Most of your customers prefer paying by card, but does it make sense for your restaurant to accept card payments only? There are several advantages to moving your restaurant to a cashless system. It can save you time, increase your restaurant’s security and improve the accuracy of your accounting. Research shows that credit and debit cards account for the most commonly used payment instrument. In 2019, 54% of consumers made purchases with a credit or debit card, compared with just 26% who used cash, according to the Federal Reserve.
For restaurants, the need to accept digital payments has increased during the COVID-19 pandemic. Research has shown an increasing number of diners using digital systems to place orders. To ease the process of accepting these orders, being able to pay by credit or debit card is critical.
Cashless systems make it easier to track transactions. There is a lower risk of theft when you accept credit card payments only.
Now is a good time to evaluate whether the cashless movement makes sense for your restaurant. Consider these points:
In order to accept credit card payments, you need to partner with a highly rated credit card processor. You can learn more about some of the top options in our review of Merchant One and our Fattmerchant review.
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Although the advantages to a cashless system are attractive, carefully consider the other side of the argument before deciding that card-only payment is right for your restaurant.
Currently, 79% of Americans have at least one credit card, but there are disparities among different groups by race, age and income. Before going cashless, consider who your customers are and if they have credit cards.
According to a study done by the Federal Reserve in 2020, credit card use varies by race and ethnicity. This is the percentage of the ethnicities it studied that have a credit card:
Also, LGBTQ individuals are less likely to have a credit card: 82% of LGBTQ Americans have a credit card, as do 75% of LGBTQ adults between the ages of 25 and 34. Credit card use is low among lower-income Americans as well as undocumented immigrants.
Consumers aged 18 to 24 have the highest preference for cash as a method of payment compared to other age groups. However, they also use debit cards and cashless payment options like Apple Pay and Google Pay, which can be processed with credit card readers. Customers aged 65 and older, on the other hand, are the least likely to prefer cash and most likely to use a credit card, followed by consumers ages 55 to 64.
Over half (55%) of consumers with incomes of less than $25,000 prefer cash, and this percentage goes down as income goes up.
Customers prefer to use cash for small purchases. For purchases under $10, 45% of Americans prefer to use cash. The average amount of cash transactions is $21, compared to $44 for debit cards. So, if your average ticket order is $20 or less, you will likely lose business if you stop accepting cash.
Even though more customers prefer credit and debit cards as their payment method, whether moving your restaurant to a cashless system is a good idea depends largely on the preferences of your customers. While some restaurant owners may enjoy the convenience of a cashless system, others may decide that catering to their customers’ preference to use cash outweighs the cashless benefits. Some restaurant owners may even choose to pursue a cash-only business model. For many restaurants and their customers, it’s still too early to declare cash obsolete.