But what are the benefits for the companies taking the plunge? And more to the point – are consumers accepting of it? Let’s take a look at the current situation, along with a few examples of brands embracing cashless payments.
Aligning with consumer behaviour
Earlier this year, the British Retail Consortium announced that cash was no longer the nation’s preferred method of payment. Cards now account for more than half of all retail purchases in the UK, while contactless cards account for roughly one third of all payments – increasing from just 10% in 2015.
Meanwhile, despite the adoption of mobile payment methods such as Apple Pay and Walmart Pay being slower to catch on in the US, data still shows that almost half of all American service or purchase payments are made with credit or debit cards.
Alongside the majority of retail stores, restaurants are now starting to recognise this growing consumer behaviour. Fast food outlets have been the first to catch on, with the speed and convenience of cashless payment naturally aligning with the kind of service offered.
McDonalds has been rolling out digital ordering technology in thousands of its restaurants, allowing consumers to order and pay for their food via card-only self-serve kiosks. With a large proportion of customers probably already paying via card, the new system feels like a natural next step.
Alongside restaurants going cashless to facilitate the growing usage of mobile payments, they’re also doing so to improve general efficiency – which happens to benefits both customers and employees.
Last month, US burger chain Shake Shack opened its first ever cash-less, kiosk-only restaurant in New York City, where customers use either digital kiosks or mobile phones to place orders.
The focus here is freeing up employees to concentrate on the kitchen or front-of-house hospitality. Eliminating cash payments furthers this, theoretically making the dining experience much more seamless for everyone involved. Customers do not have to fiddle about with cash, and employees aren’t required to stay fixed to cash registers in order to deal with payments – ultimately reducing wait times and general friction.
In the UK, healthy food chain Tossed has a number of entirely cashless stores in London, where customers can only order and pay via kiosks that take contactless or card payments. The decision was mainly due to restaurants suffering during busy service times, with food being made fresh to order (and customers wanting to customise orders) amplifying the issue. The decision appears to have paid off, with the chain seeing turnover increase by 13.6% to over £10 million in the past year.
Integrating with digital rewards
Another reason restaurants and cafes are focusing on cashless payment is that the strategy naturally aligns with other innovations in digital technology. For example, restaurants are now introducing new mobile apps that enable consumers to choose faster payment options, while simultaneously accessing rewards and digital ordering services.
Chipotle has recently updated its app with these multiple features. Integrating Apple Pay technology, customers can now order ahead and pay at the same time (much like the service offering by Deliveroo) as well as access offers and other perks.
Similarly, Café Nero has integrated its loyalty program into its mobile app. Instead of getting a paper card stamped with every purchase, the app allows customers to pay and simultaneously add stamps to their digital loyalty card. Killing two birds with one stone – it frees up time and makes the customer experience much more seamless.
Are customers happy about it?
While the aforementioned benefits are clear, that’s not to say that all consumers are ready and willing to go cashless. First, there’s the argument that taking away the option for cash is arguably unfair, ultimately discriminating against those who do not have or want to use a card or app.
Meanwhile, there’s also the danger of a cashless society leading to over-consumption. In other words, the ‘tap and go’ aspect of contactless payment means that it’s far easier to lose track of what you are buying, leading to many consumers over-spending rather than saving.
This is arguably worsened by many banks offering discounts or offers when you reach a certain number of contactless transactions, potentially leading to consumers spending more in the long run.
— Edward Leung (@iEdLeung) October 4, 2017
Who else will suffer?
With improved efficiency, large retailers and restaurants are likely to benefit from going cashless. However, not all companies will win out.
The charity sector is one that might struggle if the trend continues. While it has the potential to help attract more donations from passers-by, investment in the technology (as well as the transactional fees required from donations) could eat into overall funds raised, though of course there are costs associated with processing cash, too.
That’s new – tap to pay – contactless giving pic.twitter.com/0h2wKxPMCy
— Peter Henley (@BBCPeterH) December 21, 2016
Similarly, small businesses could be in danger of being left behind by the rise of a cashless society, and on a much bigger scale, it could contribute to a widening of the wealth gap, with the homeless and people in need losing out on spare change.
It might sound like a far-flung notion, but a completely cashless society is not as much of an alien concept as it sounds. Sweden is widely predicted to be the first-ever example, with cash currently being used in less than 20% of transactions, and a large proportion of shops and services solely offering mobile and card payment technology.
Will more restaurants start to take on a no-cash policy? In traditional, sit-down restaurants, the move looks less likely. With employees already required to wait on tables, going cashless won’t free up much time. Plus, the fact that a lot of customers still prefer to use loose change for tips is likely to impact the decision.
For fast-food outlets and less traditional eateries, the opportunity to improve the customer experience as well as streamline digital technology (such as apps and ordering systems) certainly makes it more appealing. And as more people than ever rely on cards and mobiles, perhaps it’s only a matter of time before we follow suit with Sweden.