Making Change

Payments, Perspectives, and Politics

Business owners and consumers across America are caught in a fast-changing payments landscape that’s evolved well beyond the traditional lens of cash versus card. Depending on where you live, the concept of “cashless” is either a heated debate, the wave of the future, or a term you’ve never heard of. New Square data shows American consumers have grown less reliant on cash in the last four years, and the trend is spreading from coastal coffee shops to rural restaurants.

But according to business owners across the country, it seems unlikely we’re casting cash aside anytime soon. In this report, we share Square data on the current state of payments, new research into small business owners’ sentiment toward going cashless, and divided opinions on whether government should regulate the register.

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Payments

Is the “Cashless Society” All Hype?

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We looked at millions of Square transactions across the U.S. to find out.

The following insights are based on Square transaction data from 2015 to 2019. While only 10% of Square sellers across the U.S. are cashless (accepting only card payments and not cash), Square transaction data shows a significant decrease in consumers paying with cash over the last four years.

In 2015, consumers paid with cash for 46% of transactions under $20. In 2019, consumers paid with cash for only 37% of transactions under $20, a 9 percentage point decrease in cash usage over the past four years.

The new norm:

Plastic over Paper

Consumers are using cards for increasingly smaller purchases, with the dollar value of when consumers prefer paying with a card to cash dropping dramatically since 2015.

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8
00

Price Change

Square transaction data reveals that half of consumers used their card for an $8 transaction in 2015. Four years later the transaction size has dropped dramatically, with half of consumers using their card for a $4.50 purchase in 2019.

Mod coffee owner
Mod coffee cup of coffee

After noticing 80% of his transactions were made with a card, Travas Clifton, owner of ModCup Coffee Co. in Jersey City, NJ, decided to shift his business to cashless. But New Jersey’s cashless ban in April has forced him to start accepting cash.

Cash vs. Card

The biggest shift in behavior, where consumers now reach for their cards more and more, is happening with transactions between $10 and $20. In the past four years, we've seen a nearly 10 percentage point increase in credit card usage for transactions within that range.

Credit Converts

Move the slider below from 2015 to 2019 to see how the breakdown of cash vs. card changed for each transaction size.

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$5 Cash
five dollar bill infographic
credit card infographic
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Card
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$20 Cash
twenty dollar bill infographic
credit card infographic
0%
Card
0%
$50 Cash
fifty dollar bill infographic
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Card
2015
2016
2017
2018
2019

Cashless Is No Longer Just an Urban Trend

Gone are the days when mobile wallets and cashless businesses only appeared in urban, coastal environments. The payments trend that started in tech-friendly cities has slowly made its way to suburbs and rural areas across the U.S..

Small Cities, Big Change

Outside the top 25 metropolitan markets:
In the last four years, the transaction amount at which consumers used their cards to cash dropped from $8 to $5.50.

Within the top 25 metropolitan markets:
The decline isn’t quite as steep; the transaction amount at which consumers used their cards only dropped from $5 to $4 over those four years.

Payments behavior in smaller cities is shifting toward a preference for cards, a trend that first originated in major metro markets.

Square seller Laura Leister

Laura Leister, owner of board game bar and restaurant Pieces in St. Louis, MO, launched her business with a cashless payment model, but ultimately switched to accepting cash after backlash from frustrated customers.

State by State

Where Card Is King or Cash Still Reigns

We looked at Square transactions across the U.S. to gauge which states still rely heavily on cash, and which favor card payments.

The State of the Union

Explore the map to reveal the states most reliant on cash and those most partial to cards.

Cash
Card
<40%
40—44%
45—50%
>50%
<50%
50—54%
55—60%
>60%
Square seller Candice Cox

Candice Cox, who owns CanDid Art Accessories in Oakland, CA, says while 95% of her sales are on credit cards, most of her senior customers still prefer paying with cash, and she will always accept it for her handmade jewelry.

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Perspectives

Talking Tender with America’s Small Business Owners

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There are two sides to a coin, and many more when it comes to how business owners feel about cash versus card.

