Visa Wants Restaurants To Stop Accepting Cash

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Over the years credit card acceptance has grown significantly, both in the US and abroad. It’s rare that I need cash in the US nowadays, while outside the US I’m finding myself less and less reliant on cash (though it varies significantly by country).

Could we soon find ourselves in a situation where many businesses only accept credit/debit card and not cash? This is something most US airlines have been doing for onboard purchases for years, but could this expand to restaurants and other businesses? Well, that’s Visa’s goal, as they want to help small businesses go cashless, and they’re launching a big campaign around it.

Per Visa’s press release:

Today Visa announced it is launching a major effort to encourage businesses to go cashless. Aiming to create a culture where cash is no longer king, the program will give merchants increased ability to accept all forms of global digital payments. Visa will be encouraging and helping merchants go cashless by using innovation to their advantage in order to stay competitively connected to their customers.

To encourage businesses to go cashless, Visa is announcing The Visa Cashless Challenge, with a call to action for small business restaurants, cafés or food truck owners to describe what cashless means for them, their employees and customers. Visa will be awarding up to $500,000 to 50 eligible US-based small business food service owners who commit to joining the 100% cashless quest.

Here’s what Visa claims the benefits of going cashless are:

Visa has recognized the net benefits for merchants when they reduce dependency on cash transaction. Visa recently conducted a study that found that if businesses in 100 cities transitioned from cash to digital, their cities stand to experience net benefits of $312 billion per year. According to this study, in New York City alone, businesses could generate an additional $6.8 billion in revenue and save more than 186 million hours in labor, by making greater use of digital payments. This amounts to more than $5 billion annual costs savings for businesses in New York.

While I’m sure many restaurants don’t mind the increased number of credit card transactions nowadays, I have to wonder how many of them will actually be willing to transition fully to a cashless system.

The way I see, the benefits of an entirely cashless system include, easier accounting, less risk of theft, people potentially spending more, and all around time savings in terms of withdrawing and depositing cash, having the right bills, etc.

But of course there are downsides as well, the main one being the merchant fees on credit cards, and also potentially excluding those who prefer cash transactions, for whatever reasons. I’m sure there are also a few non-legitimate ways in which both restaurants and servers would prefer not having all transactions be by credit card.

Of course hopefully if you’re a regular reader then you’re always using credit cards at restaurants, given the great credit card bonus categories that there are. Why would you pay cash when you can easily earn 2-5x points on dining spend. For example, right now you can earn:

I’ll be curious to see how this develops over time. The way in which we interact with technology is changing at such a fast pace, and with mobile payment methods becoming increasingly popular, maybe this isn’t as crazy as it sounds.

Do you think we’ll see a lot of businesses switch to a cashless system, or is Visa dreaming?

(Tip of the hat to The Points Guy)

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Comments

  1. I’m sure plenty of restaurants will (I think SweetGreen by me is already cashless), but there’s plenty of old school places that are still cash only. Those merchant fees add up, and if your food is good, people will come regardless.

  2. Visa is dreaming. Cash and checks are completely free to use and accept. Whereas they pay a transaction fee on each CC payment.

  3. A number of businesses in stockholm advertise at the counter that they no longer accept cash. Its definitely on its way out.

  4. So I guess people with bad credit or no bank account will not be allowed to eat in restaurants then? While VISA may like this I don’t see why restaurants would want to give up customers that would give them cold hard cash without having to pay a fee to VISA. Also, some restaurants may be on the shadier side and prefer cash which is more difficult to track for tax purposes whereas with credit cards its easily tracked. Not to mention to waitstaff probably preferring their tips to be in cash. I want all restaurants to take credit cards but it becomes kinda silly the idea of places stop accepting US currency.

  5. From what I saw on this Visa will subsidize some hardware in return for the merchants promising to go cashless. Pretty sure this is anti-competitive and a monopolistic tactic here.

