Not so fast with banning cash — that’s one of the messages coming out of the payments and food service world this month. Though variations of it have been heard for years, the newest iteration of the cash-is-dying idea provides a chance to see just how deeply entrenched this traditional form of money remains.
Shake Shack, a burger chain, had a progressive vision for one of its newest eateries, located in the Astor Place area of lower Manhattan. No longer would employees accept cash from customers. Instead, hungry consumers would pay at digital kiosks or via smartphone, with Shake Shack employees not only handling the food prep but making sure lines move as efficiently as possible.
The burger chain planned to expand its cashless concept to other locations. According to company executives last week (May 3) during a post-earnings conference call, the cashiers are now returning after customer concerns persuaded the restaurant to backtrack. The plan is not dead — CEO Randy Garutti told investors that “about four or five” Shake Shacks will get kiosks prior to the second quarter close — but the reversal demonstrates that old habits can be hard to overcome.
Data from PYMNTS demonstrates that. The “Global Cash Index” found that estimated cash growth in the United States between 2016 and 2021 will reach 6.2 percent. That is smaller than the almost 36 percent for Brazil and 20.4 percent for Mexico, but still indicates why so many consumers are reluctant to abandon paper money, to the point that Shake Shack had to take a step back.
The Global Cash Index report offers a few reasons for cash’s staying power. Not only is the use of cash ingrained in society — after all, the first minted coins appeared around 600 B.C., according to research cited in the report — but “cash is simple and requires no extra tools like internet or smartphones.” That feature can beat out negatives, such as the space cash takes up, the relative ease with which it can be lost, and its finite supply in pockets and purses.
The existential threats faced by cash still seem to increase with time. For example, electronic payments in the United States grew by 5.8 percent per year from 2000 to 2015, according to a Federal Reserve study cited in report. Cash grew by 4.7 percent during that period. Even so, cash retains a significant advantage — one that likely fueled the opposition to Shake Shack’s cashless restaurant plan.
“In the U.S., cash is still the most popular payment method when it comes to small, everyday purchases,” The Global Cash Index report cited. “An estimated 24 percent of U.S. citizens are still making all their purchases with cash.”
Part of the reason that preference endures could involve consumers’ sense of personal safety, the report said. Though cash use is higher in Brazil than in the United States, a push in South America’s largest country toward mobile payments has been motivated largely by the crime there.
According to the Global Cash Index report, “Government authorities in Brazil have also announced plans that reduce the country’s reliance on cash and will privatize the state-owned mint, following the example of Belgium, Denmark and the Netherlands.”
Cash is hardly the all-encompassing king it was once was, and there is little doubt that digital payments will continue to gain more loyalty from consumers. But, as Shake Shack learned and the PYMNTS Global Cash Index demonstrates, cash still has a fair amount of power.