COMMENTARY: Cash Vs. Cashless: Which Is Better for Business?

From cities to stadiums to quick-service restaurants, more and more places are grappling with the idea of going 100% cashless. According to the Pew Research Center, almost a third of Americans have stopped using cash for their typical weekly spending. Even Monopoly, many children’s first interaction with money and the idea of buying and selling, has opted to go cashless. It might sound like a concept for the distant future, but the world is already well on its way there. 

However, not all consumers have embraced the digital-money movement. 

Recently, New Jersey joined Massachusetts as it passed a bill banning cashless retail stores and restaurants, Philadelphia became the first major U.S. city to ban cashless stores, and New York City, Washington, San Francisco, and Chicago are all considering similar legislation. As the debate over cash vs. cashless rages on, one big question arises: do you have to choose a side? And if so, which one is right?

To many business owners, the benefits of a cashless society are too hard to refuse. Without needing to accept cash, business owners feel they can increase their operational efficiency in terms of serving their customers in-store or digitally and automating back-office reporting and accounting tasks. 

Many point-of-sale systems have the ability to accept all electronic forms of payment. including credit/debit, near-field communication, mobile wallet, gift card, crypto, and quick-response code, allowing businesses to quickly accept payments and keep lines moving. Faster service translates to happy customers and higher transaction volumes, which could lead to a broader customer base and revenue growth. 

While technological advantages in the payments space can be beneficial for our society, there are still risks to consider. For many, cash is still king. A national survey  by the U.S. Federal Deposit Insurance Corporation shows about 8.4 million households—or 6.5% of all households—were unbanked in 2017. Those who tend to rely on cash are often low-income or elderly. Operating as a cashless business would exclude these significant populations from being potential customers. 

Also, a rise in cyber criminals and the possibility of Internet outages inserts substantial risk to the cashless model, especially for small businesses, which are targeted in 43% of all cyber-attacks. And, according to a report by the U.S. National Cyber Security Alliance, 60% of small businesses that experience a cyberattack go out of business within six months.

At Clover, the strategy has been simple: Provide business owners with the technology and hardware they need to provide all types of consumers the options they need to pay. We’ve created solutions that give business owners the freedom to serve consumers regardless of their payment preference because we believe that merchants who offer the most flexibility in payment options help themselves by helping consumers.

As was seen with the adoption of new payments technology throughout history—most recently with the adoption of EMV acceptance and for consumers’ mobile wallets—some businesses and people change their habits to meet new expectations more readily than others, and some even refuse to change. In the case of the cash vs. cashless debate, the same is true. Business owners will have to measure whether the benefits of going cashless outweigh the costs of accepting cash.

Mark Schulze is a cofounder of Clover, now part of Fiserv Inc.