What are the problems behind moving to a cashless society?

We live in an increasingly cashless society, and for many reasons, that’s not a surprise. It can be inconvenient to fumble around in a wallet or pocket to get coins and cash, especially if people don’t want to worry about having the right amount available. Using a credit or debit card allows them to pay for things without cash. Plus, some mobile apps store payment information electronically, making things even handier.

Some companies — Amazon arguably the most well-known among them — have taken things a step further and made it so that people don’t have to bring any forms of payment into stores to shop. Instead, they use apps to put payment information on file. Then, sensors on the merchandise detect what consumers buy, bill them and send electronic receipts almost immediately after the people walk out of the stores.

What are the main benefits of the cashless business model?

When business owners think about the advantages of going cashless, several typically come to mind. As a start, transactions happen faster and in the background. Most people have stood behind other shoppers in line at cash registers and grimaced as a card reader malfunctioned, or the individual realized they left their wallet at home. A cashless store solves both of those issues.

It’s not true in every case, but most of the time, cashless stores generate more data than traditional stores, too, including the video feeds from cameras that stop people from stealing things. Having more data to work with could help stores make better decisions about things such as opening hours, which items to stock and how to adjust a store’s layout to facilitate traffic flow.

Numerous arguments assert that even though the technology needed to run a cashless business usually costs a substantial amount up front, it eventually helps stores save money over time. Amazon’s cashless stores, branded with the Amazon Go name, have only a few employees working during any given shift, amounting to a much smaller number than cash-based stores need.

A cashless store could also be a theft deterrent. Stores frequently have signs that warn would-be thieves that the safe only contains a small amount of money or that workers do not have the power to open it. But, if a criminal knows that a store doesn’t accept cash at all, they would likely look elsewhere instead of only trying to steal the merchandise in it.

The cons of going cashless

Critics of the increase in cashless stores say failing to accept cash discriminates against people without bank accounts or smartphones such as the homeless or people in low-income brackets. Plus, individuals who have bank accounts, credit cards or payment apps often lose rightful access to them in domestic abuse situations. A cashless store is off-limits to them, even when they borrow money from friends or have their own cash-based means.

Making the transition to a cashless way of doing business could also become prohibitively costly if it turns out that most people in the area prefer doing business the old-fashioned way. Some shoppers just like what they know and the less tech-savvy ones are arguably not as likely to buy from a store that doesn’t accept cash.

They may not want to take the time to register for a cashless store’s app, input payment details into it and learn to use the app before buying things in a store. Some merchants have window signs that say things like “We are cashless.” Such signage intends to set expectations. But to a person who doesn’t want to or can’t pay cashless, those signs may as well say, “You’re not welcome.”

Additionally, one of the benefits mentioned earlier is that cashless stores can save money for owners, in part due to not needing to hire so many workers. But, that could be a downside. Many high schoolers get their first jobs as grocery store cashiers or baggers. Self-checkout kiosks already hit retail job prospects hard, and cashless stores could make it even more challenging to get or stay employed in a low-skilled grocery role.

Some cities ban cashless stores

Recent pushback occurred when leaders declared that cashless stores aren’t legal in some places. Philadelphia legislated to ban cashless stores in February 2019. A month later, the state of New Jersey declared all brick-and-mortar shops must take cash. Amazon responded to those developments and announced it’s working on ways to let people pay with money at Amazon Go stores.

What’s next for cashless stores?

Stores that let people pay without cash almost certainly go away. But, you can expect the current all-cashless stores to soon give people the option to pay with cash if they want. Otherwise, brands will find themselves shut out of particular markets and demographic groups.