August 31, 2017
Would your business stop accepting cash for $10,000?
Visa is offering restaurants $10,000 if they stop accepting cash payments from customers. It’s called the “Visa Cashless Challenge,” and it would force patrons of restaurants that accept the challenge to pay with a credit card or digital payment method.
The $10,000 is designed to help pay for needed tech upgrades, like “installing platforms that accept payments from phones, smart watches or other devices.”
It’s easy to see what’s in it for Visa — after all, why would a major credit card company care about people paying in cash? Between the processing fees and other charges that businesses pay to accept credit cards, Visa would come out far ahead.
Visa would probably argue that paying with credit is easier for customers than paying with cash, so they wouldn’t mind visiting a business that makes them pay with a card. Research, however, shows that just isn’t true. As of 2016, cash is the most frequently used payment method — people pay with cash in 32 percent of transactions — and they choose to use it even when other payment methods are available. In contrast, credit cards are only used in 21 percent of transactions.
And it isn’t just older people who like paying with cash: Interactions Marketing studied more than 2,000 respondents between the ages of 14 and 19 and found “64 percent of Gen Z prefers to use cash as their method of payment vs. credit and debit cards.”
So by taking away customers’ ability to pay with cash, you’d likely be losing business — and the fees associated with the remaining credit-based business could cost small businesses up to 5 percent of their revenue, says the U.S. Small Business Administration.
The Cashless Challenge is only offered to restaurants, but it’s not a big leap to think a similar deal could be offered to retailers in the years to come. But the proven needs and desires of consumers must be considered. Yes, there’s something to be said for working to improve customer service through technology, but true customer satisfaction includes the option to pay cash.
The cost of accepting cash can be significant, but the cost of refusing to accept it could cost you even more. Make sure you have a handle on the costs associated with accepting cash and the costs associated with accepting credit cards and other digital payments, so you can make the best decisions for your stores, your bottom line, and your customers.