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Cashless Society Pros and Cons: Are Digital Payments Really Killing Cash?

Mona Bushnell
Mona Bushnell

Cash-free transactions are becoming common, but the road to a cash-free society is long.

  • Interest in cashless transactions is rising around the globe.
  • While many more businesses are accepting a wide range of cashless options, few businesses are entirely cash-free – yet.
  • Adopting cashless options is not cut and dry for many SMBs, some of which will need to make significant updates to their point of sale (POS) system.
  • This article is for small businesses considering accepting cashless transactions at their establishments.

Sweden is making headlines as the first country to go cashless, and plenty of articles are speculating that Australia will be next, but what does a cashless society look like, and how cash free will the future be?

Small business owners are accustomed to reading headlines urging SMBs to adopt new technology immediately or else get eaten alive by giant competitors like Amazon, and yet real-world change is much more gradual. In fact, even Sweden isn't 100% cash-free yet; it's simply less reliant on cash transactions and more accepting of cash-free businesses than other countries.  

Here's a balanced look at the role digital payments will play in the small business world, the pros and cons of offering cashless payment methods, and what SMB owners need to know to stay relevant and competitive in what may be an increasingly cashless society.

Pros and cons of a cashless society for consumers

Cashless options carry a number of benefits and drawbacks. Here are some of the pros and cons your customers are weighing as they navigate their cashless options.

Cashless society pros

  • It can reduce the potential for violent crime. Carrying cash comes with its own security risk, and some prefer not to carry large sums for that reason.

  • It’s great for touchless transactions. Swiping a card or tapping an app eliminates the need to touch other people or equipment. For some, this is a preferable, more sanitary option.

  • Cashless options are easier to track and tabulate. Knowing how much was spent and where can be a pain to track on paper receipts. In a cashless society, each transaction is posted to the account used, so consumers have a clear record of how much was spent and when.

  • Transactions take less time. There is no need to wait while someone counts out change. Simply tap or swipe, and a customer is out the door with their purchase.

  • International payments are made easier. Cashless transactions make it simple for those from overseas to buy items without needing to exchange currency.

Cashless society cons

  • Cashless options may carry privacy concerns for some. The same tracking perks some love are privacy concerns to others. Those records remove the anonymity some want.

  • Cashless leaves those without bank accounts in the cold. Not everyone has access to a bank account or credit card, which are often necessary for conducting cashless transactions. This excludes a percentage of consumers who do not have access to financial products.

  • Accounts can be hacked or broken into. A lot more than just money can be stolen if a cashless account is hacked. Private financial information or compromise of connected accounts can occur as well.

  • It can be more difficult to visualize spend. One tried-and-true spend management method, putting cash in envelopes segmented by expense, is still as common today as it was decades ago. Without being able to see the money spent, some may easily lose track of how much they’re spending and what they’re being spent on.

  • Providers can charge fees. Some may not be willing to exchange convenience for fees that may be passed on by either the business, the cashless transaction platform, or both. Going entirely cashless means that consumers who do not want to pay these fees may not be willing to spend money with you.

Key takeaway: Cashless transactions offer perks like easy tracking and minimizing touchpoints, but for some, security and privacy concerns outweigh these conveniences.

Types of cashless payments

Alternatives to both cash and credit cards are becoming increasingly popular, especially in certain regions and industries, so even if you aren't planning on accepting digital transactions, it's good to stay informed about what's out there.

These are the most popular digital and alternative transaction services with businesses (and customers) in the United States now:

Store Apps: National chains have led the way with digital payments in the U.S. Stores like Starbucks and McDonalds incentivize customers to use their mobile apps (with mobile payment built-in) by offering easier online ordering and, in the case of Starbucks, rewards points for using their apps. Most store apps work by either allowing users to add money to their app account or by linking their app with the user's credit card.

While store apps aren't universal, and are primarily the purview of large corporations, they are an important steppingstone in acclimating customers to digital payments. Half the battle with tech adoption isn't deploying technology that works, it's getting people to use it. Starbucks has thus far been more successful than any other digital transaction app; more people use the Starbucks payment app than any other digital payment app, with the latest number of users topping 23.4 million people.

Other chains are jumping on the app payment bandwagon, most notably Dunkin' Donuts, Chick-fil-A, Panera and Chipotle.

Apple Pay: Apple's cashless payment app, Apple Pay, is becoming increasingly accepted at national chains like Whole Foods, Target, and even Walt Disney World. Apple Pay works on mobile devices like Apple phones, Apple watches (it does not work on Android devices), and it is accepted at select independent retailers, as well as these chains. Apple Pay works with existing banks and credit card companies to process payments.

