Chicago

Cracking Down on Cashless Cafés is Crazy

Chicago considers banning businesses that won't accept cash payments.

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Flynt/Dreamstime

As more consumers use credit cards and payment apps, many businesses have decided to stop accepting cash entirely. If you think that sounds unobjectionable, you must not be Alderman Edward Burke.

Burke, a stalwart of Chicago politics who was first elected to the city's Board of Aldermen in 1969, has introduced an ordinance that would prohibit restaurants and retail outlets from refusing to accept cash. Federal reserve notes, Burke explained to Chicago's NBC affiliate, are "legal tender for all debts public or private. So follow the law."

If it were actually the law that businesses have to accept cash, of course, there would be no need for Burke's ordinance, which threatens businesses with $2,500 daily fines and revocation of their business licenses. For the record, the U.S. Department of the Treasury's website says that "private businesses are free to develop their own policies on whether or not to accept cash." The City of Chicago itself requires residents to pay with credit cards, checks, or money orders for booted vehicles. The city's buses don't accept half-dollar coins, which were legal tender the last time I checked.

Burke argues that the processing fees for credit cards get rolled into the final price of products, which consumers then have to pay. But processing cash comes with costs as well, notes John Gordon of Pacific Management Consulting Group, a restaurant consulting firm.

Cash "has to handled," he says. "It has to be stored in a POS [Point of Sale] system It has to be counted at least every shift. At the end of the day it has to counted and tallied into a sales report." All that costs time and money.

And unlike card purchases, which are in the ether as soon as they're processed, cash has to be either deposited at a bank or picked up by an expensive armored car service. "You can just see in the value chain all these costs loaded onto cash," says Gordon.

And so some businesses are going cashless. The Chicago-based chain Argo Tea converted six of its locations into cashless cafés earlier this year. Their website says that ditching paper transactions "increases our speed of service, allowing us to take your order faster and get everyone through the line and on their way with their custom-made drinks and food in less time."

For Argo, there is also a safety component to switching to card only transactions. "A cash-free store also reduces the chances of robbery, keeping our employees safe," explains an FAQ on their website.

For Burke says that businesses that go fully digital are displaying "an elitist attitude that doesn't really reflect what Chicago is about." Something that could also be construed as elitist would be for a politician to decide that he knows how to better run someone else's business. Chicago is home to thousands upon thousands of retail outlets serving customers of all incomes and tastes. The owners of those businesses are in the best position to determine if not accepting cash, or for that matter going cash-only, is the right move for them.

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  1. Chicago is a perfectly safe place to have your bar girl walk down the street with a few thousand in a bag to make the after-closing midnight deposit. What’s the issue here?

    1. She’d be an easy mark for CPD with those assets just begging to be forfeited.

      1. And fondled. Don’t forget the fondling.

  2. in fairness, what we’re calling “cash” here is really just another form of credit. We’re so far removed from hard currency at this point that we think we see some fundamental difference between an IOU from the Fed and an IOU from a bank.

    1. we think we see some fundamental difference between an IOU from the Fed and an IOU from a bank.

      The important, if not fundamental, difference is that one has your name on it and one doesn’t. I doubt that a widely used, anonymous and untraceable electronic money and payment system will ever be permitted to exist.

      The fact that law enforcement hates cash so much is a pretty good argument to fight for its continued existence and use.

      1. Bitcoin, though you do have to do a fair bit of work to keep it truly anonymous.

      2. The fact that law enforcement hates cash so much is a pretty good argument to fight for its continued existence and use.

        Oh, I’m definitely “pro-cash.” I just find it amusing and somewhat indicative of a cultural development that this guy is trying to find some argument where a dollar bill is some more “essentially real” form of currency than a bank note/credit transaction.

  3. I don’t like it because the idea of a cashless society terrifies me. I try to use cash as much as possible. But I don’t have to go to those places if I don’t want to.

