Time to Ditch Cash? Why Credit Cards Only Might Make Sense at Your Restaurant

Pros and cons of accepting credit cards only

Consider the following pros and cons of going cashless:

Pros of accepting credit cards only

The cashless movement may make sense for your restaurant for the following reasons: 

• Going cashless saves time: A cashless system eliminates cash management tasks from your daily to-do list, from counting cash in the till to making bank deposits.
• Going cashless expedites checkout: Cashless transactions speed up checkout lines; with no exchange of bills, there’s no need to count out change for customers.
• Going cashless reduces theft and increases security: Going cashless eliminates the safety threats associated with cash drawers, especially if you’re in a high-crime area or operate late hours. You don’t need to make after-hours bank deposits, and the risk of money laundering decreases due to careful transaction tracking.
• Going cashless makes foreign exchange easier: You and your international customers can complete transactions seamlessly without dealing with manual currency conversion issues.
• Going cashless improves accounting accuracy: Accepting only card payments means you don’t have to deal with cash shortages. Additionally, all tips are recorded, so you don’t have to worry about unreported tips or potential tax audits. Alfieri noted that Shift4 clients appreciate the simplified reporting and management of going cashless.

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Cons of accepting credit cards only

• Going cashless may alienate some customers: Some consumers prefer paying in cash for smaller purchases. Analyze your books to determine what percentage of your clientele you risk losing by switching to cashless payments.
• Going cashless may be illegal: Rejecting cash payments is illegal in some states (see the list below). Before moving to a cashless system, check your state’s laws to ensure compliance.
• Going cashless can be expensive: Credit card payment processing incurs fees. If your margins are tight and average sales tickets are small, you may prefer cash payments.
• Going cashless could hurt your brand: Accepting only card and digital payments might damage your brand’s reputation, consumer trust and customer loyalty, especially if you serve specific populations that primarily use cash.

Lou Alfieri, merchant services consultant for Shift4, noted that cashless setups typically benefit restaurants, but this payment situation isn’t ideal for every eatery.

“Going cashless is ideal for fast-casual restaurants, coffee shops and other environments where speed and efficiency are crucial,” Alfieri said. “However, restaurants in areas with lower credit card adoption or regulations requiring cash acceptance may need to evaluate their options carefully.”

What to consider before going cashless

Conduct detailed market research and consider the following before converting to a cash-only model.

Do your customers have a credit card? According to the Federal Reserve’s Economic Well-Being of

U.S. Households in 2024, 81 percent of American adults have at least one personal credit card. Here’s a breakdown of credit card ownership by age: 

• 18 to 29-year-olds: 63 percent
• 30 to 44-year-olds: 79 percent
• 45 to 59-year-olds: 86 percent
• 60+-year-olds: 92 percent

The report also highlights additional disparities in credit card ownership based on race, ethnicity and disability status (percentages reflect ownership of at least one credit card):

• 89 percent of Asian Americans 
• 86 percent of White Americans 
• 72 percent of Hispanic Americans 
• 69 percent of Black Americans 
• 67 percent of Americans with a disability

Income also plays a significant role in credit card ownership (percentages reflect ownership of at least one credit card):

• Earning $100,000 or more annually: 97 percent
• Earning $50,000 to $99,999: 89 percent
• Earning $25,000 to $49,999: 74 percent
• Less than $25,000: 46 percent

Cash usage also varies by age group. According to the Fed’s 2024 Diary of Consumer Payment Choice: 

• 18 to 24-year-olds pay with cash 14 percent of the time.
• 25 to 54-year-olds pay with cash 12 percent of the time.
• Those 55 and older pay with cash 22 percent of the time.

Additionally, Experian data highlights credit card ownership in the LGBTQ+ community:

• 47 percent of respondents had one or two credit cards.
• 33 percent had three or more credit cards.
• 21 percent had no credit cards.

Michael Seaman, co-founder and CEO of Swipesum, cautioned that restaurants should carefully evaluate their customer demographics and operational costs before going cashless.

“The goal is to accept all the payment methods your customers want to use,” Seaman explained. 

How much is your average ticket? 

Small-value payments (under $25) have traditionally been dominated by cash. However, the latest data from the Diary of Consumer Payment Choice (above) shows a shift: For payments of $25 or less, cash and debit cards are now tied, each used an average of 5.2 times per month.

That said, some consumer segments still prefer cash, especially for smaller purchases. If you stop accepting cash, you may risk losing those customers.

Are you willing to pay processing fees on 100 percent of your revenue?

Cash payments don’t incur transaction fees from a payment processor; therefore, you’ll pay processing fees on every transaction. Newer transaction types, such as mobile ordering, often incur even higher fees.

“Card-not-present transactions typically come with higher processing fees, a new problem for QSRs [quick-service restaurants] as mobile ordering has significantly increased,” Seaman explained.

Some credit card processors charge only a percentage of each sale, while others charge both a percentage and a small flat fee (known as interchange-plus pricing). Processors with a flat-rate pricing model might also charge a monthly subscription fee. Calculate your estimated costs with each pricing structure and eliminate platforms that exceed your budget.

Maricel Gentile, chef and owner of Maricel’s Kitchen, uses Square for credit card processing. This vendor has a plan with no monthly costs and simple, transparent processing fees.

“In food, more than any other business, every percent counts,” Gentile explained. “That’s why we use Square — if they were to change, I would drop them.” Gentile appreciates not being stuck in a contract and the ability to continue accepting cash alongside other payment types to accommodate the most customers possible. [For more information, read our comprehensive Square review.]

Seaman offered additional advice for restauranteurs: “Optimize your payment processor to minimize interchange fees. Use tools like Staitment for merchant services statement auditing or hire a payment processing consultant.”

Seaman also noted that modern payment methods like Venmo for Business and Apple Pay can help your business stand out from the competition. 

How important is security to your business? 

Consider shifting to cashless if your business has experienced security issues, like frequent cash theft or being robbed en route to the bank. Still, the risk of credit card fraud exists, so robust security measures remain crucial.

Do you have long wait times to pay? 

Customers may have a negative experience — or even leave your establishment — if they have to wait too long to purchase their food or settle a bill. Becoming cashless speeds checkout lines and improves accuracy, and can subsequently boost customer satisfaction.

Does your area have a cashless ban?

Some states prohibit businesses from accepting only cards as payment, as not everyone qualifies for a credit card and some people lack access to traditional banking services and debit cards. Here are the states and cities that currently have cashless bans (note that bans have been proposed in other areas):

States:

• Colorado
• Connecticut
• Delaware
• Massachusetts
• Montana
• New Jersey
• Oregon
• Rhode Island
• Tennessee

Cities and districts:

• New York
• Philadelphia
• San Francisco
• Washington, D.C.