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Time to Ditch Cash? Why Credit Card Only Might Make Sense editorial staff editorial staff

Consider the advantages and disadvantages of moving to a cashless system.

  • A cashless system may be a feasible goal for your organization. Some restaurants and other food service companies have stopped accepting cash as payment.
  • Cashless systems can improve tracking of transactions. There is a lower risk of theft and money laundering when you operate with a cashless system.
  • However, cashless systems may alienate your current customer base. There are also laws that ban cashless systems in some areas.

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. Plus, according to the 2016 U.S. Consumer Payment Study by payment processing giant TSYS, 40% of consumers prefer to pay using credit cards, and 35% prefer to use their debit cards, leaving only 11% who prefer to pay with cash.

However, you may see a higher percentage of your customers using cash. Per the same study, consumers value having different payment options, and the method they use largely depends on the type of purchase they're making. Restaurants, particularly coffee shops and fast food, receive more cash payments, as 28% to 33% of consumers prefer to use cash when they visit these establishments.

Pros of going cashless

Now is a good time to evaluate whether the cashless movement makes sense for your restaurant. Consider the following points.

  • It can save you time. A cashless system allows you to eliminate cash management tasks from your daily to-do list. For example, you wouldn't have to count the cash in the till at the beginning and end of each shift. When accepting payments, you wouldn't have to count the cash you receive and the change you give back, as all you'd require is a receipt signature. You also wouldn't have to regularly visit the bank to order small denominations.

  • It can increase checkout efficiency. The checkout process is expedited during cashless transactions. There's no exchange of bills, which eliminates the need to count out change to the customer. If you have a long checkout line, customers will appreciate how quickly the line moves.

  • It reduces theft and increases security. If you don't keep cash on hand at your restaurant, you don't have to worry about securing cash drawers and a safe. It discourages employees from skimming off the cash register and criminals from robbing your restaurant because there's no money to steal, which can be a significant benefit if your restaurant is located in a high-crime area or keeps late hours. It also eliminates the need to go to the bank after hours to make deposits. There is also a lower risk of money laundering, because when you go cashless, there is always a way to track transactions.

  • It makes foreign exchange easier. When you go cashless, there is no reason to worry about currency exchanges. International customers can easily complete their transactions without having to exchange their currency beforehand.

  • It improves accounting accuracy. When you only accept card payments, you don't have to deal with cash shortages. All tips are recorded, so you don't have to worry about unreported tips and potential audits come tax time.


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Cons of going cashless

Although the advantages to a cashless system are attractive, you want to carefully consider the other side of the argument before deciding that card-only payment is right for your restaurant.

  • You'll risk turning away customers who prefer cash. Consumers are accustomed to choosing which payment method they use, and many prefer to use cash for smaller purchases such as food. Before refusing to accept cash payments, carefully think about your customer base and determine whether it's a move that will work for them. Will your cash customers be willing to pay with a card, or will they take their business elsewhere? Analyze your books and develop a good understanding of what percentage of your clientele you risk losing if you move to cashless payments only.

  • Rejecting cash payments may be illegal in some states. In Massachusetts, it's illegal to require your customers to purchase on credit. Before moving to a cashless system, check your state laws to ensure it's legal.

  • Card payments are more expensive to accept than cash. When your margins are tight and your average sales tickets are small, you may prefer it when your customers pay cash, because you get to keep the 2% to 4% of each sale that you would otherwise pay the credit card processing company.

  • It could alienate your customer base. Think about your clients before deciding to go cashless. If you serve certain populations that mainly use cash as currency, then you may hurt your brand. Elderly or low-income families may have less payment options to use and may turn away from your company 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 or not depends largely on the preferences of your specific 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.

Image Credit: cyano66 / Getty Images editorial staff editorial staff Member
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