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The End of Cash?

Written by Nickel - 38 Comments

While it’s a bit premature to proclaim an end to cash-based society, I was recently reminded of just how plastic-dependent we’ve become. While on a short flight on Southwest Airlines the other day, the flight attendants came through the cabin offering a variety of energy drinks, beer, wine, and cocktails for sale. While airborne beverage sales are commonplace, I was a bit surprised to learn that they wouldn’t accept cash as payment.

“As we come through the cabin, please keep in mind that we only accept credit cards* or Southwest Airlines drink coupons as payment,” came the voice over the loudspeaker.

I’m not sure how long they’ve had this policy, but it struck me as odd that they wouldn’t accept cash. Instead, they’ve chosen to arm their flight attendants with handheld credit card readers and subject themselves to the fees that come along with credit card usage. Perhaps they’re concerned about theft, or maybe it’s simply an efficiency thing. I’m really not sure.

Anyway, before anyone asks, yes, it’s perfectly legal to refuse cash payments. True, the Coinage Act of 1965 states that:

“United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.”

This means that cash money (as defined above) is a valid form of payments for debts when tendered to a creditor. What it does not say is that private businesses, individuals, or organizations have to accept currency or coins as payment for goods and/or services. Private businesses are free to establish their own policies on the acceptability of cash unless there is a state law that says otherwise.

And now that we’ve had our civics lesson for the day…

Have you run across businesses that favor credit over cash?

*I’m assuming that they’d also accept debit cards.

Published on January 12th, 2009
Modified on January 13th, 2009 - 38 Comments
Filed under: Miscellany

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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38 Responses to “The End of Cash?”

  1. 1
    Heather Says:

    I once heard that it is illegal for a company to have a minimum amount one can charge. As in it would be illegal for a store to not allow me to charge a $1.00 candy bar if their minimum charge limit is $5.00 (obviously imposed by store management/owners). Do you know?

    Heather

  2. 2
    Sick of Debt Says:

    I suspect it is due to a couple of reasons:

    - Flight Attendants pocketing cash payments: It’s much harder to skim money off when CC are only accepted

    - Track purchases in case of lawsuit: I have heard of lawsuits that customers put on the airlines for allowing them to purchase too many drinks, therefore they got drunk and caused a disturbance. These records could be used saying “We provided only $15 worth of drinks to the customer and would not be able to know how many they had prior to the flight.”

  3. 3
    CK Says:

    There is a newspaper/magazine store in baltimore that actually only takes credit cards. They were getting robbed so much that they stopped accepting cash.

  4. 4
    Jim Says:

    Going ‘cashless’ has been a trend with airlines for a while now.

    I found this article from July 08:
    http://seattletimes.nwsource.c.....cci20.html

    They cite the reasons as : “Getting rid of cash not only eliminates the hassle of making change, it makes for easier accounting and tracking of what sells and what doesn’t. Insiders say theft prevention also comes into play, not a huge problem now but a potential one in the future if the airlines start selling more expensive items.”

  5. 5
    Ashley Says:

    Heather –
    It is not illegal to have a minimum charge, it is against the terms of the merchant agreement that they sign to be able to accept Visa/Mastercard (not sure on the other cards, imagine they have similar terms). You can report them to the credit card company and the CC company has the right to revoke their ability to accept the card, but it is not a legal issue other than them violating the terms of their agreement with another private company.

  6. 6
    cemccon Says:

    It is also a violation of Visa / MC merchant agreement to have a MAXIMUM charge, either. So, if you have a $50,000 limit on your Visa rewards / cashback card, and you want to charge your shiny new auto on it, then the dealer is in violation of their agreement with Visa if they don’t let you do that.

  7. 7
    Bill M Says:

    Since I am addicted to the Credit Cards paying me to use them in form of rebates, I refuse to go to a business that does not accept credit cards or imposes a minimum. I only pump at gas stations that accept CC and do not charge to do that.

  8. 8
    Tom Says:

    For Southwest it’s also an efficiency thing. Southwest has a lot of short flights with very small drink serving windows. If the attendants spend even 5% of that time making change, they may not be able to serve all of the passengers.

  9. 9
    David Says:

    Maybe they don’t want the crew getting robbed, a la D. B. Cooper. :-)

  10. 10
    SeattleOtaku Says:

    While all card transactions are charged a fee (1-5%) to pay for the bank fees etc., they also prohibit merchants from having minimum charges or surcharges on card transactions… But you still see plenty point-of-sale places state they’ll add a certain amount to the transaction below a certain amount. It’s effectively a surcharge, but it’s part of the transaction fee if you ever call the card company to report them for doing so.

  11. 11
    Craig Says:

    I agree with Sick Of Debt. May be a precautionary play by the airlines against theft. Also they may have a deal with those credit card companies, another method of getting consumer information.

  12. 12
    Tom Says:

    @ David: Note to self – leave parachute at home.

