This article was updated December 1st, 2023.

Busy? Click to listen to this blog post.

cashless payments in a restaurant

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

Phasing out paper money entirely would be a huge undertaking, and some restaurants have stopped accepting bills or coins. Some restaurant chain owners see the transition as a step toward going cashless in the future because restaurant point-of-sale systems make it so easy. Other bars and restaurants tout the benefits of increased safety and cleanliness (more on that below). However, it’s important to operate in a way that is not discriminatory against patrons who can’t imagine going to a restaurant and paying with a card. Of course, it’s essential for most businesses to accept cash payments in some situations. It’s difficult to go “completely cashless.”

The conversation about restaurants going cashless is new and growing. Below, we identify the most notable pros and cons of running a plastic-only restaurant based on the advantages and disadvantages of cashless payments.

The Cashless Restaurant Revolution: Does It Make Sense to Run a Cashless Restaurant Business?

In the ever-evolving landscape of the restaurant industry, the concept of not leading with a “pay with cash” option has emerged as a transformative trend. As consumers increasingly embrace digital payment methods, restaurants adapt to this shift by adopting their cash registers into cashless systems, offering numerous benefits for businesses and their patrons. One of the key advantages of cashless payments for restaurants is the streamlined and efficient process. With cashless options such as credit cards, mobile payment apps, and contactless payments, customers can make quick and hassle-free payments, reducing wait times at the point of sale. This not only helps to improve customer satisfaction but also allows restaurants to serve more customers in a shorter amount of time, ultimately boosting their revenue. For restaurants already seeing a majority of transactions with credit card transactions, it might make more sense to go cashless.

Digital transactions also offer improved convenience and security for restaurant owners and customers. By eliminating the need for cash handling and storage, going cashless also mitigates the risk of theft and human error while simplifying their accounting and bookkeeping processes. There isn’t a need to count the drawers at the end of the night. On the customer side, cashless payments provide a safer and more hygienic option for transactions, especially in light of health concerns.

Additionally, by embracing cashless payment methods, restaurants can enhance their overall customer experience and appeal to a broader customer base. With the rise of digital payment platforms and mobile wallets, restaurants can offer rewards programs, targeted promotions, and personalized experiences that cater to individual customers’ preferences. This fosters customer loyalty and allows restaurants to gather valuable data and insights to inform their business strategies.

From a sustainability standpoint, cashless payments also offer environmental benefits by reducing the reliance on paper and coin currency. With fewer physical transactions, the restaurant industry can contribute to a reduction in the production and circulation of paper money, ultimately minimizing its ecological footprint.
While there are undoubtedly numerous advantages to adopting cashless payment systems, it’s essential for restaurants to consider the potential challenges and limitations associated with this trend. Some customers may still prefer to use cash for various reasons, and it’s crucial for restaurants to accommodate their payment preferences to ensure an inclusive and accessible experience for all patrons.

In this blog post, you’ll find that the shift towards cashless payments represents a significant opportunity for restaurants to enhance their operations, improve customer satisfaction, and stay ahead in an increasingly digital landscape. By leveraging the benefits of cashless systems, restaurants can position themselves for long-term success and adapt to the evolving needs of their customers. 

Enhanced Customer Experience: Streamlining the Restaurant Experience with a Cashless Payment Option

Cashless payments provide customers with a seamless and convenient experience, eliminating the hassle of carrying and managing cash. With the tap of a card or a smartphone, customers can quickly and securely settle their bills, reducing checkout times and minimizing wait periods. This streamlined process with card payments enhances overall customer satisfaction and encourages repeat business. Additionally, cashless payments offer improved security, as there is no risk of theft or loss associated with physical cash. Transactions are tracked and recorded, making detecting and preventing fraud easier. This increased security reassures customers and businesses alike, building trust and credibility in the payment system.

Cashless payments benefit businesses, eliminating the need for manual cash handling and reducing the risk of human error. This allows businesses to operate more efficiently and allocate resources to other areas of operation. In addition, digital payment methods provide valuable data and insights into customer spending habits, enabling businesses to tailor their marketing and sales strategies more effectively.

Cashless payments offer a win-win situation for both customers and businesses, providing convenience, security, and efficiency. As technology advances, the popularity and adoption of cashless payment methods are expected to grow, further revolutionizing transactions. 

Hospitality Efficiency: Do Contactless Payment Options Make Sense for Businesses?

Cashless payments streamline restaurant operations, saving time and money for businesses. By eliminating the need to count, store, and deposit cash, restaurants can free up staff time to focus on serving customers and preparing food. Additionally, cashless systems reduce accounting errors and improve overall financial management. Furthermore, cashless payments also provide a more hygienic option for both customers and staff. With the ongoing global health concerns, reducing the handling of physical cash can minimize the risk of spreading germs and viruses.

In addition, cashless payments offer a more convenient and efficient experience for customers. In today’s fast-paced world, consumers appreciate the ease of using credit/debit cards, mobile wallets, or other digital payment options. This can increase customer satisfaction and loyalty, benefiting the restaurant’s bottom line.

