USA TODAY International Edition
Your cash is no good here, many shoppers being told
Retailers and consumers spark digital growth
This holiday season, you might want to leave home without it.
No, not American Express travelers checks, as the twist on the company’s old tagline suggests – but cold, hard cash. In an effort to cut costs and hassles, a small but growing crop of retailers have stopped accepting the triedand-true paper currency.
Some restaurants in large cities began shunning the greenback a couple of years ago, but an increasing number of nonfood chains are going cashless at some or all of their locations or never took bills at the brick-and-mortar stores they’ve opened in recent years.
They include clothing retailers such as Bonobos, Indochino, Everlane and Reformation; Amazon bookstores; Casper Mattress; Drybar hair styling; The Bar Method fitness studios; and United and Delta airlines (both at ticket counters and for in-flight food and drinks).
“The momentum started in the restaurant space, but we’re certainly seeing spillover,” says Jack Forestell, chief product officer for Visa.
Visa last year awarded $10,000 to each of 50 businesses that produced videos explaining how going cashless would benefit them.
The trend is partly rooted in the growth of credit- and debit-card transactions and the spread of digital wallets such as Apple Pay and Google Pay. Cash isn’t dead, but it’s no longer king. Jerry Sheldon, vice president of IHL, a retail and hospitality consulting firm, foresees cashless restaurants and stores comprising 40 to 50 percent of all retailers within 10 to 15 years as greenback use continues to dwindle.
“They’re making a business decision that they would rather make their investments in alternative forms of payment” than in cash-handling, he says.
Bonobos, the men’s clothing chain, launched in 2007 as an online-only retailer, opening its first brick-and-mortar stores in 2011. The company now has 59 showrooms that largely extend its website, allowing customers to try on suits, jackets and shirts before buying them and having them shipped to their homes.
“It feels more organic to continue the online experience” by accepting cards and other digital payment forms, but not cash, in stores, says Emily Lewis, Bonobos’ director of guideshop operations.
And instead of having to make change and count bills, “We can … be hyperfocused on the customer,” she says. “Finding you the right fit, getting your clothes, helping your experience.”
On rare occasions, she says, customers pay in cash, but “it’s not an issue.”
Indochino, a custom men’s clothing chain that similarly began online, says, “As a company that was formed in the digital age, we’re prioritizing other payment methods.”
Customers in its chief demographic, age 25 to 44, are the least likely to pay with cash. And average orders are hundreds of dollars, making cash payments even less likely, the company says.
Cash is losing favor: The retailers are largely following shoppers’ habits. Thirty percent of all retail transactions are in cash, down from 40 percent in 2012, according to IHL and the Federal Reserve.
Only about a quarter of Americans made all or most of their retail purchases with cash in 2016, down from 36 percent five years earlier, a Gallup poll shows. Millennials are especially cash averse. Twenty-one percent of those age 23 to 34 said they make most or all of their purchases with cash, down from 39 percent five years earlier.
“Their lives are wrapped around their little phones,” Sheldon says.
Lucas Broadway, 32, of Murfreesboro, Tennessee, says he uses his debit card “as much as possible” – once charging 27 cents for a book of matches – allowing him not to “worry about going to an ATM.”
Broadway “has no issue” with a cashless store and is instead irked by the inconvenience posed by shops that take cash only to avoid paying credit-card processing fees.
Low-income shoppers could be left out: Critics say cashless businesses hurt many lower-income Americans who don’t have bank accounts or credit cards because they can’t maintain a minimum balance, don’t have photo IDs or other reasons.
Last year, 6.5 percent of U.S. households were unbanked, with no members having a checking or savings account. Twenty percent had not used mainstream credit during the prior 12 months.
A mini-backlash is building. Bills outlawing cashless merchants have been introduced in Philadelphia and Washington, D.C., this year. Massachusetts has had such a law since 1978.