  13. 13
    Patrick Says:

    I’ve noticed this on quite a few airlines within the last year. As previously mentioned, the biggest reasons is for this policy is efficiency. Flight attendants often run out of cash for change. Another reason is because it has been proven that people will spend more money with cards than they will with cash.

  14. 14
    Runner2 Says:

    Increased revenue due to Credit Card use, as mentioned in the article, supplied by “Jim” in his comment is the most obvious candidate.

  15. 15
    aryn Says:

    The no cash rule has been in place for a while on many airlines. (At least for food. The airlines that charge for headsets and pillows will accept cash for those.) I’ve heard that people so buy more on the plane when they use credit. It’s also more efficient – the flight attendant doesn’t have to remember who paid for a $3 item with a $20 and loop back to give the proper change once she’s collected it from other passengers. It also avoids the issues of correct currency on international flights.

  16. 16
    Trevor Says:

    I find this absolutely fascinating! I wonder why they only take credit? I can almost guarantee it has something to do with theft. Why else?

  17. 17
    nickel Says:

    While it has been argued credit card users spend more than cash users, I doubt that this is reason for their credit-only policy. The reason for this is that, while they are encouraging the use of credit cards, they are actively turning away customers that don’t carry (or wish to use) a card. The smartest option approach if you want to maximize sales is to accept all forms of payment. Sure, if some pay via cash, they might spend less (though the data on that are debatable), but you’re maximizing your audience. The theft issue could be taken care of by reconciling their inventory with the money taken in. Pretty simple. I’d be willing to bet that this is largely an efficiency thing. Making change is a slow process, and running up and down the aisle to fetch more change if you run out is a huge inconvenience.

  18. 18
    Jason H Says:

    For airlines the no-cash policy makes sense for many of the reasons listed (efficency, having to carry cash, etc), but I have noticed it’s more of a LCC initiative right now.

    Interestingly if you look around there are plenty of businesses that refuse to accept credit/debit cards. I know of one place where I live that won’t even accept a check. It’s either cash or nothing. Of course these are mainly small businesses that are trying to minimize cost, but I think it’s funny to watch people’s reaction when they can’t use their trusted credit card.

  19. 19
    thomas Says:

    efficiency? Have you all been on a plane lately? it takes much longer now to get through the cart service. It will get better, but some of these stewards need lessons (as I have joked with a few when on their first cashless flight).

    So, efficiency is one reason, and breaking change is another. The staff usually funds this themselves and is always trying to scrape together the right numbers. Since a lot of passengers don’t carry cash (or at least singles) this is a real pain in the butt.

    But I think the number one reason is data analysis. As mentioned, they know who bought what, what is selling, and when it was sold. This type of information is a gold mine.

  20. 20
    Rich Says:

    I have yet to experience someone turning down cash. I have a feeling that a lot of it has to do with being on an airline, as others have suggested.

  21. 21
    My Dollar Plan Says:

    So can you buy the “Southwest Airlines drink coupons” with cash? We don’t have Southwest here, so I didn’t know if you could buy those on board or if you have to purchase them before flying.

  22. 22
    nickel Says:

    MDP: The coupons are for frequent flyers. As far as I know, they’re not for sale (though I’m not certain on that).

  23. 23
    KC Says:

    I just moved to a middle sized city in NC (from a major city in another part of the country) and I inquired at the local post office which branches offered an APC machine. The postal clerk didn’t know what I was referring to so she got her supervisor. The supervisor told me that none of the branches in the city had an APC machine as they had them in Greensboro (30 mins away) and that most of the customers here still used cash.

    After I got over my initial anger of realizing I’d moved to the stix and would spend a great deal of the rest of my life in line at the PO. I realized I was being fed a line of bull. I seriously doubt people in this mid-range city (pop. 200k) use cash more than credit. Your article helps confirm even if it is focusing on the airlines. We are heading towards a cashless society in every aspect…except the Post Office.

  24. 24
    BillyOceansEleven Says:

    I’m with Bill M. I want to use my cards for everything possible. If there is a store that doesn’t take credit cards or even a gas station that doesn’t have pay at the pump I don’t give them my business. And I always make a point to ask for the manager at such establishments when I do happen upon them to let them know that I was going to purchase $X in merchandise but I was leaving empty handed because they wouldn’t give me the choice to use a credit card.

    The only exception for me is small businesses that I get to know very well, and even then I want it to be MY choice not to use a credit card. Example: there is a small dry cleaners around the corner from my house that is really cheap and always does a great job. While I could use my AMEX, I opt to pay cash since I really like them and want to minimize their costs and chances of succeeding. But I always know that I can use my AMEX if I want or need to.

  25. 25
    Blaine Moore Says:

    I had the exact opposite experience at US Airways a week or so ago. They only accepted cash and had to make multiple announcements asking if people could break large bills for them.

    Of course, US Airways charges you for everything other than using the toilet, and I’m sure that that’s going to be coming soon enough.

  26. 26
    Converting A Spendthrift Says:

    I have experienced this cashless purchases on several airlines now.

    I even had to pay for my checked bag at the ticket counter with a CC at Frontier in Phoenix.

