The newest tech trend in restaurants? Going cashless.

You read that right. If you think a business going cashless is crazy, you’re not alone. After all, how could the oldest form of currency not be accepted as payment?

While phasing out paper money entirely would be a huge undertaking, some restaurants have stopped accepting bills or coins. Some restaurant chain owners see the transition as a step toward the future, largely because restaurant point-of-sale systems make it so easy. Others tout the benefits of increased safety and cleanliness (more on that below).

The conversation on restaurants going cashless is new and growing. Below we identify the most notable arguments in favor of running a plastic-only restaurant.

  1. Not accepting cash eliminates the risk of thefts and reduces crime rates in general

The fifth time the Park Café & Coffee Bar in Baltimore, Maryland, was held up at gunpoint, the owner decided to remove the cause: cash. Taped to the café’s door the next day was a note that read, “Due to the recent robberies and continued crime in the neighborhood, we are no longer accepting cash.”

The move was intended to be temporary, but owner David Hart might not return to the old payment practice. As Hart explained to the Baltimore Sun, “Going cashless for me was something that I felt forced into, and yet now that I’ve made that decision, the feedback from the community has been very positive.”

Although Hart admits that several customers were annoyed at first when their cash was not accepted, they seemed to understand once the reason was explained. While 20% to 25% of Park Café’s sales were paid for in cash before the switch, Hart estimates that just 5% or 10% of customers paying in cash didn’t have a card. Other restaurants undergoing cashless transitions claim that business won’t be hurt since upwards of 90% of their sales are paid for with cards anyway.

Hart is considering ways to accommodate customers without credit or debit cards.

In the early ’90s, the government stopped paying out welfare in checks that could be cashed out, opting for electronic transfers that distributed debit cards to recipients instead. Over the next 11 years (1990-2011), the University of Missouri monitored crime rates in Missouri. The research team’s conclusion was that going cashless reduced crime statewide by 9.2%.

In other parts of the world, South Korea, Denmark, Norway, and Sweden have encouraged digital payment methods over cash. To reduce money laundering and crime, the European Union has plans to phase out the 500-Euro note by 2020.

In cases like Park Café, where crime is a constant threat, going cashless adds a new level of security.

  1. Going cashless is the future of business transactions

Fast-casual restaurant Sweetgreen, part of the sustainable food movement, will be going cashless in all 64 locations nationwide (excluding Massachusetts, where it’s illegal not to accept cash). Cofounders Jonathan Neman and Nicolas Jammet list crime prevention as a supporting argument for going cashless, but their real motivation is innovation. In an interview with Fast Company, Neman expressed confidence in a future that’s cash-free. “We believe the future is hyper-experiential and hyper-convenient. The middle is going to get squeezed out.”

Sweetgreen caters to a crowd that wants to eat something fast and healthy for lunch. The duo argues that by accepting debit and credit cards only, locations increase their meal output. The pair claims that card-only payment will not only improve efficiency, but this will make the experience more personal overall.

Considering that most people pay for fast food with cash, going cashless would seem counterintuitive. But after testing the cash-free payment model in select locations, the Sweetgreen founders are confident that it’s the right move. “Cash has become such a smaller piece of our tender,” Jammet explained to Fast Company. “When we opened nine years ago, it was 40%. Now, all stores are between 10% and 15%.”

The testing period showed that Sweetgreen’s customers don’t care how they pay, so long as the process is clearly explained beforehand. Going cashless might also encourage customers to start using the Sweetgreen app to pre-order their meals, the ideal direction for a tech-inclined company to head in.

Unsurprisingly, some restaurants in San Francisco have already adopted cash-free policies. Split Bread and the Melt, for instance, opened with cashless payment policies. The Melt even went a step further, debuting with online, mobile, and QR-code ordering.

The owner of Split Bread was motivated to reject cash tender because it’s less efficient than charges. With tender, managers need to count the bills at the end of the day, staff need more time to give back change, and several registers with change need to be present. Like the Sweetgreen co-founders, Split Bread claims that working with cash is too slow for modern dining. “Getting rid of cash makes the customer experience as frictionless and streamlined as possible,” says David Silverglide of Split Bread. “[When paying with debit and credit card], cashiers can get people through the lines quickly.”

  1. Charges and spending are easier to account for, and budget discipline becomes a thing 

With the help of modern point-of-sale systems, charges are easier to keep track of. Transactions can be reviewed in one place, minimizing human errors and in-house thefts. Additionally, without cash, business owners no longer need to make deposits at the bank.

According to Manoj Nagpal, CEO, Outlook Asia Capital, “If all transactions are on record, it will be very easy for people to keep track of their spending. It will also help while filing income tax returns and, in case of scrutiny, people will find it easy to explain their spends,” 

Having an easily accessible digital record helps restaurants keep tabs on their spending, ultimately resulting in better budgeting. With this record, restaurants can then employ the use of various analytical apps and tools to help monitor their spending patterns and give good insights on how to implement budgets better and also help with taxiing.