Moreover, cashless transactions provide valuable data and insights to help restaurant owners make more informed business decisions. By tracking sales trends, customer habits, and popular menu items, restaurants can optimize their operations and marketing strategies to drive growth and profitability.
Overall, embracing cashless payments can bring numerous benefits to restaurant businesses, including improved efficiency, hygiene, customer experience, and financial management. As the world becomes increasingly digital, restaurant owners should consider integrating cashless systems into their operations to remain competitive and meet the evolving needs of their customers. 

Security, Crime, and Fraud Prevention: Enhancing Restaurant Security with Cashless POS Systems

Cashless payments offer enhanced security and fraud prevention compared to traditional cash transactions. Digital payment methods utilize encryption and other security measures to protect sensitive customer information, reducing the risk of theft and fraudulent activity. Cashless payments also provide a digital trail of transactions, making monitoring and tracking any suspicious activity easier. This can help prevent and detect fraudulent transactions more quickly than cash transactions, where it can be difficult to trace the source of fraudulent activity. This is helpful for patrons who can’t afford the costs associated with fraud.

Cashless payments can offer additional security features such as two-factor authentication, biometric authentication, and real-time transaction monitoring, adding an extra layer of protection for consumers and businesses.

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 initially annoyed 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 over 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%.

South Korea, Denmark, Norway, and Sweden have encouraged digital payment methods over cash in other parts of the world. 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.

By reducing the reliance on physical cash, cashless payments also minimize the risk of theft and robbery associated with carrying and handling cash. This can contribute to a safer and more secure environment for both consumers and businesses.

Cashless payments provide enhanced security and fraud prevention measures compared to traditional cash transactions, making them a more secure and convenient option for modern transactions. 

Embracing the Future of Business Transactions: Positioning Restaurants for Success

As technology evolves and consumer preferences shift, cashless payments are undoubtedly the future of business transactions. Restaurants that embrace this trend will be well-positioned to provide a superior customer experience. There are several reasons why cashless payments are the future of business transactions in the restaurant industry:

  1. Convenience: Cashless payments provide a convenient and efficient way for customers to pay for their meals. With just a tap or a swipe, customers can easily complete their transactions, saving both time and hassle.
  2. Hygiene: In light of recent health concerns, cashless payments reduce the need for physical contact and cash handling, which can be a breeding ground for germs. This promotes a cleaner, more sanitary environment and gives customers peace of mind.
  3. Enhanced customer experience: Cashless payments offer customers a more seamless and frictionless experience, leading to higher satisfaction and loyalty. With the ability to split bills, store payment information for future visits, and collect rewards or loyalty points, customers are more likely to return and become regular patrons.
  4. Security: Cashless payments are often more secure than carrying cash, as they are protected by encryption and additional layers of authentication. This gives both customers and businesses peace of mind.
  5. Integration with technology: Cashless payments can work easily with other technology solutions and integrate online ordering, delivery apps, and loyalty programs. This creates a more cohesive and streamlined experience for both customers and restaurant staff.

As the world moves towards a more digital and cashless society, restaurants that adapt to these changing consumer preferences will be better positioned for success. By accepting various forms of cashless payment, such as credit/debit cards, mobile wallets, and contactless payments, restaurants can cater to a wider customer base and provide a superior dining experience. 

Is Going Cashless the Future of Business Transactions?

Fast-casual restaurant Sweetgreen, part of the sustainable food movement, will go 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 cash-free future. “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 improve efficiency and make the experience more personal overall.

Going cashless would seem counterintuitive, considering that most people pay for fast food with cash. 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 Sweetgreens’s customers don’t care how long they pay 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. For instance, Split Bread and the Melt 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 quickly get people through the lines.”

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 of 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 spending.” 

Having an easily accessible digital record helps restaurants keep tabs on their spending, ultimately resulting in better budgeting. With this record, restaurants can use various analytical apps and tools to help monitor their spending patterns, give good insights on implementing budgets better, and help with taxing.

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

Faster Business Cash Flow

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 implementing POS-based transactions 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 changes anymore.

Leo Kremer said, “For most customers, there’s no reaction at all; they’re already paying with their cards. And most 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 aim 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 cashless payment. Cash costs money, from bank charges to cash deposit struggles and handling of coins. For larger businesses that require cash pickups by armored car services, that’s another cost incurred. In essence, cashless payments benefit not only restaurants but also other businesses.

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 that we can become a safer place for our team and our guests.” 

Co-founder Adam Landsman of Sunday in Brooklyn shares his sentiment: “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. He said, “It saved a tremendous amount of time on the accounting side of things for the manager at the night’s end.”

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, perhaps he or she didn’t belong there.

The FDIC counts 9.2 million unbanked or underbanked households in the United States. Depending on your restaurant is location, 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 forward with the cashless payments, advantages might be considered too restrictive regardless of socioeconomic standing. For some customers with cards, being told how they can pay is just plain annoying.

