No Cash(ew) Money

Cashless Payments are the Future – But at What Cost?

The days of “I left my wallet at home, can you spot me $10 for lunch?” may soon be over.

Like many millennials, I can’t remember the last time I carried cash in my wallet. To be honest, I rarely ever carry a wallet – my Metrocard, ID, and primary credit card are all stored in my phone case. If you’re nodding in agreement as you read this, you’re not alone. A study by TSYS found that only 5% of Americans between the ages of 25 to 34 prefer to pay in cash.

Putting Cash out of Business?

Over the past year, the cashless revolution has taken the fast-casual food industry by storm. Fast-casual restaurant chains including Sweetgreen, Dig-Inn, and Shake Shack have gone completely cashless.* Other establishments, such as Starbucks, still accept cash but offer branded apps to give consumers the ability to order ahead and skip long lines.

As the payments landscape continues to evolve, digital wallets are becoming the norm, not just an option. Cashless payment methods are especially gaining popularity among restauranteurs who believe that the immense amount of time and effort required to manage cash handling procedures is not worth the amount of business that is done in cash.

According to Sweetgreen cofounder and co-CEO Jonathan Neman, during beta testing, employees at cashless locations performed 5–15% more transactions per hour. The bottom line? Guests are in and out several minutes faster in a cashless store than in one that accepts cash. In early 2017, nearly all of Sweetgreen's 64 locations went completely cashless.*

Food for Thought:

Digital payment integration is a double edged sword, as businesses must meets consumers' rising expectations for digital payment integration, while also considering the potential challenges of going cashless.

Though many of us take our smartphones and credit-cards for granted, there are millions of people who do not have access to the technological and financial tools necessary to participate in cashless payment methods. While cashless payments may be preferred by millennials, “when businesses reject cash as a valid form of payment, their goods and services effectively become off-limits to anyone who cannot access cash alternative.”

In my opinion, Starbucks has hit the sweet spot. While the app leads to faster transactions for those who choose to use the app, no potential customers are excluded since in-store purchases can still be made using any form of payment. That said, the app has been wildly successful. eMarketer estimates that “by year’s end, Starbucks will have 23.4 million users in the U.S. who have made an in-store mobile payment in the previous six months."

Washington, Lincoln and Hamilton – it looks like you’re going to be sticking around for a bit longer.

*This excludes locations in Massachusetts, where it’s illegal for a business not to accept cash.

Want to Learn More?

• At Sweetgreen, a Suitcase Full of Cash Won't Buy You Lunch

• Cash Is a Miracle. So Why Are More Businesses Refusing It?

• Starbucks Mobile App Launches in Indonesia

• Starbucks's mobile payments system is so popular in the U.S., it has more users than Apple's or Google's

• Sweetgreen Is Going Fully Cashless In 2017

• The Challenge Of Going Cashless

• Welcome to the Future  -  It's Cashless

• 2016 U.S. Consumer Payment Study