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The quiet perniciousness of cashless restaurants

The pandemic has upended much of our lives, and the hospitality industry is one of the primary victims. In the process, many restaurants, coffee shops, cafés, bakeries, etc. have transitioned to a cashless experience. While the professed reason for this is to promote "contactless" payment without dealing in potentially germy cash, many places have been trying to streamline their operations into cash-free enterprises for years.


I make good money most of the time. I wouldn't be able to eat the way I do if I didn't. But I still have two jobs, and my second job is anything but stable. From time to time, that second job dries up completely, and the pursestrings get tight rather quickly. Moreover, I don't use credit cards because I know my penchant to spend, so everything is on my debit card (for my own safety!).


I recall a time last spring where my second job hadn't given me hours in a handful of weeks and I was struggling to re-adjust to that economic reality. I found myself on the verge of overdrawing my checking account a day or two before my next paycheck, so took out some cash and turned off my debit card so as to only suffer one overdraft fee. Thinking I was golden for the day with cash-money, or what might be called "Legal tender for all debts, public and private," I stopped in for lunch before work at a local food hall. In that food hall, the place I selected informed me they don't take cash because of the pandemic. "Contactless only." Except... they'd be touching my food containers. My soda bottle. The screen I signed with my finger. It took four (!) restaurants in this food hall before locating a spot that would take my "legal tender."


But here's the thing––I am pretty firmly middle class. I have had a bank account since age eight. I have a debit card. I have a credit card for emergencies but don't carry it around, hence the aforementioned dilemma. Many in this country, however, are what industry folks call "underbanked" or "unbanked." The FDIC estimated that 7 percent of adults in this country, some 25 million of them, do not have access to banking of any kind, meaning they don't have debit or credit cards. A further 20 percent of the country is "underbanked"––"people with a bank account who have had to resort to check-cashing, money transfers, pawn shops, and payday loans to make ends meet on a day-to-day basis, totaling nearly . . . 64 million [people]." And, unsurprisingly, these folks are by-and-large already among the worst off in society.


Commercial banking is pretty cruel to the worst off, from charging monthly fees if you don't have a multi-thousand dollar minimum balance to leveraging $35+ overdraft fees with each transaction that puts you in the red (and some banks charging you another overdraft fee every 24 hours you're in the red!). A recent Forbes article quotes a study that 95 percent of overdraft fees are charged to people already considered "financially vulnerable." In fact, a CFPB report released this year found that banks make $15.5 billion annually in overdraft fees, amounting to over two-thirds of their fee revenue. The poorest 9 percent of people, the ones who have ten or more overdraft fears in a year? 80 percent of that revenue. It's no wonder folks in poverty steer away from institutions that punish them for being poor.


The cashless craze

The cashless advocates have some points. The trend toward carded or touchless transactions has been accelerating, especially in the restaurant world, for decades. Transactions without cash are faster and more efficient. A cashless restaurant doesn't have to deal with making deposits, reconciling ledgers, cash bags, and all the other sorts of work and expenses. A restaurant dealing in cash is also at risk of irrecoupable loss or theft, from a simple miscounting of bills by an employee to being robbed at gunpoint. There's even some psychological research that paying with card makes a consumer more likely to spend more money, because they don't see the cash leaving your hand. An incentive for restaurants, indeed, especially in a world where 80 percent of restaurant transactions are with card, and restaurants pay 2 to 5 cents on the dollar to accept cards.


And financial institutions and card servicers are actively encouraging cashless transitions––Visa has a whole page dedicated to it, touting the benefits for businesses. With charges ranging from 2 to 5 percent of a retailer's revenue, they stand to profit from the transaction fees that encouraging more cards would create. They even offer retailers powerful incentives, like rebates on fees or free new tech to encourage businesses to go cash-free. Sounds pretty great for banks and for retailers, no? So who's left behind?


To be clear, there is, of course, no "right" to eat out. One of the pioneers of the cash-free movement, New York City restauranteur Tony Zazula, said in 2009 of his Commerce restaurant's new cashless policy, “If you don’t have a debit card, you probably don’t have a checking account. And if you don’t have a checking account, you probably shouldn’t be eating at Commerce to begin with.” As elitist and tone-deaf as this statement is, he isn't necessarily incorrect––the clientele of a high-end restaurant is likely well-heeled, well-banked, and hence unlikely to need to pay cash. The founder of Shake Shack, Danny Meyer, opened his first counter-service place since the now-ubiquitous fast food chain blew up, and immediately made it cashless. Maybe Meyer thinks he is catering to a sliver of the upper class crowd, which with many of his places he is. But now even some Shake Shack locations, a fast food chain and a member of possibly the most democratic category of food establishments, only accept cash, which seems to break the facade.


