There’s a great scene in the Wayne’s World movie, where Mike Myers’ character, newly flush, strides proudly into a music shop, picks up the guitar he’s been coveting and says “I think I’m gonna buy it. Do you accept... CASH?” Whereupon he immediately flourishes two handfuls of bills. The joke played well in 1992, when cash was king, but there’s a generation growing up today who won’t get the punchline at all, expecting the salesman to instead respond: “No, why would we?”

People have been talking about a cashless society for decades, but for a long time it always seemed more science fiction than practical idea. In the 25 years since Wayne’s World, however, a lot has changed. Just ask restaurant entrepreneur Mustafa Yusuf, founder and president of Flock, one of Toronto’s hippest eatery chains.

More cash money, more problems

“We’ve been open for two years with the Flock concept and we see cash use dwindling,” says Yusuf. “I had another quick service restaurant previously and, when we first opened in 2007, 40 percent of our customers paid with cash. Currently, at Flock, it’s only 5 percent.”

This steep decline has made it harder and harder to justify accepting cash at all. “There are security concerns in terms of handling cash, and extra labour for the staff reconciling every day, going to the bank, having to get change,” says Yusuf. “It’s a lot of work for collecting a few hundred dollars a day in cash.”

As cash use declines as a percentage of business across many sectors, Flock is not alone in feeling this crunch. The less cash a business handles, the more expensive each cash transaction gets for them. “Whether you handle a hundred dollars or a million dollars per day, many of the costs of handling cash remain relatively fixed,” explains Iain McLean, Senior Vice President of Market Development at Mastercard in Canada. “This means that as merchants see non-cash transactions increase, the cost of cash on a unitary basis increases as well.”

So what’s changed to cause cash transactions to decrease so dramatically in such a short time? “Card acceptance generally has been very prevalent for a number of years now, but what has really changed is the proliferation of technologies like contactless transactions,” says McLean. “Also, with card payments most merchants get paid within a day, with that money going directly into their bank account. So they don’t have to worry about accepting the money, counting it, accounting for leakage, and then taking the money to a branch.”

Acceptance and confidence

The magic formula is merchant acceptance plus consumer confidence. And they are two sides of the same coin. For merchants, the value of credit card acceptance becomes clear almost immediately. “Research shows that new credit card acceptors see a 10-15 percent increase in their average transaction amount, and that overall consumers unrestricted by cash spend four times more at checkout,” says McLean. Like physical cards, acceptance of digital wallets like Masterpass and mobile payments like Android Pay and Apple Pay continues to grow. As acceptance grows, says McLean, so does consumer confidence. “Consumers feel very confident that in most places they can pull out a card or mobile device, tap or scan, and move through the queue quickly.”

All these factors combined have led businesses like Flock and Ottawa-based restaurant chain Mad Radish to take the plunge and go cashless. Mad Radish has gone cashless at both their locations and it has been a completely smooth transition. “I think most of North America is ready for cashless,” Mad Radish founder David Segal told the CBC. “It’s one of these things that five years from now, won’t even be a topic of conversation.”

As for Flock, they are going cashless from day one at their newest location, opening this fall in the MaRS Discovery District near the University of Toronto St. George Campus. It’s a sort of trial balloon, and one in which their confidence is high. “We’re looking at this location as a test,” says Yusuf. “If it goes well we’ll be rolling it out at our three other quick service locations in the new year. We’re very excited, and the staff is very excited. The staff wants to have more interaction with the customer rather than counting change.”

These restaurant chains may be part of the vanguard in the cashless revolution, but they aren’t going it alone. The cashless mindset has already infiltrated a relatively large segment of the gig economy — the growing workforce of temporary workers and independent contractors. For new startups, the balance has tipped to the point that digital payment only is a more desirable path than cash only. Of particular importance is the transition that has happened recently with very small value transactions. Whether it’s a pack of gum or cup of coffee, transactions that used to be completed with cash are now being performed with tap or mobile payment solutions.

Mobile devices in particular make it easier than ever for consumers to shop whenever and however they want, which also means that retailers can attract consumers in-store, online, and in-app. And with today’s digital payment technologies, even the smallest business can turn a smartphone or tablet into a mobile payment terminal.
“Electronic payments are the great equalizer,” says McLean. “They give smaller businesses access to the credit and tools they need to compete with larger players, and allow Canadian businesses to reach consumers around the world online.”

For both merchants and consumers, the advantages of going cashless are increasingly clear. There is one downside though: Wayne’s World has gotten a little less relevant. It’s sad to see a good joke die, but progress requires sacrifice. And Wayne’s World still has plenty of timeless laughs.