    1. In terms of International Bitterness Units, how low on the scale is a cashless society for you?

      1. It’s like one of those sour, historic recreation beers that doesn’t even have any hops at all.

  4. If businesses stop accepting cash, the govt will push to get rid of cash altogether because it allows for anonymous exchange. Swirl that softly and gently around in your libertarian mind.

    Visa is trying to bribe restaurants to stop accepting cash already.

    Cash “has to handled,” he says. “It has to be stored in a POS [Point of Sale] system It has to be counted at least every shift. At the end of the day it has to counted and tallied into a sales report.” All that costs time and money.

    And unlike card purchases, which are in the ether as soon as they’re processed, cash has to be either deposited at a bank or picked up by an expensive armored car service. “You can just see in the value chain all these costs loaded onto cash,” says Gordon.

    Not anywhere near 3% of revenues… and he’s overstating the work that must be done. This is something restaurants and other businesses have done for a long, long time and he’s acting like it’s a burden.

    1. I think the fact that lots of restaurants want to, and do, go cashless counters your argument. It’s like saying people have been slaving over the stove all day for a long, long time so why stop now.

      1. I always go to the grocery store with the self-checkout lanes. I also love that restaurants started putting little self-checkout machines on the tables. It’s not that I don’t appreciate low level functionaries, it’s just that I don’t like being dependent on them.

      2. On the other hand, there are also lots of businesses encouraging cash transactions now. I’ve noticed a lot more gas stations offering discounts for cash purchases than there have been for a while. The Pizza place in the town where I’m from just recently, grudgingly started to take cards, but still makes it clear that they prefer cash (being a pizza place there is some real chance that there is some kind of money laundering operation going on, which could explain some things).

        1. Around here, Sweetgreen does not accept cash. It is the first food establishment to do so, AFAIK.

        2. I’ve noticed a lot more gas stations offering discounts for cash purchases than there have been for a while.

          The ones I use give the same discount for debit cards. That is my preferred payment method.

          1. I never use a debit card anymore except at an ATM. Credit cards have much better fraud protection and I never carry a balance. Plus they give me 2% of everything I spend back.

            1. I don’t have any credit cards, just debit. My wife has one card in her name with a high enough cap that we use for emergencies. On the plus side, both of our credit scores are over 750.

              1. If you think you might use them for credit, then credit cards aren’t great outside of emergencies. But if they’re going to pay me to use the card, charge me nothing for the service and alert me any time any suspicious uses of the card happen, I’ll take it.

          2. I’m kind of surprised that they treat the debit like cash for the discount. I’m pretty sure that the same fees are charged by the card networks whether it’s a credit or debit card. Maybe it’s lower for a PIN transaction.

            1. With some exceptions, debit card transaction (PIN or no PIN) are cheaper. Banks with over $10billion in assets can only charge 21 cents + .05% on debit card transactions.

              https://en.wikipedia.org/wiki/Durbin_amendment

      3. Can make this easy for you. At $20/hr and a 2.5% credit card vig, your end of day counting employee has to count $800 to break even. Given that most people can count out $800 in a couple of minutes (assuming its not all 10s and 20s which would be faster), I think the argument that counting cash is a *financial* burden is quite false.

        I’m not privy to the cost of armour truck pickup rates but if you have that much dough to need that kind of service I still suspect you end up ahead of visa/mc/amex. And don’t forget, there are no charge backs with cash.

    2. As someone who worked as an assistant manager and had to handle drawers of cash, count them, put cash into plastic bags, seal them, mark them correctly, etc. I can say there is SOME burden to dealing with cash, sure. It still only took 40 minutes or so to clear 3 registers.

      It seems to me the main advantage cashless systems have is the elimination of human error. I can’t see a computer giving incorrect change.

      But the real reason they want to do away with cash is because cash is essentially anonymous.