From Kenosha, WI, to Kapaʻa, HI, no two businesses are exactly alike, nor are their perspectives on what type of payment is best to accept at their business. We spoke with small business owners across the country to uncover their thoughts, concerns, and frustrations with a changing payments landscape. Each business owner’s preferred payment method is tied to unique motivators: business efficiency, safety, technology, and appealing to both digital and traditional consumers.

We also wanted to better understand how small business owners across the U.S. feel about recent legislation in New Jersey, Philadelphia, and San Francisco that bans cashless businesses. Would they support something similar in their own hometown?

Overall, business owners are divided on the fine line between making autonomous decisions and protecting consumers. Hear from them below.

Click on the portrait of each Seller to learn more about their perspectives.

Small town coffee customers
Small town coffee register

Anni Caporuscio, owner of Small Town Coffee Co., estimates that shifting to a cashless business model in her town of Kapaʻa, HI, would leave behind roughly half of her customers. She can’t fathom making such a drastic decision.

Small town coffee outside shot

Caporuscio says most of her fellow business owners in Kapaʻa take that same approach.

Desire to Be Cashless Is the Exception, Not the Norm

We commissioned third-party data by Wakefield Research, surveying 1,000 small business owners to uncover insights into how they feel about cash, regulation, and if—or when—America will ever go fully cashless.

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of small business owners across the U.S. say they will never stop accepting cash at their business. For those who remain cash-only, the rationale is simple.

We’ve had this restaurant for 54 years, since 1966. We’re cash-only because we haven’t changed anything in this place. We aren't trying to keep up with the whole internet and millennial thing. We’re trying to keep it where it’s at.”

-Fadi Shawa
Owner of Sam’s Pizza and Burgers, San Francisco, CA

The majority of small business owners are skeptical of a cashless future, with 73% of small business owners saying that America will never go fully cashless. Why? Customer satisfaction: Two out of three small business owners say their customers would react negatively if they went to a cashless business model. This is consistent across geographies (cities, suburbs, and rural areas) as well as age groups, with only Baby Boomer business owners (54–72 years old) trending slightly higher toward expecting a negative customer reaction.

Square seller Sam's Pizza

Sam’s Pizza and Burgers in San Francisco, CA, has been a cash-only establishment since 1966. Owner Fadi Shawa has no plans to change that.

Is Going Cashless Elitist?

While most small business owners accept cash without question, they also support their fellow business owners’ decision to do what’s best for their own business—the majority of small business owners agree that the decision to go cashless is simply strategic (56%), rather than elitist by leaving out unbanked or underbanked consumers (44%).

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Strategic

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Elitist

For Kelly Kim, cofounder and executive chef at Yellow Fever in Los Angeles, CA, going cashless was an easy decision. In 2013 she received 40% of payments in cash, which dropped to fewer than 20% by 2015. Once her bank started charging for cash deposits, it put the nail in the cash coffin.

From a practical standpoint as a business owner, not having cash simplifies my life 100%. All three of our locations are cashless. Different communities are more sensitive to it than others. At two of our locations, it’s a non-event. But at the third, we have a number of customers who are not happy. And it goes both ways. We also have people say, ‘That’s so smart.’ But for the vast majority of customers, they simply don’t care.”

-Kelly Kim
Co-Founder and Executive Chef at Yellow Fever Eats in Los Angeles, CA

Age Denotes Cash(less) Preferences

A business owner’s age significantly influences whether they are more likely to consider cash critical or obsolete.

Generational Divide

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of millennial business owners (22–37 years old) plan to go cashless in the next two years.

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of baby boomer business owners (54–72 years old) plan to go cashless in the next two years.

Square seller Keva Juice

Gary Thomas, owner of Keva Juice in Reno, NV, believes that cash will one day be obsolete. But for now, he’s meeting his customers on their terms.

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POLITICS

Cashless (R)evolution

Cashless Revolution

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Exploring the political and socio-economic consequences of a cashless society

From New York to San Francisco, the cashless conversation is controversial, particularly when it comes to unbanked or underbanked (those without a bank account, or who have an account but still use financial services outside the banking system) individuals who may be excluded from cash-free establishments. Below, experts help explain the impact of a cashless society on this overlooked population.

As we progress through this cashless evolution, I think we need to consider how it impacts two distinct groups: people who get left out, meaning they want to be cashless, but are unable to due to lack of access to credit cards and mainstream financial institutions, and the segment of people who simply opt out—meaning they simply prefer to use cash for whatever reason. How do we ensure we account for each group?”

