Will Paying With Actual Money Soon Become a Thing of the Past?

Why businesses are embracing the cashless trend, and what's at stake when they do

The cashless movement is largely coastal and urban, and confined to restaurants and takeout places, at least for now. Illustration: Miguel Montaner

In his nearly 30 years in the restaurant business, having done every job from waiter to regional director, Michael Ryan has learned a good deal about running a profitable house. His operational savvy helped make a success of legendary New York City names like Shaw’s Crab House and Blue Water Grill. Meanwhile, his watchful eye took note of many liabilities: the time it took to count the register drawers at night, for example, or the fivers and ten spots that would sometimes disappear into employees’ pockets as they worked behind the bar.

Which is why both locations of his latest concept, Filipino taqueria Flip Sigi, do not accept cash.

Before the restaurant adopted e-payments exclusively, “the manager was spending 20 hours a week counting cash, going to the bank and signing off on everybody’s [drawer],” Ryan says. If an employee’s count came up short, they’d be held to account for the shortage. That, Ryan says, “builds up animosity—and that takes its toll.” Today, with no cash in sight, Ryan’s manager can concentrate solely on running the restaurant, and endless cash-outs are yesterday’s problem. “We close at 11 and we’re out by 11:15,” Ryan says.

Though the cashless movement is largely coastal and urban—and confined, for now, to restaurants and takeout places—a growing number of businesses in America’s major cities are turning a cold shoulder to greenbacks.

At its 75 locations spread between Los Angeles and eastern seaboard cities like Philadelphia and Boston, artisanal salad shop Sweetgreen began going cashless in 2017. So did taqueria Dos Toros, with 20 locations in New York and Chicago. The influential fast-casual restaurant Tender Greens, with 27 units dotting the California coast, went cashless early in 2018. Situated in New York and Boston, locavore lunch spot Dig Inn stopped accepting cash at locations where 8 percent or fewer of the transactions were in cash, and Starbucks has been testing a cashless system at a Seattle location since last year. New York-based Union Square Hospitality Group currently has four concepts that no longer take cash—“and we have others on the way,” founder and CEO Danny Meyer promised on the company’s website.

Across the country, mom-and-pop restaurants have also joined in, some of them spurred by Visa’s 2017 “Cashless Challenge,” which handed out $10,000 prizes to 50 operators with the best stories of how eschewing paper money has helped their businesses. (Winners included Houston’s Peli Peli Kitchen and an Austin, Texas, Mexican food truck called Alli.)

“We observed about a year and a half ago that there was a front edge of this movement [of] small businesses eliminating cash altogether,” explains Visa’s chief product officer, Jack Forestell. “We thought that was an interesting choice.”

While credit cards have been around since the 1950s, only recently have plastic and mobile payment technology together threatened to drive paper money to extinction. The growing wave of urbanization, the combined $300 billion spending power of millennials and Gen Z (two groups inherently comfortable with electronic transactions), and the rise of apps like Apple Pay and Google Wallet have coalesced to make cashless the next big thing.

In 2016, a Gallup poll showed that Americans were steadily abandoning cash as they moved toward electronic payment methods. While in 2011, 36 percent of Americans said they conducted all or most of their transaction in cash, by 2016 that number had fallen to 24 percent. According to TSYS’s 2017 Consumer Payment Study, close to half (44 percent) of consumers opt for debit cards at transaction time, and the Federal Reserve’s 2018 Payments Study found that between 2016 and 2017, chip-authenticated card payments grew in volume by 19 percent.

Going completely cashless comes with a multitude of additional, and by now well-publicized, gains. It boosts efficiency by speeding transaction times. “Without handling cash and making change,” Meyer has written, “we can serve more guests in far less time.” The absence of cash also curbs employee theft and makes for a safer working environment. “You’ll not have an armed robbery for credit-card receipts,” notes Melissa Wilson, principal at restaurant consultancy Technomic. “And you don’t have to worry about the managers going to the bank at night.”

Other benefits are less visible but no less significant. In 2016, Sweetgreen (which did not respond to requests for comment for this story) told the Boston Globe that going cashless saved 100,000 driving miles for armored cars and eliminated 500 pounds of paperwork—and that was just for its Massachusetts locations.

The vanguard of the cashless trend is undoubtedly Amazon Go—the grocery stores that use computer vision, AI and machine learning to let shoppers stroll out the door with nary a stop at the register. But any retailer that already accepts plastic can theoretically go cashless tomorrow. “Once you’re equipped to accept electronic payments [like] credit, debit and prepaid, there’s nothing else you need to do,” says Forestell.

The logical next step, then, would be for every establishment to go cashless. Yet the fact that an overwhelming majority have yet to do so points to the underside of the trend.

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This story first appeared in the Feb. 4, 2019, issue of Adweek magazine. Click here to subscribe.

@UpperEastRob robert.klara@adweek.com Robert Klara is a senior editor, brands at Adweek, where he specializes in covering the evolution and impact of brands.