    3. “If businesses stop accepting cash, the govt will push to get rid of cash altogether because it allows for anonymous exchange. Swirl that softly and gently around in your libertarian mind.”
      Top Men are in unanimous agreement that cash must be banned, but how to get the great unwashed on board is a perplexing problem. If cash simply becomes obsolete or is no longer accepted as legal tender few will even notice when the treasury stops printing those anonymous reserve notes. I’d guess we are a couple decades away from that brave new world.

  5. That alderman knows that bribes are much harder to hide without cash. He is merely looking out for the interests of Chicago municipal employees.

  6. what Chicago is about

    Is there any more grating phrase that flunkies like this always use to justify their grandstanding, bigotry, and/or power grabbing?

    1. Your attitude doesn’t reflect my values!

    2. For the children?

  7. The city’s buses don’t accept half-dollar coins, which were legal tender the last time I checked.

    I don’t believe coins technically are “legal tender”. They’re “specie”, which had intrinsic value back in the days they were made out of actual precious metal, and therefore theoretically didn’t have to be legally designated legal tender — who’d ever turn down something with intrinsic value. For the same reason, it’s illegal to deface currency, but not specie, because you wouldn’t be affecting that intrinsic value.

    1. 31 CFR 82.1 prohibits melting pennies and nickels.

  8. Odd that the government would want you to use anonymous, untraceable cash they have to physically seize rather than digital bits they can track and seize with a keystroke. Unless, of course, our honorable alderman is involved in some sort of business that requires anonymity and untraceability but the only businesses like that I can think of all involve illegal activities. Drugs, gambling, prostitution, extortion, bribery – which of these are Chicago pols not involved in?

    1. Of course, for the same reasons it’s odd that anybody not in government would want to forego using anonymous, untraceable cash. I’ve heard rumors that some people in my line of work will give discounts for cash just in case they accidentally forget to fill out the paperwork for the IRS on the transaction. Again, just like they accidentally forgot every other single time they’ve ever received cash payments.

  9. RE: Cracking Down on Cashless Caf?s is Crazy
    Chicago considers banning businesses that won’t accept cash payments.

    “Chicago considers…”
    That’s all I need to know things are going to be fucked up in that city.

  10. The only thing I’ve used cash for in the last 5 years is drugs.

    1. I’d use cash for everything, but Amazon gives me pennies on the dollar every time I use their CC to buy something in a store, online. Anywhere. I have saved hundreds of dollars on Amazon that way (enough to pay for the Prime membership, if I had to guess).

    2. It shows

  11. The cafes could just make paying cash a gigantic pain in the ass of jumping through hoops like the tollway does.

  12. For Argo, there is also a safety component to switching to card only transactions. “A cash-free store also reduces the chances of robbery, keeping our employees safe,” explains an FAQ on their website.

    It also reduces they chances that your bank will rat on you about bullshit “structuring” of deposits.

  13. Is cash not legal tender for all debts public and private?

    Oh well, guess we better all go cashless and ensure the government can trace all transactions. I love big brother!

    /sarc

  14. Their website says that ditching paper transactions “increases our speed of service, allowing us to take your order faster and get everyone through the line and on their way with their custom-made drinks and food in less time.”

    Bullshit.

    1. Well, I mean this might be true if they’re too stupid to do basic math to give someone their change.

  15. No offense to Christian here, and I agree that Burke’s ordinance is just bullshit regulation, but I’m not sure he’s considered the anti libertarian ramifications of a cashless world.

  16. I’d like more restaurants to adopt the kiosk system like they have in Japan. Put cash in, select items, hand order printout to cooks/waitstaff, sit down.

    That, and vending machines that can give paper money change. Put a 5000 yen note in a vending machine, get four 1000 yen notes and coin change.

  17. “It has to be stored in a POS system”

    I’m above making a comment about this.

  18. For Burke says that businesses that go fully digital are displaying “an elitist attitude that doesn’t really reflect what Chicago is about.”

    Oddly vague. Typically democrats prefer to use the word “racist” instead of “elitist”. What is this really about? Illegals who are off the grid or poor minorities with crappy credit?

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