—Shelle Santana
Professor, Harvard Business School

According to the 2017 FDIC National Survey of Unbanked and Underbanked Households, 6.5% of Americans are unbanked and18.7% are underbanked. In short, this means they would be excluded from a cashless society, since they rely heavily on cash, either by choice or force. Here, we take a closer look at how U.S. Census income data correlates with cash and card usage at Square businesses across five New York City boroughs, where legislation has been proposed that would compel restaurant and retail businesses to accept cash.

Square seller Foster Coffee

Nicholas Pidek, owner of Foster Coffee in Flint, MI, wants to best serve his socioeconomically diverse community, and that means accepting any kind of payment that comes across the counter. He believes Michigan is far away from embracing cashless.

A Tale of Five Boroughs

A closer look at New York City transaction data reveals a correlation between median household income and reliance on cash. For the most part, lower median income translates to increased cash usage. The one outlier? Staten Island. This is the only borough that bucks the trend, which we attribute to the unique geography (isolated from the rest of New York) and demographic makeup (slightly older median age) of the borough.

Borough Breakdown

Click a borough to better understand how income level (based on U.S. Census Bureau data, 2012-2016) corresponds with cash and card usage.

NYC BOROUGHS BY INCOME LEVELS
<$80K
$80K—$89K
$90K—$99K
>$100K
New York City Staten Island Manhattan Bronx Queens Brooklyn
New York City Boroughs
Council member Torres portrait

Council Member Torres

In early 2019, NYC Council Member Ritchie Torres, who represents the Central Bronx, formally introduced legislation that would require every restaurant and retail establishment in NYC to accept cash. According to the FDIC, nearly 8.4 million U.S. households do not have a bank account, presumably relying on cash for daily purchases. In NYC, 25% of residents are underbanked; in the Bronx, that number rises to 30%. As Torres sees it, "Even if a cashless business model appears to be neutral on paper, it has a real-world exclusionary effect."

Local Regulation Leaves (Small) Business Divided

According to new third-party data by Wakefield Research, commissioned by Square, small business owners across the country are split on the idea of local leaders banning cashless businesses.

51% of small business owners would support a regulatory requirement that they accept cash; 49% would oppose it.

Carlos Lopez in his office
Carlos Lopez of Lopez tax service

Carlos Lopez, who owns Lopez Tax Service in Salinas, CA, says it’s important that he continue to collect cash for the 40% of his customers who are classified as low income and prefer to pay with cash.

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Conclusion

The Legislation and Looking Forward

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Who has proposed (or passed) cashless business bans?

Over the last year, proposals for cashless business bans have spread from New Jersey to Washington, D.C., to San Francisco, with fines that range from $500 to $5,000 for small business owners who don’t comply. Now, bills have also been proposed in Congress that would require businesses across the country to accept cash.

LEGISLATION LANDSCAPE

Here are the cities and states that have proposed legislation banning cashless restaurants and retailers (as of May 2019), including the local card-to-cash ratio based on Square payment data.

Legislation Status
Proposed
Passed
Not Passed
Multiple Statuses
Proposed
Passed
Rejected
Multiple Statuses
Square seller Elsie Mae's cannery

Kelly (not pictured), the owner of Elsie Mae’s Cannery and Pies in Kenosha, WI, says most of her customers are heavily reliant on cash and often surprised that she accepts credit cards at all. She believes that the U.S. will never be a fully cashless society.

Cents and Sensibility

As the company that made it easy to accept credit cards, one would think Square would be the loudest advocate for a cashless economy. We’re not.

The first integration we ever launched for our point of sale was connectivity with a physical cash drawer, because we want business owners to be able to accept whatever form of payment comes across the counter. A Square seller should never miss a sale, which is why we’ve made it easy for sellers to accept cards, swipes, chips, taps, mobile payments, and yes, cash.

We learned a lot in our exploration of how business owners view the changing payments landscape, and one thing stood out above all: Today, a decade after Square started, cash is still an integral part of a small business owner’s income, and an overwhelming majority of small business owners will continue to accept cash, despite the fact that fewer customers are using it.

Learn more