Cashless Restaurant Considerations

I know, as I asked on an Instagram post: I got 53 “likes” but no real answers to my question, “Cashless Restaurants – pros and cons?” Out of 11 comments, none really stated an argument. One said, “Been in the NYC bar business for 20 years and would NEVER support a non-cash venue.” And, yes, the user capped the word “NEVER.” When I asked my friend why, I received nothing. Is it because he wants to pocket more of his tips? Does he think he would lose business and therefore make less? Does he think it’s discriminatory? My guess is the latter, but he nor anyone else would comment on specifics. One said, “What’s cash?”

As you may be aware, many establishments have been cashless for quite some time. Eater recently mentioned one establishment’s cashless policy began as early as 2009. Daily Provisions, Van Leeuwen Ice Cream, Milk Bar, Dos Toros, Fuku, Barcelona and D.C.-based Sweetgreen are all cashless today.

There is clearly a trend toward this way of doing business and, from many perspectives, it makes sense. For the record, a private business like a restaurant is not legally required to take U.S. currency. The exception is in Massachusetts. The federal government leaves this debate to individual states to govern. According to the NYC Department of Consumer Affairs, there is no law stating you must accept cash.

So, why go cashless?

• Efficiency: Creating “banks” for staff is time-consuming and can be mistake-ridden if the cash is miscounted. Businesses can close out for the day and close out checks with simplicity, and customers theoretically spend less time at the register.
• Safety: It’s potentially dangerous to go back and forth to the bank for cash. Theft of bank, cash receipts, petty cash and tips are real problems. There’s an inherent danger to sitting in a closed restaurant counting cash, and the safe can be stolen, which has happened to me.
• Bookkeeping: It’s easier for an establishment to record its tips for taxes and payroll when all transactions are electronic. A cashless restaurant does not necessarily mean that cash tips are not accepted (not to be confused with a no-tipping establishment, although some are both). Handling and dealing with cash tips is different than accepting cash for dining tab payment, the latter being more difficult and the source of many of the above issues.
• Profitability: People tend to spend more with credit than cash.

Some establishments take in so little cash all of the above is a hassle. I’ve personally had restaurants where payments were over 90% credit or debit. It would have been easy to go cashless and likely lose close to zero business.

It’s sort of a no-brainer right? Let’s all go cashless! Well, not exactly. Here’s why:

• Equality: Not everyone has debit or credit cards for myriad reasons, whether people are undocumented, don’t have a permanent address or have credit issues. According to the latest national survey by the FDIC, about 6.5% (about 8.4 million) of American households do not have a bank account, and an additional 18.7% are what’s called “underbanked,” which means they are more likely to rely on cash from day to day. In New York, almost 25% of households — and nearly half of black and Hispanic households — are unbanked or underbanked.
  
  Not everyone wants to use their cards. Debt is clearly a big and growing problem in the U.S. and elsewhere. Children do not have credit cards. While someone may give a kid cash to get some ice cream, they may not lend their credit card. And, even if they did, would the store accept it? Should an ice cream shop be cashless?
  
  Our society is increasingly being further separated by those that have opportunity and access to certain things (in this case credit or debit cards) and those who do not. Going cashless can be viewed as discriminatory. Is the business operator comfortable sending out the signal that “your business is not wanted here”?
• Profitability: Depending on a restaurant’s price point and demographics, it may lose a significant amount of business if cashless. Plus, establishments pay fees to process credit and debit cards. This can be as high as 5% (especially with AMEX). That’s up to $50,000 for a business with $1 million in sales. It costs to be cashless.
• Privacy: Some people prefer not having Apple or Square track their eating or other behaviors.

The debate continues with many on the sidelines waiting to see which direction to go. Lawmakers are drafting bills against discriminating against cash. For example, Philadelphia will be the first U.S. city to require restaurants to accept cash beginning in July. The new law also regulates surcharges for cash payments, while New Jersey and New York City have similar bills under consideration.

There are clearly some benefits to going cashless. Is it discriminatory to do so? Some politicians and operators think otherwise. What are your thoughts?

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