IS CASH DEAD?

 

By Marisa Bidois, Restaurant Association CEO

How many of your customers still pay by cash? Is it a dying method of payment, or do customers still want the option of handing over their money, rather than their credit card? The Restaurant Association recently surveyed members, asking, “Is Cash Dead?”

Members overwhelmingly (71 percent) indicated that the use of cash by customers in their businesses is declining. For all business types, there is a shift by consumers to using electronic payments for their hospitality purchases. More payments are being made with a tap, or a swipe, rather than the more traditional payment by cash.

While the style of your hospitality business (food to go vs café vs restaurant) will influence the percentage of cash transactions you receive, according to the survey as an industry, average cash payments made in member businesses is between 10 – 15 per cent (as a percentage of total sales). This is low, but New Zealand may have some further catching up to do with international trends. The CEO of Cactus Restaurants, a five-unit chain in the United States, says 93–94 per cent of their company’s current business is coming via credit cards.

A Mastercard New Zealand survey earlier this year also found that New Zealanders are relying less and less on cash. “Over two-thirds of New Zealanders have admitted they do not carry cash,” said Peter Chisnall, Mastercard country manager for New Zealand and the Pacific. In addition, half of New Zealanders don’t think we will be using cash in ten years’ time. Mastercard expects cash transactions will continue to decrease, with 41 per cent of consumers saying they could live without cash and only use emerging payment technologies in a few years’ time.

A global consumer survey by American company Oracle Hospitality found:

  • Only a third of global consumers think that cash will definitely still be used in restaurants and other hospitality outlets by 2022.
  • 54 per cent of consumers expect to use cash less themselves over the next five years.
  • 47 per cent of consumers expect to use mobile payment and digital wallets more – and this is not just millennials. Surprisingly, Oracle discovered that age doesn’t play the role you might expect. Forty-nine percent of the 55-plus generation said they’d use cash less compared to 55 percent of Gen X and 53 percent of pre-millennials.

Although not yet a huge trend in New Zealand, cashless restaurants are becoming more commonplace. At the end of last year, an American kiosk, Shake Shack, opened a kiosk-only, cashless store in New York City and there have been other hospitality businesses go cashless in the United States.

However, contradicting those statistics that say the days of cash are numbered, the Federal Bank of San Francisco recently released a report that looked at cash use in 42 economies across the globe (including New Zealand). This found that only a few countries have managed to move away from notes and coins, in favour of digital payments and despite the abundance of digital options, in most countries, demand for notes and coins is still strong. They say consumers still expect to be able to pay by cash – mainly for payment of small and relatively small transactions – so simply put, if you say no to cash, you say no to a potential customer.

For the consumer, the positives of cash include that it is widely accepted, easy to use, and doesn’t require a bank account or mobile phone. However, a negative is that particularly in food to go and casual dining premises, customers want to be able to pay for food and drink quickly, and cash has become one of the slower payment options. In the Oracle Hospitality report 84 percent of the consumers said that fast, efficient service was the single most important factor when they visit a restaurant, bar, coffee shop or other hospitality provider.

There are many additional cons for the continued use of cash in hospitality businesses, including:

  • Lack of personalisation – cash is anonymous and offers no opportunities for recognition.
  • Hygiene – handling food and handling cash need to be kept separate.
  • Cost – considerable time and costs are involved in cashing up/banking.
  • Theft – it’s easier for fraud to occur with cash.

This last point is also one of the reasons that the Inland Revenue Department has turned its attention to the hospitality industry in its campaign targeting undeclared income. The industry is considered a high-risk group as part of the IRD’s ‘hidden economy programme’.

In the future, the decline (or not) of cash will be determined by how well newer payment options—like mobile payments—are adopted by consumers, but if eliminating cash now appeals, a key take away from the Oracle Hospitality report is that flexibility is critical. You need to ensure you are offering the right payment options to guests and making sure that the operation of whatever system you use works every time, as this is a great influence on customer satisfaction.