Consumer behavior and merchant expectations regarding restaurant credit card payment are changing. Can you feel it?
From Argo Tea to Epic Burger, the trend of businesses going cashless and only accepting credit card payment is still small, but growing in the wake of a customer base that increasingly eschews cash for cards.
In a poll from Gallup taken in June of last year, the number of Americans who report using cash for all or most of their purchases has dropped a third in just 5 years. That’s a staggering shift in consumer behavior in a very short period of time. Your restaurant credit card strategy can’t help but be affected.
In other findings delivered by the Tsys 2016 U.S. Consumer Payment Study, those surveyed were asked the question, “When given a choice, what payment form do you prefer?” 40 percent selected credit, while 35 percent selected debit and only 11 percent selected cash.
But looking deeper into the numbers, only 5 percent of those surveyed between the ages of 25 and 34 use cash. And 99 percent of consumers with a household income over $100,000 use credit or debit for purchases.
Depending on your restaurant’s business model, that could be almost your entire customer base — or will be soon enough, at least.
But the question isn’t “Why should you accept credit and debit cards?” The numbers on that speak for themselves. The real question for many restaurants in 2017 is “Do I even need to accept cash anymore?”
Interestingly enough, Visa is running a trial right now with a small group of 50 restaurants, offering each $10,000 in free technology or marketing expenses in exchange for eliminating the cash payment option from their restaurant—credit card only.
Of course, Visa benefits with every transaction made with one of their cards rather than cash. But maybe your restaurant might, too – not directly, but through operational improvements that can save you money you don’t even realize you’re losing.
First things first, though.
Is it legal not to accept cash at your restaurant?
In short, yes. The Coinage Act of 1965 has a specific clause about the validity of government-issued currency, as “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.”
However,
This statute means that all United States money as identified above are 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 for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.
The exception? If a State law exists to contradict the Federal law, as in Massachusetts. Merchants in that state, including restaurants, are required to accept cash. Don’t forget to check your local laws.
Why no cash?
No reconciliation is necessary.
It’s late. Your staff is tired. You’re tired. And the end of a long, exhausting day may not be the ideal time to have to reconcile point of sale receipts with cash on hand. It has to be done of course, but having non-electronic payment to reconcile outside your point-of-sale system — when you are at your least astute perhaps — is a recipe for a much longer night, if not mistakes. Ditch the cash and you can close up faster, making you and your staff happier (and fresher for their next shift).
There’s less chance for accidental error.
Speaking of counting money at the midnight hour, eliminating cash payments means less chance for miscounting — both in reconciliation and along the way all day long. Relying on point-of-sale calculation isn’t error proof, as servers can always accidentally input numbers incorrectly. But the likelihood of a match between what was charged and what was paid at the end of the shift is much higher when cash is taken out of the equation.
It reduces (but doesn’t eliminate) risk of theft.
Less dollar bills and coins floating around your establishment means less risk of theft from both inside and out. Not exchanging cash doesn’t eliminate the possibility of theft in the form of goods (think overpouring) or charges, but it does make skimming off the top of a check total with manual input much harder. And (applying logic) if you are upfront about being a no-cash location with visible signage, it might deter robberies, both during and after hours.
It’s simply cleaner (but standards must remain).
Plainly put, dollar bills and coins are dirty. Money attracts dirt, grime, and germs on its surfaces and never gets cleaned. Cash changes hands rapidly, and you have no idea where it’s been. This is not the ideal variable to be introducing to an environment where standards of cleanliness must be maintained. Admittedly, credit cards can also carry germs — although their plastic surface leaves them less susceptible to transmission than porous paper.
Nevertheless, it’s important to always completely isolate the exchange of money from food preparation, either by having different staff entirely handling each, or by following state-mandated sanitary standards, which most certainly start (but don’t end) with wearing fresh plastic gloves when handling food and removing them when handling money.
Rewards are automatically applied.
The biggest benefit for the consumer in frequenting restaurants that have gone cashless is the risk of missing out on rewards drops precipitously. Card-linked offers have become so common among credit card companies, banks, and dining rewards programs like those offered by Rewards Network, that paying with cash at your local restaurant could be costing consumers money.
If your restaurant is enrolled in or manages a loyalty program that works with card-linked offers, make sure your customers know about it! It’s not just great encouragement for your diners to keep their cash in their wallet and pay with a credit or debit card. It can also encourage return visits and inspire greater engagement and more money spent each time they dine with you.
Want to know more about how dining rewards programs can drive more money through your restaurant’s doors?
Rewards Network® does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