  6. The cost of handling cash is minimal compared to the fees. Until banks are more responsible with the merchant fees, this will not take off. I would much prefer all businesses to charge surcharges to process cards as all cash paying people are doing is funding my travel.

  7. I have a bad feeling about this concept. If you want to eat at a restaurant, you need a CC. Fast forward, now that everyone has one a CC (bc you have to eat), “every business has to be cashless.” How does someone that doesn’t have a job or is a refugee or can’t get a job bc of external reasons (insert financial crash bc of greedy banks & no one is hiring) live with no cash? This sounds like privilege & capitalism at it’s finest. *the bank is the shepherd…follow me little sheep*

  8. I can barely use cash in the US anyway bc none of you bother to add prices before posting them on menus so i need coins

  9. I live in Canada, and unless I’m misinformed, cash here is legal tender and businesses must accept it if the customer demands so. Having said that, these days I always pay with credit cards to maximize points (thanks Lucky!). But if a vendor charges me a transaction fee for using the card I never patronize that establishment again and I buy elsewhere. The buyer has all the power, and there are plenty of competitive vendors out there to choose from.

  10. @DB – I’m not sure I follow how Visa subsidizing credit card equipment is anti-competitiive. Is Visa then demanding that not only do they go cashless, but also only accept Visa? Even if they did, doesn’t the merchant still have the option to A) say no thanks, and B) purchase credit card equipment themselves and accept all forms of payment that they want to?

  11. Last year the credit card fees for my restaurant were 155k. Utilities were 220k f we took credit card only our credit card fees would be more than utilities. I can guarantee I am not going to credit card only. Cash is faster and cheaper. I always use my credit card for the points but as a business I hate swiping credit cards.

  12. If Visa really wants to make a dent it needs to mandate that businesses that accept its cards not impose a minimum transaction to use a credit card. For example my dry cleaners has a $10 minimum which often presents issues for me.

  13. Cash will always be needed. Sometimes I want to pay cash for privacy reasons – I don’t want a paper trail of where I went or what I bought.

    In Europe, contactless pay is becoming common and that is better – gets rid of that annoying wait while the guy in front of you puts a $2 item on some card.

    Until the US goes contactless (and we haven’t even gone “chop and pin” yet, it will never happen in the US

  14. “Visa is dreaming. Cash and checks are completely free to use and accept. Whereas they pay a transaction fee on each CC payment.”

    “The cost of handling cash is minimal compared to the fees. Until banks are more responsible with the merchant fees, this will not take off. I would much prefer all businesses to charge surcharges to process cards as all cash paying people are doing is funding my travel.”

    Disagree… Merchants have to pay processing costs to deposit cash and checks as well as paying for transportation to deposit the cash.

  15. It should be legal for businesses to offer a discount for cash. In fact, some businesses do even though it’s technically illegal.

    Also many wait staff prefer tips in cash even if you pay the bill with a CC.

  16. No one has really pointed out that tens of millions of households in the US are unbanked or under banked. VISA doesn’t care about them but why should they be shut out of participation in a large part of the economy?

  17. As to legality, this is from Fed web site.

    Section 31 U.S.C. 5103, entitled “Legal tender,” states: “United States coins and currency [including Federal reserve notes and circulating notes of Federal reserve banks and national banks] are legal tender for all debts, public charges, taxes, and dues.”

    This statute means that all United States money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise.

  18. Might be nice in a perfect world, but not going to happen anytime soon. As long as you have a substantial number of people in the “unbanked” category, there’s no real way to go cashless. I’d imagine that’s far too large a potential customer base for most businesses to want to intentionally turn their backs on. Perhaps it’s possible once contactless payments become more accepted and widespread.

  19. @Martin – Most people prefer cash tips because they engage in tax evasion…

    @Carl P – The Fed response doesn’t help most sit down restaurants. If you eat your food before payment is sought, then you are paying a debt and cash must be accepted.

    Also, some states, like Massachusetts, require all retailers to accept cash.

