From the time we were little, putting birthday money into our piggy banks, cash has always been an important part of our lives. Now, imagine a world where cash is no longer king. Like so many other things that we thought were futuristic, a cashless society is becoming more of a reality and less of a fictitious idea.
The use of cash has been steadily declining, with cash payments expected to continue to fall by 30% over the next 10 years. Countries such as Denmark, Sweden and Thailand have recognized this and have been trending toward becoming cashless societies. These countries have enacted laws that permit businesses to ban cash payments, and in some instances, require payments by mobile applications or credit cards. In Thailand, commercial and state run banks have introduced a payment system which is linked to a mobile phone number and allows the consumer to pay for goods and services without the need for cash.
Businesses in the United Kingdom are also jumping on board. Citing increased efficiency and speed during the lunch time rush, the salad chain Tossed has recently introduced cashless restaurants in the UK. Another example, Waitrose, a UK based supermarket chain, has recently unveiled the first cashless supermarket in the head office of Sky. While this store contains only 1,700 square feet, it will serve over 3,500 customers who will use self-service kiosks to pay with credit cards and mobile applications. Both retailers are expected to introduce cashless platforms in more locations.
Similarly, many benefits of the cashless world are being seen here in the United States. The ban on cash saves employee time and payroll costs by eliminating cash registers and trips to the bank, gas for armored cars, streamlined accounting and the ability to track customer habits to increase retail sales. The salad chain SweetGreen and the sandwich shop, Amsterdam Falafelshop, each headquartered in Washington D.C., are among the growing number of businesses that have started testing the cashless market.
Don’t turn in all of your green just yet, however. Despite the increase in mobile applications, cash is still used to complete over 80% of transactions worldwide. Security risks are still at the forefront of electronic transactions. Although the banks, credit card companies and inventors of mobile applications are working tirelessly to find ways to create mediums that consumers can trust and feel safe using, the risks still exist. In addition, many people still depend on cash – people who survive largely on cash tips (i.e. valets, doormen), smaller stores that cannot afford the high fees that credit card companies charge, and individuals who cannot afford the latest smart phones or who have credit issues. It is also worth considering the dilemmas that we will face when networks are down and consumers can’t purchase groceries, gas or oil because cash options are not available.
There is currently no Federal statute mandating that businesses must accept cash as payment for goods and/or services. Absent a State law to the contrary, private businesses are therefore free to develop their own policies on whether or not to accept cash. Massachusetts is one state that does have a law that prohibits retail establishments from requiring the use of credit to purchase goods or services. But this law does not appear to be well known or actively enforced, and the statute does not impose a specific penalty on businesses that fail to comply. Retailers should familiarize themselves with the laws in states where they operate before they refuse to accept cash payments.
While the cashless world is certainly on the horizon, many kinks still need to be ironed out. We do need to start preparing for this new age though. The convenience of paying by mobile applications, credit cards and ApplePay could eventually eliminate the need to carry cash. Will our grandchildren will be as excited to fill their virtual piggy banks with virtual currency as we were to fill ours with coins and paper?