Visa’s core mission is to crush cash, but its latest promotion rewarding businesses with a pile of money if they stop accepting cash altogether may be too little for this goal.

The payments network has pledged to up to $500,000 in awards to small restaurants, cafes and food trucks that promise to ditch cash — a promise that many would find hard to keep.

“I’d expect uptake of Visa’s offer to be very limited,” said Tim Sloane, vice president of payments innovation at Mercator Advisory Service. “While upscale restaurants would have the easiest time eliminating cash, I expect many food trucks and small-ticket restaurants would alienate their customers if they refused cash.”

Stack of Visa cards
Bloomberg News

The promotion centers on New York's Formula E electric car race taking place this month in Brooklyn, where Visa is working with three local restaurants that will go cashless during the event.

To participate, businesses are invited to apply online and describe how getting rid of cash will help their businesses, employees and customers. Visa will award up to $500,000 to the first 50 businesses who commit to stop accepting cash.

Some businesses are going cashless without any such incentive. Washington, D.C.-based Sweetgreen, which operates 64 fast-casual salad eateries, went fully cashless early this year, a move it considers beneficial.

“Getting rid of cash improved efficiency, cut operating costs around transporting cash to the bank and we promoted it as environmentally friendly," said Theresa Dold, who was Sweetgreen’s director of product until she joined mobile payments firm LevelUp last month as vice president of agency strategy.

Restaurants in specific regions and niches are going cashless wherever it makes sense, said Linda Kirkpatrick, executive vice president of merchants and acceptance at Mastercard. “We’ve seen some restaurants in Manhattan already completely get rid of cash—it’s happening even without incentives,” she said.

But it’s a narrow range of restaurants that can quit cash, she concedes.

"The U.S. market is incredibly fragmented, and taking a one-to-one approach to wiping out cash with bodegas and food trucks isn't really scalable," Kirkpatrick said.

Restaurants that operate without cash typically are in urban areas and have a high volume of lower-ticket transactions in peak periods around lunch and dinner.

It’s true that cards offer many efficiencies versus cash, and many large restaurant chains are currently seeing strong growth with order-ahead mobile apps that rely on cards for in-app payments, but thousands of small, independent café operators aren’t ready to move in that direction yet, according to Sloane.

“E-commerce and mobile apps are far from common for these (smaller) restaurants, and while cash has costs associated with acceptance, small businesses love it because they can use that cash to fund the next day’s food,” Sloane said. Restaurants typically wait a few days to get revenue from card transactions due to routine card-network fraud-prevention policies, he noted.

For most small businesses, the concept of eliminating cash is unrealistic, said Jordan McKee, a senior analyst with 451 Research, which recently conducted a survey that suggests 98% of consumers have used cash in the last 90 days.

"The death of cash remains greatly overstated, and while wiping out physical currency can make sense in certain environments such as parking, other segments like QSRs will likely continue to have a heavy dependence on its use," McKee said. "For most small businesses, completely distancing themselves from cash is unrealistic, given how entrenched paper currency is in some many facets of daily commerce."

Even if Visa doesn’t persuade many small businesses to immediately eliminate cash, its goal with the program may be more about illuminating this market about the changing payments technology landscape, said Rick Oglesby, president of AZ Payments Group.

“I think Visa’s goal here is really to show that cashless is possible, that we are nearing the stage where cash could become irrelevant in the future,” Oglesby said.

Visa did not provide comment by deadline.

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