Some customers, like students and children, are not old enough to have cards. 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 why people could end up overspending, throwing their budgets into disarray.

In regards to profit, accepting cash is a cheaper sale for businesses. Cash also comes without transaction fees. 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 impossible, 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.

In the wake of a growing trend toward cashless transactions, many restaurants are considering or have already switched to eliminating cash as a payment option. While cash has been the traditional payment method for decades, several factors drive this shift towards cashless operations.

Convenience and Efficiency: Cashless payments offer convenience for both customers and restaurant staff. Customers can order and pay using their cards or mobile devices, eliminating the need to wait in long queues at the cash counter. For restaurant employees, cashless operations reduce the time spent handling cash, streamlining the checkout process and improving overall efficiency.

Hygiene and Safety: In the wake of the COVID-19 pandemic, concerns over hygiene have amplified the appeal of cashless payments. Eliminating cash handling reduces the risk of germ transmission, promoting a safer and more hygienic environment for both employees and customers.

Reduced Theft and Fraud: Cashless payments minimize the likelihood of cash theft or fraudulent transactions, safeguarding the restaurant’s financial assets. With the growing prevalence of mobile payments, contactless payments, and Apple Pay, cashless operations offer enhanced security measures.

cashless order options for restaurants

Data-Driven Insights: Electronic payments provide valuable data about customer spending patterns and preferences, enabling data-driven business decisions. Restaurants can analyze transaction data to identify popular menu items, optimize pricing strategies, and target marketing campaigns effectively.

Integration with Online Ordering: As online ordering in and takeaways become increasingly popular, cashless operations simplify the payment process for both in-person and online orders. Customers can seamlessly order and pay for their meals from the comfort of their homes, reducing the need to handle cash at the restaurant. It’s important that you integrate online orders with your POS system. Lavu makes this especially easy with MenuDrive.

Cashless Economy and Future Trends: With the increasing adoption of digital payment methods and the growing momentum towards a cashless economy, cashless operations will likely become even more prevalent. As mobile payments are allowed and integrated into more online ordering systems, restaurants may be the next businesses to ditch cash altogether.

While initial costs may be associated with implementing cashless payment systems, the long-term benefits of convenience, efficiency, hygiene, security, and data-driven insights drive the trend toward a cashless restaurant industry. As technology advances and cashless payments become more widely accepted, businesses that rely on cashless operations will likely reap significant rewards. However, it’s important to consider some patrons without bank accounts whose payments are likely to be cash and who might not appreciate removing cash from every transaction.

FAQs About Cashless Payments

Should Restaurants Go Cashless? What are the benefits of going cashless?

Offering cashless payments in your restaurant can provide several benefits, including:

  • Reduced theft and fraud: Cashless payments eliminate the risk of cash theft or fraudulent transactions, protecting your restaurant’s financial assets.
  • Faster checkout speeds: Card payments and digital transactions generally process quicker than cash transactions, leading to shorter checkout lines and improved customer satisfaction.
  • Simplified accounting and reconciliation: Cashless operations eliminate the need for manual cash handling and reconciliation, streamlining accounting processes and reducing errors.
  • Valuable data insights: Electronic payments provide valuable data about customer spending patterns and preferences, enabling data-driven business decisions.
  • Enhanced hygiene: Eliminating cash handling reduces the risk of germ transmission, promoting a safer and more hygienic environment for both employees and customers.

What are the initial costs of implementing cashless payments in my restaurant?

The initial costs of implementing cashless payments in your restaurant will vary depending on the specific equipment and software you choose. However, you can expect to pay for:

  • Payment terminals: You might need to purchase one or more payment terminals to process card payments. Utilizing Lavu as your POS is a great way to keep these costs down without sacrificing quality.
  • Software: Unless you use Lavu as your POS, you might need to purchase software that integrates with your payment terminals and your restaurant’s point-of-sale (POS) system. The cost of software can range from a few hundred dollars to several thousand dollars.
  • Installation and training: If you don’t choose Lavu as your POS, you may need to pay for installation and training services to help you set up your cashless payment system and train your employees on how to use it.

Why Are Restaurants Going Cashless?

Restaurants are ditching cash for a reason. Digital payments speed things up, eliminate errors, and save money with lower fees and reduced theft risk. Customers get convenience and loyalty rewards, while restaurants gain valuable data and streamlined operations. But not everyone embraces cashless: some lack access or prefer paper bills. Technical glitches and privacy concerns are also bumps in the road. Not every customer likes to pay with cards, bitcoin, or QR codes. Ultimately, the cashless trend offers efficiency and benefits, but restaurants must ensure everyone feels welcome and secure in the new pay-and-dine landscape.

Can Businesses Refuse Cash?

Whether a business can refuse cash depends on where you are. In the United States, there’s no federal law requiring businesses to accept cash. They can choose their preferred payment methods, as long as it’s clearly communicated to customers. However, several states have laws mandating cash acceptance, often for fairness and accessibility reasons. So, the answer depends on the specific location and its regulations. It’s always best to check beforehand to avoid any unpleasant surprises!