Visa rewarded merchants who went cashless last year. Photographer: Andrew Harrer/Bloomberg
There’s a lot of money in San Francisco, but there isn’t much cash. Smartphone cases that hold a driver’s license and a credit card are popular. Traditional wallets that hold paper money are almost unnecessary. It’s premature to call the wallet a relic, but it’s losing its practical value.
There’s an El Salvadorian restaurant in my neighborhood that only accepts cash. They have a small ATM in the corner that charges $2.50 per transaction. When I withdraw funds, I sometimes take out more than I need on a whim. Like reading a newspaper in a waiting room, taking out cash is a novelty. A novelty covered in germs.
Clean isn’t the word I would use to describe my smartphone either, but it has so many apps. It empowers me to trade Bitcoin, manage my 401(k) and reimburse friends. It only makes sense that I should exclusively make purchases with my phone.
Every transaction is tracked. Every calculation is immediate. All it takes is a tap or two. Even if I have to wait for funds to transfer, there is an accurate record of my current balance and what’s pending. It took banks and other financial companies awhile to get this right, but it’s reliable now.
Last year, Visa ran a promotional campaign to encourage small businesses to go cashless. They rewarded a limited number of food service owners with $10,000 each. They’re also providing POS (point of sale) terminals for smart device transactions at the 2018 World Cup.
A cynic would highlight Visa’s desire to increase transaction fees, but it’s worth looking past their self-interest. If you accept the premise that cash is going away, it’s good business to reward cashless establishments. Visa is a welcome catalyst in this inevitable transition.
Visa made a promotional video for its cashless program. In it, the owner of 2nd City says its a generational preference. “We attract a younger Millennial crowd and no one really carries cash anymore, so it’s really not an issue. They like the speed and efficiency of it. I like the marketing aspect of it.”
Visa isn’t the first company to push for a cashless future. NFC (near-field communication), a technology that allows consumers to pay with their smartphones, is commonplace now. A few years ago, Square launched an exciting, but now defunct app, called Square Wallet.
It allowed a customer to walk into a coffee shop without pulling out their wallet or their phone. Their smartphone would connect to the Wi-Fi automatically, as it still does today. Their face would pop up on an iPad at the counter. The barista would select the customer based on their profile picture when they ordered. That’s all there was to it.
No exchange of filthy cash. No careful alignment of sensors. Square Wallet was a throwback to the olden days when a small town shop owner knew their customers well.
As Jack Dorsey described it, “It’s like opening a tab with the entire city.” Square Wallet leapfrogged the need to hold your phone up to a sensor. As part of a larger partnership, Starbucks offered the app as a payment option. While Square Wallet never took off, aspects of its user experience live on in newer apps.
Merchants like digital payments because they save time. They’re easier to calculate, split, transfer and track. The owner of 2nd City estimates that a manager spends 23 hours a week on cash. It takes time to run to the bank, balance the register and make change.
Those costs start to justify Visa’s transaction fees. They burden small businesses, but the customers benefit from the expense. No one likes to stand behind someone waiting for exact change.
Cashless is safer too. If you’re closing a bar at 2 A.M. in the morning, a register full of cash makes you a target for a robbery. Just as Uber drivers are safer than taxi drivers that accept cash, cashless bars are safer.
Credit and debit cards also make travel simpler. No traveler’s cheques, no currency exchanges. All it takes is a Visa or Mastercard to cover your costs.
The significant loss in a cashless future is culture. Paper money and coins are important artifacts. While unfortunate, national identity is already fading in this corporate, globalized world. The future is cashless. We ought to complete the transition faster so we can reap the benefits today.
