Visa (NYSE:V) wants to convince small businesses to stop accepting cash and are prepared to give them money to do it. Visa is calling it the “The Visa Cashless Challenge.” Visa said the program will initially focus on restaurants and food establishments. There is an expectation that Visa will expand the program to other industries, and possibly other countries, in the coming months and years.
Restaurants that accept the challenge may receive a $10,000 gift from Visa to help pay for technology upgrades. The program participants will be picked from an online application that starts in August. Businesses that receive the award can use the $10,000 toward upgrading their point-of-sale systems so they are completely cashless. Any money left over can be used for marketing or other efforts to promote their small businesses
It’s all part of the trend of moving towards a cashless society. The credit card company wrote in a press release, “Visa will be awarding up to $500,000 to 50 eligible US-based small business food service owners who commit to joining the 100% cashless quest.” Andy Gerlt, a spokesman for Visa, said, “We are declaring war on cash.”
Cash remains a significant method of payment in many industries across the U.S. Many small businesses accept credit cards to be competitive, but would rather have cash. According to recent Nilson Report data, cash currently accounts for around 30 percent of U.S. retail personal spending.
The ploy would force customers to pay with credit cards or digital payments. Credit card companies charge processing fees and other charges to businesses that accept their cards as payment. The more payments done through its network, the more revenue Visa gets.
Those fees can cut painfully into the margins any small business. Fees for credit card transactions can cost businesses up to 5 percent of their revenue. Those fees can run into the thousands of dollars each year depending on how much the business sells.
While going completely cashless often requires expensive upgrades to current point-of-sale systems, Visa claims cutting out cash can help small businesses. Visa argues that handling cash requires more intensive bookkeeping, physical transportation of cash, and other additional costs.
Visa is also planning on releasing a report on “Cashless Cities: Realizing the Benefits of Digital Payments” later this year. The company said its study found in New York City alone, “businesses could generate an additional $6.8 billion in revenue and save more than 186 million hours in labor” per year if they stopped accepting cash.
Sweden is already predicted to become the world’s first truly cash-free society. Nearly half the banks in the country do not keep any cash on hand now.