Visa has declared a “war on cash” — a somewhat melodramatic campaign to support its business model, which is based on the interchange fees Visa charges at the POS. The credit card company has even gone so far as to offer some merchants $10,000 to upgrade their POS equipment in exchange for refusing cash payments.
The move has caught the eye of at least one politician, New Jersey state Assemblyman Paul Moriarty, who introduced legislation to make it illegal for retailers to refuse to accept cash from their customers. Moriarty cited the plight of the unbanked and those with poor credit, who lack access to higher-tech payment options.
Are Moriarty’s fears overblown? Cash remains a popular payment option in the U.S., with no indication it will disappear any time soon. Yet in some of China’s big cities, the high penetration of mobile phones and the dominance of the Alipay and WeChat payment platforms created a near-cashless society in a short span of time.
The Retail TouchPoints team discusses whether retailers should take sides in this “war” (and which side they should take), as well as the potential for the U.S. to go cashless any time in the near future.
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Debbie Hauss, Editor-in-Chief: I appreciate the impetus behind planning for a cashless society, and I think we’ll get close but never completely there. First, the underbanked must be considered (and I hope that argument doesn’t become too political, given our current climate). Second, on a personal level, I can’t imagine not being able to slip the person who grabs the cab for me outside a hotel a few dollars, or the person who washes my hair at the salon, or the person who checks me in at the kiosk outside the airport. There is something relevant and tactile about those events in our lives that I think cannot and should not go away. Additionally, the obvious overture on the part of Visa to do whatever it can to protect the transaction fees it collects is disturbing. Today, businesses are giving a significant amount of their income to Visa and other card companies: the average credit card processing cost for a retail business where cards are swiped is roughly 1.95% to 2%. The average cost for card-not-present businesses, such as online shops, is roughly 2.30% to 2.50%.
Adam Blair, Executive Editor: The “cashless society,” like its cousin the “paperless office,” always has been touted as one of the features of a utopian future. For retailers, going cashless does offer benefits: there’s less chance of being robbed, either by outsiders or sticky-fingered employees, and there are time and money savings to be realized in not having to count, store and deposit bills and coins. But the more I read about Visa’s “war on cash,” the less I like it. As the New Jersey legislator points out, “outlawing” cash discriminates against those who can’t afford debit cards or get credit — and isn’t there enough inequality in our society already? Cash also has the virtue of being anonymous. I cherish the right to, for example, pig out on junk food without worrying that some faceless corporation will some day be able to shame me for my dietary choices. Sound silly? So did the idea that the NSA was listening in on our conversations, before Edward Snowden spilled the beans.
Klaudia Tirico, Features Editor: As someone who rarely has cash in her wallet and gets extremely annoyed at businesses when there is a “cash only” sign on the door, I see the pros of a cashless society without question. But I understand that accepting credit cards or virtual payments is not always accessible for, say, small businesses, as it obviously costs money to implement credit card machines and fancy technologies like Apple Pay. Of course, Assemblyman Paul Moriarty also has a point when he says that a cashless world discriminates against those with poor credit or no bank accounts. To be honest, I don’t see this as a big deal at all, and Visa sounds overly dramatic about its “war on cash.” Money is money, so as long as a customer is willing to shop at your store and pay for your products, what does it matter if it’s cash or credit? I believe giving people an option is much more accommodating than anything else.
Glenn Taylor, Senior Editor: I can’t see cash ever going away, but I am more than open to the idea of different types of currencies entering the mix, and I think major retailers should gravitate that way as well. We’ve seen in just about every “customer experience” case, that failing to adapt to the consumer’s needs pushes shoppers to buy on Amazon. It really depends on the research results showing what method most of these shoppers are paying with. Ideally, many small businesses would partake in cash transactions only so they wouldn’t have to deal with interchange fees, but the difference between the average convenience store and a brand with 300 stores is so massive that any regulation is going to have to take these variances into account. The China example shows how embedded the mobile device is in these consumers’ entire lifestyle — well beyond shopping. However, the U.S. isn’t even remotely there yet, despite the number of people you see burying their heads in a small screen. So, I think while mobile payment will continue its slow growth, the clunkiness of the experience will prevent it from claiming a serious stranglehold over any share of in-store payment.