A Cashless Food Economy? Don’t Bank On It – Yet

The case for moving away from cash for food purchases is strong: it’s efficient, convenient, and cuts down on theft and human error. But it’s not all good

Canadians’ food transactions are becoming more digitalized and the rate people are moving away from using cash is phenomenal.

According to a recent survey by Payments Canada, 42 per cent of consumers use cash fewer than four times a month when purchasing food, compared to 20 per cent who did the same a year ago.

And there has been a lot of talk about Amazon Go’s cashier-less model in the United States. It will come to Canada at some point.

However, little attention has been given to how a cashless world could affect how we shop for food in the future.

It’s convenient and easy. Let’s face it, as soon as possible, most us want to leave the grocery store and enjoy our food.

The changing marketplace offers an ideal exit scenario form cash. So more and more consumers are going cashless, with the industry playing along.

This doesn’t sit well with everyone, though. San Francisco lawmakers are considering a ban on cashless stores, as are those in New Jersey and Philadelphia. They contend that cashless stores discriminate against low-income shoppers who may not have a bank account or the means to have credit or debit cards.

Close to a million Canadian adults are unbanked and have no credit or debit cards. Many of them are single mothers.

So these arguments can’t be overlooked, especially if food is involved.

The pressure was so intense for Amazon.com Inc. that it backtracked and said Amazon Go stores will eventually accept cash. And the company says it will launch a program that allows anyone to go cashless, regardless of socio-economic status. It’s piloting a new program called Amazon Cash that allows shoppers to add cash to a digital account.

So the food retail industry going cashless will be a process aimed at making it more inclusive.

In food service, though, the cashless agenda is very different.

Some argue that digitizing food transactions allows food service companies to inconspicuously increase prices. If the price of a cup of coffee was raised by five or 10 cents, it’s easily noticeable when you count your money before giving it the cashier. But now we’re just a tap or a swipe away from that coffee. No paper, no coins, no visuals.

When it takes less time to pay, a business likely increases sales. And since shoppers don’t see money leaving their wallets, the focus is more on satisfaction and experience – while prices go up. That means shoppers are likely to spend more.

And when transactions are part of a daily routine and need to be quick, a moneyless world can make a difference when managing margins.

Recent studies in behavioural economics suggest the theory works.

A cashless food economy just might be imperative, especially when the industry is dealing with higher labour costs, and more environmental and food safety regulations.

As well, managing cash can be quite costly. A cashier spends 40 to 80 minutes a shift handling and counting cash. Some managers spend almost 20 hours a week validating the cash totals of others and dealing with the bank. So the economic case for a cashless food economy is quite strong.

And the cashless economy is also less prone to theft and human error.

Online, where cashless is really the only option, convenience of payment is becoming a huge factor. According to the same survey from Payments Canada, 73 per cent of Canadians will choose a food-purchasing website based on what method of payment is available. Psychologically, it’s a totally different game as an increasing number of shoppers are driven by transactional convenience rather than what they intend to buy.

A growing number of businesses in Canada are turning a cold shoulder to cash. Grocers and restaurants will continue to offer options and accept cash, but we all should expect things to change.

The old adage that cash is king remains true, but cash may leave its throne in the not-so-distant future.

By Sylvain Charlebois

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University, and a senior fellow with the Atlantic Institute for Market Studies.

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