Cracking Down on Cashless Cafés is Crazy

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



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.