Credit card processor Visa has gone public with its war on cash. The company is offering 50 small businesses in the United States $10,000 each if they agree to stop taking cash payments. They may even try to take that campaign internationally, incentivizing foreign businesses to stop taking cash payments. Their ultimate goal is to get as many businesses as possible to stop taking cash in order to spur credit card and other electronic payment methods from which they can gain additional fees.
One of the reasons for continued acceptance of cash by small businesses is the cost of accepting credit card payments. Credit card processors take around 3% of each transaction to process credit card payments. Small businesses can’t absorb those losses, so they pass the cost on to consumers, either in the form of higher prices or in the form of small discounts to those who choose to pay in cash.
One problem with getting businesses to stop using cash is the fact that cash is legal tender. Legal tender means that someone must accept it in payment of debts. Visa is targeting food services, such as restaurants. If you eat a meal at a restaurant and want to pay afterward, that is a debt transaction. You have received the goods and services and now are in debt to the restaurateur. They are legally obligated to accept cash and cannot refuse it. In practice, however, they may try to do so and, unless you’re willing to mount a legal challenge they will win. That is what Visa is banking on, hoping to win enough small victories that cash use eventually is done away with.
War on Cash – Government
Visa’s war on cash also ties into the government’s war on cash. Governments don’t like cash because cash allows people to transact anonymously. All credit card transactions, however, are recorded, allowing the government to check up on what people are purchasing. It doesn’t even require a warrant, as transaction records of that type are not subject to normal Fourth Amendment protections.
Many Problems With Digital Payments
Perhaps the major problem with a cashless society is the inability to transact without electricity. Imagine a major thunderstorm, hurricane, tornado, snowstorm, etc. that knocks out electrical power for hours or days.
With cash, you just write down prices on a piece of paper, calculate what is owed, pay your money, and you’re on your way. In a cashless society, there would be no way to buy the tools and supplies you need to clean up. Once the registers are down there is no way to conduct transactions. Need that shovel to dig you out? Too bad, it just has to sit there because there’s no way for the store to sell it to you. That’s a major practical disadvantage.
Americans are still wedded to cash payments and have a fundamental distrust of people who try to spy on what they’re doing. While that means that Visa will have a long way to go to attain its goal of a cashless society, it’s clear where the trend is leading. Let’s hope that it’s stopped in its tracks before all of us lose the freedom to use cash.