a better experience in the store.
Can stores get away with not accepting cash?
The biggest argument against cashless commerce is that 10 million people in the U.S. don't have bank accounts. These individuals don't have access to a debit or credit card and could be negatively impacted by cashless commerce.
For that reason, many people wonder if stores can get away with not accepting cash. But according to the U.S. Department of Treasury, the answer is mostly yes. On its FAQs page, it stated, "Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise."
But many argue that banning cash is discriminatory and hurts low-income residents. This is why many states are looking to pass laws prohibiting businesses from excluding cash payments.
Philadelphia already has one such law in place, pointing to the city's 26 percent poverty rate. San Francisco, Massachusetts, New York, and Washington, D.C. have all passed similar legislation in recent years.
Things to consider before going cashless
If there are no laws in your state prohibiting cashless commerce, it may be a beneficial choice for your business.
Your business will likely operate more efficiently. For busy entrepreneurs, this is no small feat. You will likely eliminate the risks that come with storing money on-site, and many customers will appreciate the change since cashless payments mean shorter wait times.
You should, however, also keep in mind all the customers you are potentially turning away with this move. And cashless commerce also comes with fees that can range anywhere from 1.95 percent to 2.50 percent of the total transaction price. Here are a few things to consider before making the decision to go cashless:
- Consider what percentage of your demographic pays in cash.
- Would cashless commerce help or hurt the majority of your customers?
- Can you afford to lose a percentage of your customers?
- Can you afford to pay the fees that come with credit and debit card transactions?
If you decide that cashless commerce is the right choice for your business, make the transition gradually to allow your customers time to adjust. And make sure to negotiate the fees with credit card companies so you can save money wherever possible.