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

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,” conducted by payment processing giant TSYS, 40 percent of consumers prefer to pay using credit cards, and 35 percent prefer to use their debit cards, leaving only 11 percent 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 a choice of 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 percent of consumers prefer to use cash when they visit these establishments.

Visa has its eye on this segment of consumers. It’s encouraging small restaurant businesses to embrace card-only transactions by hosting a Cashless Challenge, with $10,000 prizes to be awarded to up to 50 small restaurant businesses that submit short videos describing how going cashless could help their businesses thrive (entries were due Oct. 31, 2017).

Aside from Visa’s contest, 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 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.

• 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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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.

• Why risk turning away customers who prefer cash? Consumers are accustomed to being choosy with which payment method they use, and many prefer to use cash for smaller purchases such as food. Before refusing to accept cash payments, you want to 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, you’ll want to 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 percent of each sale that you would otherwise pay the credit card processing company.

Even though more customers choose credit and debit cards as their preferred payment method, whether moving your restaurant to a cashless system is a good idea or not depends largely on the preferences of you and 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.