COMMENTARY

US restaurants lead the charge for a cashless future

March 30, 2017

Chris Francis, VP Market Development, Worldpay US

Talk about a cashless society has floated around news channels for years. But for many businesses, the concept didn't become a reality until recently, when mobile payments finally started to gain traction with consumers.

According to eMarketer, 38.4 million Americans used mobile payments in 2016. And many restaurant chains are embracing the mobile payment trend with open arms. For example, fast casual salad chain, Sweetgreen, announced that more than 60 of its locations will go cashless in 2017. But although mobile payments are convenient for both employees and customers, transitioning to a cashless operation also presents a new set of challenges.  

The benefits of cashless restaurants

In today's tech-savvy world, restaurants are looking to technology to improve the customer experience. Customers who frequent fast food or quick service restaurants want to be in and out the door in minutes, a goal supported by cashless payments. By offering a series of instant and frictionless payment options (such as card-not-present, contactless or invisible payments) restaurants can cater to consumers' convenience-first mentalities by speeding up operations and minimizing lines. Customers who have downloaded the restaurant's app may also have the ability to order ahead, pay through the app and skip the line upon arrival — options that are especially popular for large group orders.

Going cashless also benefits employees in several important ways. By transitioning to cashless payments, restaurants can insulate employees from the threat of theft. Employees are also protected from the germs associated with handling money and the very real possibility of contaminating food after handling cash. And without cash transactions, there is no risk of employees miscounting change or misplacing hard currency. All transactions are recorded automatically and easy to track.

Perhaps most importantly, the elimination of cash transactions creates opportunities for increased efficiency. Managers have more time to properly train and mentor staff, and transaction speed increases, allowing employees to perform more transactions. Sweetgreen co-founder Jonathan Neman reports that employees have been able to perform 5 to 15 percent more transactions per hour since going cashless.

Navigating the challenges of a cashless restaurant

Although plastic is still king and mobile payments are on the rise, there are still customers who prefer to make transactions with cash only. There is also a small, but consistent, demographic of unbanked citizens who simply don't own a debit, credit or prepaid card.

According to a 2016 Gallup poll, nearly a quarter of Americans still make all or most of their purchases using cash and a  2015 study by the FDIC found that seven percent of American households are unbanked. Depending on location, going cashless could alienate a significant portion of a city's population. Turning these customers away could damage customer loyalty and the restaurant's long-term reputation.

But lost customers aren't restaurants' only concern. The processing fees associated with digital transactions are an added expense. Restaurant owners can raise the cost of menu items to compensate for the loss (which could affect sales) or simply absorb the loss per transaction. Either way, processing fees will likely affect the restaurant's bottom line at the end of the day.

The transition to a fully cashless operation has the potential to positively impact a restaurant's services and revenue. But without careful consideration of location and fees, restaurant owners could face a bumpy start on the road to the cashless future.


Topics: Contactless / NFC, Handsets / Devices, In-App Payments, Loyalty Programs, Mobile Marketing, POS, Restaurants, Trends / Statistics


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