Are cashless businesses good or bad for consumers?

Fact Check Finance: Cashless stores are good for customers

“Less time counting and more time making your day great.”

—the trendy Bluestone Lane coffee shop, which went cashless

Recently, I took a friend out to lunch at a fancy salad place in my neighborhood. I slapped two 20-dollar bills on the counter so that my lunchmate wouldn’t be able to refuse my offer to treat her. But my smooth maneuver ended up falling flat: The cashier told me that my money wasn’t good there. Not because I was a favorite customer, but because the place had recently gone cashless.

A few years ago, I knew of just one or two local establishments that did not accept cash as a form of payment. Now, it seems like “Cashless is King” is a common refrain. Cashless businesses say they’re eschewing currency for their customers’ own good. And the majority of us do prefer cards and mobile payments to cash. Companies claim it gets us in and out the door faster, allows for more customer attention because workers no longer have to spend time counting bills, and even makes the whole experience safer because there’s no cash to rob from the register. But this doesn’t mean we should overlook the benefits for the business. Mostly it means significant savings for them, which is why newer corporate chains like Amazon Go, as well as established ones like 7-Eleven and Walmart, are moving in the cash-free direction.

One problem: All this swiping and waving discriminates against the 19% of Americans who are either unbanked or underbanked—referring to a range of financially underserved households with no debit or credit card accounts, or who rely heavily on payday loans, check cashing, and money order services. In other words, one in five Americans often needs to pay in cash.

And what about those who are willing and able to purchase with Apple Pay, or a debit or credit card? It turns out that buying at a cashless store can affect those people negatively, too. Here’s how:

You’re more likely to overspend at a cashless business

Research has long shown that consumers spend more when using cards than they do with cash. A classic MIT study found that people were willing to pay up to twice as much to purchase an item with plastic than they would to buy the same thing with bills. Paying with cash, we tend to experience the “pain of paying” when parting with our money. Using plastic doesn’t have the same effect. A recent European study also found that people who use mobile payment are more likely to feel they’re getting a good deal at a particular store compared to people who pay with cash. Why would that be the case? One theory is that using mobile payment feels more like a waving a magic wand than spending hard-earned physical money. Mobile payment is so wonderfully simple, the study showed, that it can make you feel like you’re getting a discount—and that might nudge you toward spending more than you’d planned.

Young kids aren’t able to see that we buy things with real money

I will never forget the time my friend told me that her 8-year-old son got upset with her in the supermarket checkout line when she took out cash, insisting that she not pay for the groceries but instead use her card. This idea that credit cards allow you to get stuff for free may seem funny, but it’s no laughing matter if you end up paying 17% interest on a carried balance. To ensure that your child is financially literate, you need to school them on credit cards early—and explain that they aren’t magic money, but rather a loan that could result in the item you’re buying costing you a whole lot more. For more on that, check out the PBS NewsHour segment I filmed with Paul Solman in 2019.

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Fact check verdict


Cashless stores are not good for customers. It may be true that we’re increasingly reliant on cards and mobile payments for most transactions, but businesses shouldn’t take away the choice of using cash. (And it’s even more insulting when they tell us refusing cash is really for our benefit.) Cashless stores prevent financially underserved people from stepping through their doors, and they may encourage card users to overspend. And in an era of digital transactions, eliminating cash in the brick-and-mortar world takes away one of our increasingly dwindling opportunities to teach kids the value of a (physical) dollar.

There is some good news. To combat this cashless tide, San Francisco and Philadelphia both recently issued citywide bans on cashless businesses; New York City will join them this year. I say embrace the backlash. The next time you see “Card only!” at the register, consider letting the store know that it’s your policy to buy from stores that allow customers to pay with cash.

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