In recent years use of mobile payments has steadily increased while still falling short of what one might call widespread adoption. Meanwhile credit and debit cards are the clear favorite for consumers, being utilized in nearly half of all transactions completed by U.S. adults. Despite that, good old cash still accounts for around one-third of all transactions — and that’s what Visa wants to change.
As Wall Street Journal reports Visa is launching a new initiative that aims at converting small food vendors into cash-free operations. The company is selecting businesses and offering them nearly $10,000, which will go to various tech upgrades to improve card acceptance infrastructure and institute mobile payment options. To hold up their end of the deal, retailers must eliminate the acceptance of cash at their establishment. Visa plans on extending this deal to 50 businesses that it will select via an application process. It should also be noted that online-only businesses are not eligible.
Speaking about the initiative, Visa exec Jack Forestell told WSJ, “We’re really viewing this as the opening salvo.” He added that he say this as a step on the “journey to cashless.” Lest there be any confusion about Visa’s intentions, CEO Al Kelly told recently told investors “We’re focused on putting cash out of business.”
On the surface, Visa’s offer seems like a win-win. However some business owners might wonder how ditching cash will go over with their customer base. To that note Michael Ryan, co-owner and co-founder of New York’s 2nd City, says his cashless restaurant has experienced little resistance from customers. He also estimates that his staff and managers save as many as 23 hours of labor per week by not having to rectify cash drawers or drop off deposits.
Of course, beside annoyed customers, there are some other disadvantages to dealing strictly in credit cards and mobile payments. At the top of the list (and clearly a factor in Visa’s desire to overthrow cash) are credit card fees. According to WSJ, the average business owner pays 2% in credit card fees for every transaction. Additionally, there’s always the chance that a power or internet outage could knock out a vendor’s ability to process transactions beside cash, which may concern some owners. Finally another potential problem cashless vendors face should the movement catch on is the threat of legal action as cash is still legal tender. These downsides led National Retail Foundation SVP Mallory Duncan to declare, “The idea that merchants don’t want to accept cash is a myth.”
So, with initiatives like this, can Visa actually lead us toward a cashless future? That remains to be seen and there’s a lot of skepticism to go around. In fact the site Naked Capitalism speculates that Visa could struggle to even attract 50 vendors to take them up on their offer. In the end, it seems even with mobile and other FinTech payment options growing in popularity, it will be a long while before cash is truly out.