  20. tda,

    The wait staff I know are not evading tax. It’s just that a cash tip in their hands removes the reliance on the restaurant sharing out the tips correctly. Some restaurants keep some of the tips for management.

  21. Anon, you are hurting yourself with your “boycott”.

    The nearest gas station to me charges 50 cents a gallon more for card than it charges for cash. Its cash-only price is the cheapest gas in my city.

  22. When we were in the UK, they seemed annoyed when we wanted to pay with a card. We were thinking that perhaps the reason was that most didn’t have the machines where you could add a tip, so card=no tip (or no leaving 20 pounds on the table for a 17 pound bill because they’re being really, really, really slow — if that’s what you call a tip).

  23. I’ve seen an number of times. (occasionally happened to me as well), that when the restaurant bill is larger than usual, the waiter will apologize that the “credit card machine is out of order”, and a cash payment is required. Then the clueless (usually American) tourist group or family will all get out their cash to cobble together enough to pay the bill.

    This is most likely to happen in Italy, where tax evasion is a national sport. I have no way of knowing if the business is telling the waiter to do this for tax purposes, or if the waiter to going to pocket it himself. But I have found that when you firmly say that you don’t have any cash whatsoever with you, they will check the credit card machine again, and miraculously it now is working again. 😉

  24. I would rather hear that VISA is going to provide restaurants with portable scanners so that waiters close you out tableside rather than taking your card to some back room.

  25. @tda – if you find yourself in the situation where you try to pay cash at a sit-down restaurant and they don’t accept it – if you choose to “lawyer up” then and there will you at least promise to video tape it so we can all enjoy later???

  26. Visa should probably focus their efforts in Europe more than the US. Too many places in Europe, especially in tourists heavy cities, still do not take credit and it’s annoying AF.

  27. Chris,

    Nobody is going to do that. Most reasonable people accept that some people and businesses just prefer cash. Ideally they will give a discount for cash but, either way, getting all precious about it doesn’t strike me as real mature or tolerant.

  28. Maybe slightly off topic, but I still can’t believe we don’t have chip + pin or contactless card payments yet in the US. Contactless would be so nice if it became as widespread as it is in Europe. I don’t see restaurants going cashless without these kind of advancements and/or a significant reduction in CC fees (really mostly just the latter)

  29. Owen

    I agree although bear in mind that contactless typically has a cap – maybe $40-$50 or so. Otherwise the fraud risk is just too high without any PIN, signature or verification.

    But yes, why the US doesn’t have PIN numbers for credit cards is beyond me. It’s not like we can’t figure out the technology – ATM cards have had them since forever, although the data is on the stripe not on a chip.

  30. what an ill conceived idea. The poor will just get poorer. No cash means they have to buy visa gift cards which are not free, yet.

  31. If I trusted the card companies I wouldn’t care if places moved to cards only. But let’s face it, once Visa or MC or the card companies get a large portion of businesses to move to cards only they will jack fees up fast. The banks could care less about convienience or anything else. Eliminate cash as the competitor and the card companies will gouge.

  32. This was partly brought up so say this happens and you go to a restaurant or all the restaurants are cashless and their credit card machine is down really down for some reason then how are you supposed to eat or buy anything if the machine is down will they do an IOU I do not know what the fascination is with these credit cards I use cash for 95% of my purchases and I don’t like that they are lines do not take cash on board this is very discriminatory towards the unbanked people who have a spending problem and everything else like that

  33. And what happens when your card randomly decides to block all your transactions for suspicion of fraud? It happens to me 4-5 times a year. I guess the restaurant will just have to wait for my next visit to get paid. They’re sure to love that.

    Meanwhile what am I going to eat while I wait for the bank to open Monday and take my complaint?

    (My identity has never been stolen and my cards have never been used fraudulently.)

  34. @daniel Basic economics is how cash paying customers are funding my travel.

    If a business is paying banks all these merchant fees, they must raise prices to make the budgeted margins. So if cash paying people are paying exactly the same as me, they are actually paying more since they are paying more and getting no benefit out of the spending, while I do. If no one used cards, both of use would be paying less since no merchant fees provided there is good market competition.

