The dangers in being a cash-only restaurant.



Competition in the restaurant business can be cutthroat. At a time when every penny of profit counts, you might be tempted to become a cash-only operation to avoid credit card fees. Before you take this drastic step, you need to know the possible consequences.

A hit to your reputation.

No doubt, you have lavished a lot of care on your eating establishment. The food, the décor, and the staff have all been carefully selected in keeping with the theme and ambiance you want to achieve. Unfortunately, preventing customers from using credit cards to pay may cause damage to the carefully crafted image you have taken such pains to promote.

For starters, people might see your “We Accept Cash Only” sign and conclude that you are cheating on your taxes. After all, credit card receipts provide unimpeachable paper proof of purchases that were made in your restaurant. When everything is done with bills and coins, only you and your trusted staff actually know how much revenue the business is taking in. That makes it exponentially easier for unscrupulous owners to fudge on their tax statements, under-estimating their profits to Uncle Sam. Even if you are being 100 percent honest and are meticulously keeping track of every paper receipt, the perception may still be out there that you are playing fast and loose with the numbers.

If your cash-only mentality also extends to the way you pay your staff, it makes your tax situation even more hard to quantify. In addition, you are not doing your employees any favors. Young workers might be thrilled to receive their pay in a stack of hundred-dollar bills, with nothing being taken out for income or Social Security taxes. However, many will fail to remit what they actually owe to the government; it is often the furthest thing from the mind of an inexperienced young worker. In such an instance, you, as an employer, could be complicit in what amounts to tax omission or even fraud. This is true even if everyone’s intentions are honorable and no one had any plans to deliberately cheat the IRS.

On the other hand, there are some restaurant owners who choose to accept only cash for reasons that are decidedly not honorable or ethical. When the proceeds are all in cash, it is easy to mix them with other monies that come from illegal activities like selling drugs or human trafficking. When a dodgy owner submits a large cash deposit to a bank after the restaurant closes every day, the bank will probably not notice anything amiss as long as the amounts of money remain relatively consistent over time. Therefore, it isn’t difficult for a criminal operation to mix its legitimate profits with its nefarious ones and deposit the entire bundle on a regular basis.

Customers will be unhappy.

As is the case with any retail business, your goal as a restaurateur is, among other things, to make a profit. In order for that to happen, patrons need to enjoy their experience at your establishment as much as they do the food. If they don’t, they will simply take their business elsewhere.

One component of a positive restaurant experience is the payment process. Given the fact that most customers take it for granted that every business they frequent accepts credit cards, it should not be a stretch to understand their anger and frustration to learn that you only take cash. Modern consumers often don’t even carry more than enough cash to purchase a pack of gum or put money in a parking meter. The situation only worsens if your patron does not find out your rule until after they have finished their meal and are trying to pay. Believe us, nobody who is trying to impress a date or a business prospect will be happy about trying to scrounge enough bills to cover a tab or, worse, trudging to a sketchy ATM machine in the dark in search of cash.

You may be targeted by criminals.

Unhappy customers are not the only detriment your business can suffer by accepting only cash. When criminals learn that you have lots of money lying around, you can quickly become an easy target. By contrast, with just an inexpensive portable payment device, you can ensure that the majority of your funds are electronic and thus a great deal more secure.

Why accepting credit cards makes sense for your restaurant.

As you already may know, you will be required to pay a small transaction fee every time you process someone’s card, whether through the countertop credit card terminal or through a portable credit card terminal. This is an unavoidable consequence of taking customers’ plastic. However, there are compelling reasons that cancel out those small losses.

For starters, think about the nature of cash. It is finite; your customer only has whatever amount they put into their wallet before leaving the house. They have a clear idea of how much they can spend, a threshold that they generally do not surpass even though it is theoretically possible to add to it by visiting an ATM. By contrast, people with credit cards tend to be more willing to open their wallets. They tend to feel that they can spend a little more, within reason.

Furthermore, you cannot overstate the role the smartphone is coming to play in the consumer payment process. These days, even plastic cards are often left at home in favor of making contactless NFC payments with mobile technology. Android and Apple smartphones now come equipped with built-in payment apps. Customers need only enter their credit card data into their phone’s digital wallet to have it securely stored and encrypted. In a steadily increasing number of stores and restaurants, paying is now a simple matter of placing a smartphone near the establishment’s contactless payment reader, after which the customer verifies their identity using a fingerprint or facial ID. Within a matter of seconds, the virtual money changes hands and the patron can go on their way – no muss, no fuss.

Running a successful restaurant business is a daily struggle. Keeping your eatery in the black can be a daunting prospect, but don’t fall into the trap of believing that going cash-only will solve your problems. In fact, taking this step may damage your reputation, anger your customers, and put your security at risk. Instead of going this route, take time to find a merchant services provider that will give you competitive rates and excellent customer service. You will probably come to find that accepting plastic – and perhaps even contactless payments – was the best decision you ever made for your restaurant!