When spending is controlled, higher investing is like to follow, as budgetary leaks and unaccounted spending are easily curbed with a proper record, and cashless pos systems specifically designed for restaurant businesses help make this happen.

  1. Faster business

A typical example of the impact of a cashless system can be seen in Dos Toros – a Mexican food chain co-owned by Leo Kremer. It was observed that lunchtime lines began to move faster immediately after the implementation of POS-based transaction into their chain of restaurants, and the reasons aren’t far-fetched. Customers no longer take time fumbling for bills or coins, and employees don’t need to make change anymore.

Leo Kremer was on record to say that “For the vast majority of customers, there’s no reaction at all; they’re already paying with their cards. And the significant majority of cash customers don’t have any problem with it either.” Leo also has 14 stores in New York and one in Chicago.

Employees have been trained on how to politely educate customers who offer cash about the reason for this decision – saving the business time and money and faster customer service.

The trend toward cashless businesses for small and mid-sized businesses is on a fast track, with restaurants taking the forefront at it. With menus and prices more upscale than fast-food chains, but with the aims to serve as quickly as a McDonald’s or Subway, cashless servicing is the future for restaurants.

Many business owners in other industries are beginning to prefer the cashless form of payment. Cash costs money, from banks charges to cash deposits struggles and handling of coins. For larger businesses that require cash pickups by armored car services, that’s another cost incurred on the business. In essence, cashless payments do not only benefit Restaurants; they also benefit other businesses too.

  1. For the employees

For businesses handling a lot of cash, one of the major concerns is the safety of their employees, as cash is known to attract trouble from criminals. Indirectly endangering the lives of the employees at all times. In an article published via LinkedIn, Union Square Hospitality Group CEO and co-owner of Tacocina Danny Meyer points out that, going cashless “mitigated the very real security risks associated with having large quantities of cash on-site, so we can become a safer place for our team and our guests.” 

Co-founder Adam Landsman of Sunday in Brooklyn shares his sentiment, saying, “There’s no concern over theft or the safety of our managers or staff when they have to walk home.” He also added that going cashless has helped their employees reduce after work hours. In his words, “It saved a tremendous amount of time on the accounting side of things, for the manager at the end of the night.”

Also, cash bills can be really dirty. There are claims that paper money carries more germs than a toilet bowl. One study even revealed that a huge majority of US dollars are contaminated with traces of cocaine! Touching money and then handling food is not ideal for sanitation.

Every restaurant mentioned so far has included cleanliness as a benefit of going cashless.

The Cons of Going Cashless

There are several notable cons for restaurants to go cashless. Each affects the customer and business, respectively.

First, customers who don’t have cards are excluded from eating out. Whether it’s intended or not, cashless hints at elitism. Tony Zazola, owner of the now-closed Commerce in New York City, shocked the public by going cashless. He became notorious for later saying that if a diner couldn’t pay with a card, then perhaps he or she didn’t belong there at all.

The FDIC counts 9.2 million unbanked or underbanked households in the United States. Depending on where your restaurant is located, going cashless can impact a considerable portion of the population. For instance, in Baltimore, where Park Café & Coffee Bar is located, 27% of residents don’t have bank accounts.

Going cashless might be considered too restrictive regardless of socioeconomic standing. For some customers who do have cards, being told how they can pay is considered just plain annoying.

Some customers are not old enough to have cards, like students and children. An employee of Park Café told the Baltimore Sun that going cashless is almost sad in this case. “There’s a lot of children who come in all the time,” she said. “They’re some of my favorite regulars, and they usually just come for a glass of water, but sometimes they want a cookie, and it would break my heart if we couldn’t provide that to them.”

There is no denying the convenience cashless transactions afford to customers and businesses. However, it is essential to note that it could be a spending trap, especially for an unsuspecting populace. According to behavioral finance theorists, the pain of parting with money is felt more acutely if you use physical cash instead of a card. This is the reason that people could end up overspending, throwing their budgets into disarray.

In regards to profit, accepting cash is a cheaper sale for businesses. With every credit or debit charge, there is a transaction fee that the business pays for.

In conclusion

At first glance, a cashless restaurant may seem like an impossible feat, especially from an operational and customer service standpoint. However, as mobile payment technology improves and makes substantial gains in popularity, it may not be a completely unattainable goal after all.

Between 2011 and mid-2016 alone, a Gallup survey found that the number of Americans using cash for nearly all purchases dropped from 36 to 24 percent. Also, 12 percent reported that they don’t use cash at all.

As more restaurants like Chicago’s Bonci Pizzeria make the switch to cashless transactions, the future seems bright for cashless restaurants, and this has become a hot topic among various levels of the restaurant business.