Casual and high-end places alike all over the country have grabbed on to the trend, and the pandemic fueled the shift, pushing even more to cashless. Misreporting on WHO guidance seemed to feed the fire––cash is obviously pretty germy, so the WHO issued guidance to wash hands after handling it, leading to hysteria that cash would spread COVID. The reaction was so strong against cash that the WHO even issued a clarifying reminder of its actual guidance. These days, scientists understand that SARS-CoV-2 is spread through the air and largely not surfaces. Moreover, a credit card is often handed between cashier and client. A food container and bag, or a bottle of soda, is handled by employees and given to the guest. Hell, many places with cashless policies because of "health and safety" refuse to issue mask mandates. In the face of this, does the cashless craze in the wake of COVID amount to anything more than performance art?


The answer is that of course it amounts to more––it amounts to banks standing to profit in droves. A restaurant netting $1 million in card-transacted sales in a year could pay a bank $50k in fees alone. That is higher than the median income in many states. This is a policy designed, advocated, and paid for by the same type of organizations that pilfer billions from the poor in overdraft fees every year, the same organizations responsible for profiting like kings from the ballooning over $1 trillion in consumer debt, and predatorily pushing credit cards with near-usurious interest rates and fees to people with financial issues. It's a policy that not only pads the pockets of the rich; it also overtly excludes and discriminates against those who cannot pay with anything but cash.


Pushing back

Public servants are taking notice. New York City banned cashless restaurants a couple of years back––other cities have followed, and the momentum seems to be building. Massachusetts has had a law since 1978 requiring establishments to take cash––no retailer “shall discriminate against a cash buyer by requiring the use of credit." A Chicago ordinance says "a ‘no cash’ sign is a ‘not welcome’ sign for many without ready access to credit, including those who are low or fixed income, homeless, undocumented, young, or victims of identity theft.” The ordinance is right––beyond just the poor, many under 18 can't get a card; many are concerned about privacy; many still are temporarily without cards for whatever reason. All of these people are functionally unwelcome at cashless food service establishments.


There are, of course, things that cashless advocates say such people can do. Get a Visa gift card at CVS, which can be activated for a fee! Get a high-interest credit card loaded with activation and other fees! Go groveling for an account and debit card from credit union to credit union and see who says yes!


See how awful this is? And it's structural, built into every facet of our existence. Fees for poverty. Punishment for bad luck.


I call this phenomenon "quiet" perniciousness. It's discreet, under-the-radar, and something most of us, at least those unafflicted by poverty, never have to think about, which is why so many businesses can get away with it. It's also why I don't necessarily blame restaurant owners. They've been the victims of predatory marketing by Visa and Mastercard for decades. They absolutely do get efficiency and cost-saving benefits from going cashless, and may even boost their sales as people spend more with cards alone. But this is exactly why it's a blind spot that needs to be brought to light.


Virtue-signaling businesses say they "are going cashless to protect customers and keep staff safe." Businesses profess social justice in hiring, philanthropy, and community engagement, but then go cashless. Here in Charlotte, a really exciting new restaurant is openly cashless, despite openly being immersed in social justice, expressing a strong desire to be involved in their under-privileged community, and even offering a "pay what you can" meal daily so more people can access good, nourishing food for what they can afford. More people, at least, as long as they have a card to "pay what they can." At what point are businesses going to stop allowing themselves to be swayed by the propaganda of card servicers and instead stand up for what they profess to believe in?


Food is a social justice issue. One of the worst injustices in the world is late stage capitalism's relegation of healthy, nutritious food to the upper classes. Buying a cache of local, organic produce, loaded with nutrients, supporting local farmers, and free of shortcuts that sap the food of nutritional value, is expensive. A box of Kraft mac and cheese is cheap. Factory-farmed eggs, dairy, and meat, bastions of animal cruelty and pumped with hormones, antibiotics, and other chemicals that are anathema to the human body's health, are cheap. And these cheap foods further pad the wallets of gigantic, profit-maximizing corporations rather than promoting a thriving network of local producers committed to nutritious, ethical sustenance for their communities. That is exactly why they are cheap––people will buy them in spades because they are cheap, which is, in turn, exactly why local producers have to charge more for their less-in-demand products, making them unaffordable for the worst off. It's all by design by the richest in society. These local establishments that speak of justice and yet go cashless should be engaged in work that makes good, healthy food more accessible, not less. The cognitive dissonance is spectacular.


I get that this is a hard time for food service establishments and that margins are thin. Maybe, then, they should welcome the business of cash bearers, and commit themselves to access for those in their community that are already so helplessly trodden upon by every other entity, especially during the pandemic. The food industry is a critical apex of social justice, and as long as Visa and Mastercard hold the puppet strings of restaurant policy, food service establishments will continue to operate with this quietly pernicious blindspot. The public servants of this country are finally taking notice––when will restaurants follow suit on their own?


Eater's Melissa McCart summarized the problem well––"in an era when an increasing number of restaurants no longer accept legal tender, it’s useful to think about who this system benefits most: the businesses and banks, at the expense of consumers."

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