The Pros and Cons of Switching to Digital-Only Payments

Many restaurants and cafés are considering going completely cashless, relying solely on card payments and digital wallets. While this can streamline operations and reduce security risks, it’s not without its downsides. Before making the switch, it’s important to weigh the benefits and challenges.


Pros of Going Cashless


1. Faster Transactions and Shorter Queues


Taking card and mobile payments speeds up service – no more handling change or waiting for staff to balance tills. This is particularly useful in busy cafés or quick-service restaurants where efficiency is key.


2. Reduced Security Risks


Cash businesses are more vulnerable to theft, whether from external break-ins or internal shrinkage. Going cashless removes that risk, as there’s no physical money to steal or miscount.


3. Easier Financial Management


Digital payments automatically track sales, making bookkeeping and end-of-day reconciliation simpler. There’s no need for manual cash counting or bank deposits, freeing up staff time for other tasks.


4. Lower Risk of Human Error


Handling cash increases the risk of mistakes – incorrect change given to customers or till discrepancies. Digital payments reduce these errors, ensuring that every transaction is recorded accurately.


5. Encourages Higher Spending


Studies suggest that customers tend to spend more when paying by card or mobile wallet compared to cash. The friction of physically handing over money is removed, making people more likely to order an extra drink or dessert.


Cons of Going Cashless


1. Alienating Some Customers


Not everyone is comfortable with digital payments. Some older customers or those who prefer using cash may feel excluded, potentially leading to lost business.


2. Transaction Fees Add Up


Card transactions come with processing fees, usually between 1-3%. For high-turnover businesses, these costs can become significant. It’s worth calculating whether the benefits of digital-only payments outweigh the added expense.


3. Dependence on Technology


If your card reader malfunctions or the internet goes down, your ability to take payments is instantly compromised. Having a backup plan – such as multiple payment processors or an offline mode – can help mitigate this risk.


4. Tips May Decrease


Customers tipping with cash often leave more than they would on a card. A cashless system could reduce staff tips, which may affect morale unless you introduce an alternative tipping method.


5. Some Suppliers May Still Prefer Cash


If you rely on local suppliers who operate on a cash basis, going fully digital could make payments more complicated. You may need to adjust purchasing arrangements or find alternative suppliers.


Making the Right Decision for Your Business


If you’re thinking about switching to digital-only payments, consider the following steps:


  • Analyse Your Customer Base – Do you serve a large number of cash users? If so, a hybrid approach may be better than going fully cashless.


  • Review Costs – Calculate how much you’re currently spending on cash-handling versus what you’d pay in card transaction fees.


  • Test a Phased Approach – Start by reducing cash usage rather than eliminating it overnight. You could introduce “card preferred” policies first.


  • Prepare Staff and Customers – Clearly communicate any changes to avoid frustration. Ensure staff can explain why the transition is happening and what alternatives are available.


  • Have a Backup Plan – Ensure you have reliable internet and multiple payment providers in case of technical issues.


How We Can Help


At MSF Associates, we help restaurants and cafés make smart financial decisions that improve efficiency and profitability. If you’re considering switching to a digital-only payment system, we can help you evaluate the financial impact and find the best approach for your business.

Book a call with one of our accounting specialists or call us on 0113 240 4100 to discuss whether going cashless is right for you.