Cash-Based Businesses That Must Change to Survive in the COVID-19 Era

Even before COVID-19, there were questions about whether we were moving toward a cashless society. For example, a 2018 Federal Reserve survey found that debit card usage had surpassed cash as the preferred payment method for the first time in history. And while there was push back against businesses refusing cash, with cities like San Francisco and Philadelphia banning such practices, there is little doubt that the coronavirus crisis has reignited a cash backlash, with business owners, their employees, and customers concerned about bills' and coins' ability to transmit infection. So, what's a mostly cash-based business to do moving forward? We spoke to small business owners and finance experts to find out.

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Many small business owners — restaurants, retail stores, cafes, bars, and the like — have not yet transitioned to cashless commerce because they fear it will change their relationship with customers. In May 2019, financial services company Square reported that in a third-party research project, 83% of U.S. small businesses said they would never stop accepting cash, with two-thirds noting that their customers would "react negatively." There are also "drawbacks to going cashless," notes Sean Messier, associate editor for Credit Card Insider. "There's the cost of adopting a suitable payment service and the planning that goes into choosing one that's right for your business. Then there are the fees involved, like transaction fees, which can cut more away from profits than you might like."

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However, debt resolution attorney Leslie Tayne, founder and director of New York City-based Tayne Law Group, P.C., stresses that business owners should keep the potential upsides in mind as well. "For high-volume establishments such as coffee shops and quick-serve restaurants, mobile payments and contactless payments can decrease transaction times and reduce employee exposure to cash … Additionally, accepting payment methods other than cash can reduce the need for bank deposits, the time employees spend counting money, as well as losses involved if a robbery occurred."

A poll conducted by website Mobile Cuisine found that 72% of mobile food vendor respondents stated that "cash is king" for their business. The site further reported that vendors' biggest concern is "the cost involved in the equipment used to process a credit card transaction in addition to the fees charged per sale."

In a business where food preparation is involved, and given the economic challenges already experienced by restaurants in the COVID-19 era — not to mention that a 2012 Zagat survey found that 40% of diners avoid a restaurant that only accepts cash — now seems like an apt time for food truck owners and other mobile food vendors to make the transition. In the process of doing so, Messier notes, business owners should keep in mind that "the actual physical handling element isn't necessarily eliminated by accepting card payments, either. If you're implementing cashless technology in response to the pandemic, try to make sure your approach accepts contactless credit cards or tap-to-pay mobile wallets, like Google Pay, to minimize the physical contact required to conduct the transaction."

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It's not that you can't pay for cookies via non-cash methods, but when your coworker's daughter shows up your desk with a box of Thin Mints, cash might be the only option you have. Girl Scout Cookie season usually begins in late January and runs through April. However, it was cut short by the virus this year, resulting in thousands of unsold boxes, according to Today.

The upside of this year's unfortunate timing is that it gives scouts, their leaders, and families nearly a full year to adapt to using other payment methods and selling tactics that fit digital payments. For example, the organization offers a Digital Cookie Platform that lets scouts accept payments, among other features, online and via an app.

Some sellers at farmers markets do accept credit cards, but plenty don't, mostly due to the fees charged that can impact an already limited income. While COVID-19 could mark a jump in farmers willing to use smartphone apps for payment, it's likely that many will continue to accept cash only. But that doesn't mean changes aren't in store, both low- and high-tech.

In Virginia, the Charlottesville City Market, is using e-commerce service Lulus Local Food, where customers can place and pay for orders prior to picking them up. Maine's Goranson Farm is asking customers to use a bucket for contactless payments. And, for farmers that have not yet made a switch to non-cash payments, organizations like the Pennsylvania Department of Agriculture are recommending best practices like having a different person handle money vs. produce and other goods. "It's no secret that payment habits have been trending toward cashless for quite some time now," says Messier. "But the COVID-19 pandemic has changed things considerably — businesses have been forced to develop more creative ways to provide services while minimizing human-to-human contact."

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In 2015, website Think Progress reported that more than 90% of salons have no direct employees, with many relying on independent contractors to perform services. It further reported that more than a third of stylists, cosmetologists, and hairdressers are self-employed. As such, salon workers sometimes eschew non-cash forms of payment due to the fees associated with accepting credit cards, not to mention some customers prefer to tip their stylists with cash.

As they're allowed to return to work — and given the challenges already faced due to COVID-19 — salon workers who've in the past accepted only cash might want to think about other options like a smartphone-connected device that accepts credit cards. In addition, many stylists develop personal relationships with their clients, which might help legitimize payment via services like Paypal and Venmo. Finally, notes Ethan Taub, CEO of Loanry, small business owners like stylists could see making the transition as an opportunity on a couple of levels. "Implementing cash alternatives where possible will both make your business 'modern' and also be useful in the pandemic. It is both a safety issue and a relevancy issue."