Google Pay: Google Pay is available on Android and Apple devices, and works the same way as Apple Pay. Vendors online and in real life can accept Google Pay transactions, and many of the same chains that accept Apple Pay also accept Google Pay. Stores like Bloomingdales, Stop & Shop and Trader Joes accept Google Pay, as well as many others. Google Pay works with existing banks to process payments, plus services like PayPal and Visa Checkout.

Samsung Pay: Another digital wallet, Samsung Pay, allows users to link credit cards, bank accounts, and credit unions to the app and pay online or in-person via Samsung Pay. While Samsung Pay does not boast a long list of vendors who accept their payments, unlike the competition, they claim to be accepted in most places that accept other forms of digital transactions.

PayPal: Tap and pay is available for in-store purchases via the PayPal app, and it works the same way as the other digital wallets on our list. PayPal is available on Apple and Android devices, but PayPal does not provide a full list of retailers that accept in-store payment.

Key takeaway: There are many ways to accept cashless payments, including with store-specific apps, online platforms like PayPal, or mobile wallets.

Bans and backlash against cash-free businesses

Most establishments that accept digital payment methods also accept cash. There is relatively little backlash against offering digital payments in general; the opposition that's popping up is related to businesses that only offer digital payment methods (and credit cards) and no longer accept cash at all.

Many people feel that businesses that don't accept cash are discriminatory against people with lower incomes, recent immigrants, or those who, for other reasons, may not have access to credit and traditional banking.

Backlash is so strong that legislation is taking shape against cash-free businesses. Philadelphia recently became the first U.S. city to ban cash-free businesses, and others (including New York City) may soon follow.

Even if your city doesn't pass an outright ban on cash-free establishments, as a business owner, consider the ramifications of taking part in what is becoming an increasingly fraught practice, and consider continuing to accept both cash and credit.

Key takeaway: While little opposition exists against cashless transactions, consumers want to know that cash can still be used. This is both for practicality and for accessibility.

Benefits of accepting digital payments  

Accepting digital payments, in addition to cash, offers real benefits to business owners, workers and customers. For one, tap-and-go app payments are fast to process for both customers and employees, meaning quicker service.

Digital payments also make it harder for employees to steal from your business, which is no small feat considering that up to 30% of inventory loss may be attributable to employee theft.

Offering digital payment options also presents the image of being a forward-thinking business; it shows customers that you're ahead of the curve and not behind it.

In certain regions of the country, especially those with dense populations of high-income tech workers (where digital transactions are most common), offering tap-and-go payments may help you stay competitive with other local businesses.

Take note when you see small businesses and chains in your area offering cash- and credit-free payment options.

Key takeaway: Accepting cashless payments means that your business can get through transactions quicker, help you stay competitive, and can help limit employee theft at the register.

Editor's note: Looking for a POS system for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

Cash-free society

The concept of a cashless society isn't new, but the path to digital-only payments is a long one. It took decades for store credit systems to be replaced by charge cards and finally credit cards, and cash survived all that.

It wasn't until 1979 that the first national department store (J.C. Penney) accepted Visa or Mastercard, and it was years longer before accepting credit became common at small businesses.

The long history of the evolution from barter to credit is chronicled in Borrow: The American Way of Debt, by Louis Hyman, and makes for excellent reading for entrepreneurs who want more context on how payments (and consumer debt) have changed over the years. 

While it may be true that cash will eventually be phased out in favor of digital payments, if credit cards haven't been able to kill off cash since their advent, it's highly unlikely that digital transactions will become ubiquitous or exclusive anytime soon, at least not in the United States.

Cash-free businesses are trending primarily in areas that are not financially diverse; wealthy regions where people are highly trusting of technology and digital security, and are likely to be early adopters. Businesses that serve a diverse clientele, in terms of age, class and resident status, are less likely to go cash-free, as doing so would hurt their bottom line.

Additionally, research tells us that small businesses are slower to adopt new technology than news headlines might lead one to believe. Many thriving small businesses still don't have websites and don't accept credit cards, and a massive number of successful restaurants don't even use point of sale systems yet. [See our latest reviews on small business payment processing solutions.]

When it comes to small business tech adoption, cautiousness and skepticism still reign supreme. Most small business owners resist new technology until not adopting it is clearly hurting their bottom line, making it difficult to maintain quality workers, or otherwise causing more inconvenience than the time and expense of adopting it.

Image Credit: Syda Productions/Shutterstock
Mona Bushnell
Mona Bushnell
Business News Daily Staff
Mona Bushnell is a Philadelphia-based staff writer for and Business News Daily. She has a B.A. in writing, literature, and publishing from Emerson College and has previously worked as an IT technician, a copywriter, a software administrator, a scheduling manager, and an editorial writer. Mona began freelance writing full time in 2014 and joined the Business News Daily/ team in 2017. She covers business and technology.