The program is called “The Visa Cashless Challenge” and was announced by Visa’s corporate headquarters in San Francisco. The company is promising to give 50 selected restaurants, food trucks and other eateries $10,000 each if they promise to reject cash payments. Customer payments are not restricted to use of Visa cards but can be made by other credit cards or any form of digital payment. It is hoped these businesses will use the money to help them go cashless by making investments in technology that allows them to accept all kinds of digital transactions.
The Visa Cashless Challenge comes a few months after the Supreme Court of the United States issued a ruling dealing with credit card companies. Credit card companies charge businesses a fee to process a transaction, known as a “swipe fee,” every time a customer uses a credit card. The Supreme Court ruled, in part, merchants are legally able to offer lower prices to customers willing to pay cash. It is against this backdrop Visa is attempting to encourage businesses to limit their establishments to non-cash payments.
Jack Forestall of Visa Inc. said“With 70 percent of the world, or more than 5 billion people, connected via mobile device by 2020, we have an incredible opportunity to educate merchants and consumers alike on the effectiveness of going cashless.”
Visa claims companies can earn more revenues if they go completely cashless. According to Visa, a study was conducted in 100 cities that showed changing from cash to digital transactions results in $312 billion more revenue. Visa found in New York City alone, establishments could make a further $6.8 billion if cash transactions were done away with. By relying solely on digital transactions, Visa estimates 186 hours of labour could be saved in NYC, resulting in a further $5 billion to the city’s businesses.
The study has not yet been released but Visa says it will be made public later this year.
According to a credit expert, Marco Carabjo, the cost to businesses of having to pay processing fees can be as much as five percent of their revenues. While large companies can probably absorb these fees, the approximate five percent decrease in revenues from processing fees could mean the difference between staying in business or going under for smaller enterprises. And as Mashable notes, the refusal to accept cash will be a hardship on low income people who are not able to obtain credit cards or access to devices to make digital payments.
Visa Inc. will not say if the company plans to broaden the cashless challenge to businesses other than the 50 in the food service industry.