  35. A field day for some lawyers. Take out any bill and note the words ” this note is legal tender for all debts, public and private”. It is actually illegal to refuse to accept cash (except pennies, nickels and dimes for debts over 2.00).

  36. I thought it was legally required that businesses take cash. “..legal tender for all debts..”
    If a restaurant refused cash they might be find themselves in a lawsuit.

  37. I wonder, do all minors in US have their own credit card nowadays? Cuz in most places in Europe they don’t.

  38. anon, my local “cash only” gas station is cheaper than my local Costco. And more convenient as well as I am not a Costco member.

    But my point is that “cash only” places can be cheaper, as there is a hidden cost to using a card. That may not manifest itself in the price charged, but sometimes there’s a discount for cash (they are not allowed to charge more for a card, but some places do anyway) or have a minimum spend. My local convenience store won’t allow a card under $15.

  39. This post touches on a larger issue of cash itself. In a 8/25/16 Wall Street Journal article by Kenneth S. Rogoff ( Harvard Professor and former chief economist of the IMF) entitled “The Sinister Side of Cash” where he advocates getting rid of $100, $50, and $20 bills to reduce crime. I think a number of academics support that idea.

    While I admit that I put almost all of my spending on credit cards to obtain frequent flyer points, I am against any move to get rid of cash or even the $100 bill. Why, because it puts your livelihood at risk of the capricious legal system and could impact your freedom. A few examples:
    (1) What happens if you are in divorce proceedings and the soon to be ex claims that you are hiding money. Judges typically freeze all funds in that case, even though you might be totally innocent. You need cash.
    (2) Similarly, what happens a court freezes your funds pending resolution of a case. This is a common request of prosecutors to put pressure on the defendant.
    (3) Suppose you want to do something this is legal, but you do not want to create credit card records. Like all the stories where the Father disowns the child, but the Mother is secretly giving child cash under the table.
    (4) Suppose you want to travel to a country like Cambodia, where American Dollars are king.
    (5) Suppose you want to do something sleezy, like buy or sell lapdances. This happens in every bachelor’s party I have been to.
    (6) What happens if you have a legitimate dispute with Visa. They would have a lot of power over you.
    (7) What happens if through a security glitch, you cannot obtain approval to use your funds. I have had difficulties with the Chase security. Due to their aggressive security for ATMs, one time, I my ATM card turned down while traveling, even though I had put in travel notifications. Another time, I tried to put in a travel notification on the phone. They asked me to verify my identity by entering my pin. I typed in my pin, but no numbers were recognized by the system. The security person told me that there was no alternative way to verify my identity. So my ATM card was useless. That is why I travel with ATM cards from more than one bank, cash, and travelers checks.

    I am sure everyone can think of other types of transactions that it would be nice to use cash. Getting rid of cash would put ones livelihood at risk of hacks and glitches in security, would hurt privacy and give the government the means to monitor all of our activities.

  40. FF, if $100, $50 and $20 bills were abolished I would convert my liquid worth into JPY 10,000, CHF 1,000 and EUR 500 bills.

    There must be a way to hold cash that cannot be traced for privacy and security reasons.

    Maybe this is why BitCoin is increasing in popularity?

  41. I guess you don’t spend much time in the Netherlands, then: in most cities, it’s easy to go months without touching cash (the only time I ever take out cash in the Netherlands is when I’m about to go to Belgium). Groceries? An order of drinks at the bar? Dinner? Contactless bank cards for everything. Rent? Most people transfer to their landlord from the mobile app of their bank. Splitting the bill? There’s apps that send out a link to your friends via WhatsApp and can connect directly to your bank account to send instant transfers for the requested amount. I can think of at least 50 businesses in Amsterdam alone that don’t accept cash whatsoever, and banks stopped accepting cheques at their branches many years ago (you can send them by mail to the bank’s headquarters, where they will charge a fee per item handled).

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