    They did not keep cash at the ticket counter. I am unsure why but the same airline took my cash at my home airport (Reagan National)

  27. 27
    SWA LUVer Says:

    Yes, you can purchase SWA drink coupons at the ticket counter with cash.

    The main reason that they went cashless is efficiency. Too many people buying a $4 beer with a $20.

  28. 28
    Mike Says:

    Of course, people will realize there are many benefits to a cashless society – much less crime. Next up will be microchips in our hands and foreheads so the IRS can track every transaction and the FBI can keep tabs on us with GPS.

  29. 29
    Bruce weaver Says:

    I read every comment here; most are valid, a few absurd. I think at this time when people are pulling back from big banks and their nonsense fees and apparent lack of accountability, it falls to the end consumer (passenger) to be informed. This was the first I heard of it. I was conditioned to pay either $5 or $10 for 1-2 drinks cash. I don’t think the attendants were concerned about a tip. Unfortunately this will become another topic of the hassles of flying. I bet the major media largely ignores it so as not to offend some activist group. As a 46-yr-old casual traveler I have found that one or two drinks is the way to go on any flight over over an hour and a half in the air (or two on the ground)…the harder the better. Most domestics other than cross-country fly md-80’s which are quick to board but a bitch on the back and rear end. 737’s are much more comfortable, but take twice as long to board for 25% more passengers. Most of us deal with daily pain; it is amplified greatly on an airplane no matter how relaxed you are. I doubt that most passengers are ever served more than three drinks. Don’t put this on the stewardess’…honesty is not the issue.

  30. 30
    Dan Murry Says:

    This actually worked out in my favor last time I flew on Southwest. Their hand held credit card machines were not working, so they just comped me my drinks for the entire flight. I didn’t complain. :-)

  31. 31
    stephanie Says:

    I was shocked the first time I learned that Southwest accepts only credit cards for drinks – I had always refrained from ordering drinks, assuming that they /wouldn’t/ accept credit cards, and I rarely carry cash. When I fly I usually carry some cash in case of emergency, but I never felt like a drink or two on board the flight really qualified as “emergency.” Who knows how much money I saved by not knowing about this policy until recently? :)

    (Although for the record, the one drink I ordered on that flight was comped, probably because our flight was delayed for over 2 hours. So I’ve still never actually bought drinks during a flight.)

  32. 32
    Courtney Says:

    *snort* Of course! Every time you buy something on the Internet, you almost always pay with a credit card! Or, with any catalog purchase! Hard to pay with cash when there are no hands to “handle” the transaction! It’s much quicker at the fast-food drive-thru to pay with a credit card. Gas stations favor credit cards, because they’re guaranteed payment. Otherwise, most around here make you pre-pay. One biggie is car rental companies- you MUST have a credit card (not a debit card) to rent a car.

  33. 33
    Getz Says:

    BillyOceansEleven-I do the exact opposite. I hate credit cards and I only use one right now for two monthlies, I just cancelled one, am about to cancel another, paying off the balance transfer on one I’ve never used. While I don’t like cash-only, I deny my business to any company that will only accept credit cards, even if I have a credit card.

    Mike-Exactly!

  34. 34
    Nick Says:

    Wow, haven’t heard of this. I’ve flown on Southwest as recently as September and they had no problem taking my greenbacks.

  35. 35
    Leisa Says:

    Wow. Here we all are in debt hell, and we all are amazed that a flight will not take cash for a drink. First of all, the water is FREE. Secondly, the reason we are in debt hell is because we are paying interest continually on credit card charges. If you pay off each month hurray, you are not the object of this post. If you have a rotating bal and use it for essentials like gas, food, gum, etc.. you are part of the mess we are in. If you cannot afford to pay for these small purchases with cash you really must not “need” them. Get a bike and skip the latte at the drive-thru. Why would ANYONE want to pay 18% interest on an overpriced airline beverage when you can get water for free? I am not swayed by the argument of it’s quicker… easier, etc. I give someone a dollar they give me change.. in much the same amount of time it takes to determine if I have enough money for the purchase. Yes, it’s true some of us use our visa checkcards.. but here’s the deal when the gov quits giving out funds to the banks and they fail … will it work? nope. me and my cash will be king. Suckahs. hmm I guess at that point I will be able to purchase a drink on a plane with my filthy money then. LOL

  36. 36
    nickel Says:

    Leisa: Not everyone is in debt hell. And, for the record, I had apple juice (free, like the other “non-adult” beverages).

  37. 37
    Leisa Says:

    Yes, I am aware that all of us are not, but the majority are. ;)

  38. 38
    Linda Lee Miller Says:

    What if you are poor or in bankruptcy or lost your job and ONLY have cash to pay? Are you going to get denied food from a store because you don’t have credit? Or arrested for not having a credit card to pay a DMV fine or food in a restaurant that you ordered without realizing cash wasn’t acceptable? We are truly becoming a Caste society. Poor people go screw yourselves, you aren’t welcome in America thanks to big corporations. God I want out of this nation.

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