In the past, it was not uncommon to walk into a restaurant that only accepted cash, but the rise of credit cards and mobile payments might cause cash-only restaurants to be a thing of the past. In fact, is it possible that society is moving towards cashless payments in restaurants?
These days, the vast majority of consumers are carrying smartphones with them at all times. If mobile payments become even more prevalent, we might start to see customers ditching wallets completely. Some restaurants – even chain restaurants – are beginning to make the switch towards cashless payments. What does this mean for customers who prefer cash? Should your restaurant go down this path, or could it alienate some of your repeat business?
Let’s look at the pros and cons of switching your restaurant to cashless payments:
The Pros of Cashless Payments
1. Quick
Speed and efficiency are valued by all restaurants – especially quick-service restaurants. Switching to cashless payments will speed up each transaction, which improves throughput during even the busiest of times and ensures customers are not waiting as long. When most patrons are already swiping a card or scanning a phone, why make them wait behind someone insisting on finding exact change deep in a pocket or purse?
If customers know your lines always move quickly, they won’t be discouraged when they see a packed house. Paying with cash is proven to slow down productivity, so why continue to allow it?
2. Safe
It’s quite common for restaurants to be the victims of theft, whether from an outside thief or an employee working from within. If your restaurant stops accepting cash payments, there will be nothing for the thieves to steal. Simply advertising that your restaurant doesn’t accept cash will make it safer.
3. Stable
Since most restaurants accept both cash and credit card payments, their bottom lines are dependent on card rates and the volume of credit card transactions. They lose a few cents with every card swipe, and that can add up. While that might make switching to cashless payments seem like a negative, it actually makes it much easier for restaurants to accurately predict their monthly, quarterly, and yearly credit card fees.
The Cons of Cashless Payments
1. Unequitable
The main issue with cashless payments is that it is simply unfair to consumers who do not carry cards or prefer to pay with cash. For some people, credit cards enable the urge to overspend so cash is the smarter option for them. Only taking cards or mobile payments can lead to some awkward situations for patrons. Cutting out the portion of customers who pays with cash could be considered rude by some, potentially hurting your business.
2. Costly
Processing fees are already something restaurants have to deal with, and eliminating cash payments could cause those fees to increase. If you keep all menu prices the same during a switch to cashless payments, your profits will suffer. However, if you do not want to hurt your bottom line and you increase menu prices to compensate, customers will likely notice, and they might not be happy with paying more. If given the choice, customers might prefer to pay the lower price with cash instead of the higher price with a card. No matter which option you choose, a cashless restaurant has some sort of drawback.
3. Potentially Illegal
Although the Federal Government decided that private companies can make their own rules when it comes to accepting cash payments, it is ultimately up to your state. If your state says it’s illegal to discriminate against customers paying with cash, then going cashless could get your restaurant in trouble. Before making any big decisions on whether to go cashless or not, check what the laws in your state say.
There are many strong arguments for and against cashless payments in restaurants, which is why it is ultimately up to you to decide what the right decision is. Some restaurants can make the change without much hassle and actually improve efficiency and profits, while others might run into more problems that they’d expect.
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