Already something of a dying breed, the shoeshine market is in deep crisis on a few different fronts. Not only were many closed as they were deemed unessential businesses, but even as they're allowed to reopen, public areas where shoe shiners typically flourish, such as airports and train stations, have seen a rapid decline in traffic due to COVID-19. Finally, fewer people are as concerned about their professional attire as they continue to work from home.

While some shoeshine businesses do accept payments other than cash, many don't. In fact, businesses like Executive Shine in the Denver International Airport ask customers to pay them what they think the shine is worth, resulting in some clients just pulling whatever cash they have out of their wallet. For shoeshine businesses that don't see a cost-benefit to switching from cash-only methods, it might be worth keeping Messier's comments in mind: "It ultimately comes down to weighing the benefits of forward-thinking technology versus their associated costs. Can you offset those costs with price increases? Will improved payment technology draw more business? The answers to these important questions are bound to change from one business to the next."

Lawn care and landscape maintenance are professional services that see a lot of cash change hands. "Many of our clients take primarily cash payments for smaller jobs, especially if they're called in just once a month to maintain a lawn," says Dan Bailey, president of WikiLawn Lawn Care, a service that helps connect homeowners with lawn care pros. "Cash is fairly common in that case, but it's been a big concern with the COVID-19 scare." Bailey says that as lockdown came into effect, many of his clients weren't booking at all, and "those that were booking mostly accepted debit and credit payments only — no cash."

However, Bailey continues, changes are afoot. "A few [clients] started implementing contactless payments ... so customers could just receive the invoice and pay it online without having to interact with an employee." As for how the pandemic will affect the industry moving forward, Bailey seems to think more caution is in store, rather than less cash. "The lawn care professionals I've talked to about this have said they'll continue accepting cash, for the most part. A few want to cut it out altogether. Most are just saying they'll take precautions when handling currency. For them, the cash payment system is so ingrained in the process of getting lawn care that they're concerned it will negatively impact business if they suddenly change to a cash-free policy."

Artists and crafters trying to make a living off their work often have to travel from market to fair to festival to do so, a transitory method of business that can make it difficult to deal with anything but cash. Some businesses "like outdoor markets and stands," notes Taub, "do not have access to outlets for a card terminal, Taking cash makes sense in a lot of ways for businesses like these." On top of that, many such events have been canceled or postponed for the foreseeable future, which could severely limit makers' income potential.

Makers who are often on the move to sell their wares could consider using a portable device like a Square Reader, which attaches to a mobile device, in order to take credit or debit card payments. They can also consider using Venmo or Paypal to accept payments on the spot. And, for the immediate future, crafters and artists can look to online resources like Etsy, Big Cartel, Spoonflower, and Zazzle on which to sell their products.

As the pandemic began to shut America's economy down, the medical and recreational cannabis industry scored a major win when most of the states that allow dispensaries declared them an essential business, thereby allowing them to stay open. But, because marijuana is still considered illegal at the federal level, dispensaries have historically only been able to deal in cash — for dispensary owners, as of right now, there are few options other than cash.

The declaration making dispensaries essential not only helped owners from a financial standpoint — it helped legitimize the industry, especially as dispensary owners and state regulators worked together to implement new approaches like telehealth resources for medical dispensaries, curbside and home delivery, and so on. If society continues to turn away from cash due to health and safety concerns, however, this could spell trouble for dispensaries. There might be a light on the horizon, albeit a slow-moving one. In March 2019, the Secure and Fair Enforcement Banking Act — or SAFE Act — was introduced, a measure that would let federally regulated banks work with state-approved cannabis businesses. While it has passed the House, it has not yet been taken up by the Senate nor, therefore, reached the desk of the president. If it becomes law, it would allow dispensaries to move away from a cash-only commerce model. Updates regarding SAFE can be found here.

Related: What to Know Before Buying Cannabis in States Where It's Legal

Strip clubs are, of course, largely cash-based. But with increasing concerns about the safety of handling potentially virus-laden cash, not to mention the close quarters required to do so in such establishments — particularly those without "no contact" policies — could strip clubs be headed for doom? It probably won't surprise anyone to learn that proprietors are doing their best to get creative.

As these clubs reopen, business-as-usual could look very different. The print and online magazine Complex reported that strict sanitation procedures likely will be in place, with masks and gloves required for clientele and dancers. It further reported that the "biggest potential change" — a no-contact policy — "would end the illustrious era of lap dances." Enter services like Lucky Devil Eats (original moniker: Boober Eats), an offshoot of Portland, Oregon-based Lucky Devil Lounge that is attempting to get creative with restrictions. For a $30 fee over and above food costs, two Lucky Devil employees will deliver food to a doorstep — topless. Other gentlemen's clubs in Tulsa, Oklahoma, and Las Vegas both tried to set up drive-through strip shows before such clubs were deemed non-essential and shut down, while other clubs have offered "virtual" dancing online.