Businesses going cashless may result in overspending, says professor

Some businesses are moving towards cashless transactions during the COVID-19 pandemic.

Some businesses are moving towards cashless transactions during the COVID-19 pandemic

Leopold's Tavern is one of the businesses that has reopened and is going cashless. (Facebook/Leopold's Tavern)

Many store owners are going cashless to reduce contact during the coronavirus pandemic, but a University of Saskatchewan professor says there may be unintended results if the trend continues after COVID-19. 

Keith Willoughby, dean of the Edwards School of Business and a professor of management science, said the trend toward cashless businesses started before the pandemic but has been increasing lately. 

"I think consumers are reacting to this in a generally positive way," Willoughby said. "Because we see it as a way of the future ahead, as a way of simplifying transactions." 

Willoughby said data shows Canada is the fifth-highest nation for cashless transactions.

Fans watch sports at Leopold's Tavern in Regina before the coronavirus pandemic came to the province. (Micki Cowan/CBC)

Leo's Tavern is one business that made changes during the pandemic and plans to keep some of them. 

Matt Pinch, president and CEO of Leopold's Hospitality Group, said that as soon as the two Regina locations closed their doors, the staff started planning to reopen. He said the biggest change was figuring out how to eliminate key touch points. 

"Obviously a menu is something that's touched many times throughout the day by very various different people," Pinch said. "Also cash is something that, you know, it's touched who knows how many times throughout the day, throughout the week and circulates often."

The restaurants now have only disposable and online menus.

"Currently when you come to Leopold's Tavern, on every table that's usable there's a sticker that has a QR code which you would use your mobile device just to simply scan over and that it brings up the menu," Pinch said. 

They will also accept cash only if it is a person's only option. 

"We're really just recommending that our customers use debit or visa and use the tap function if possible."

The provincial government has regulations around bars and restaurants, including keeping establishments at 50 per cent capacity. (CBC)

Pinch said customers have been understanding so far. 

When it comes to servers and staff being tipped, Pinch said instead of being paid out in cash at the end of their shift, money is deposited onto servers' prepaid credit cards through an app. 

Willoughby said Pinch's businesses using an app to tip servers and staff is a great solution to the problem of cash tips. However, he said there are pros and cons when it comes to going cashless. 

On the positive side, it enables faster transactions, Willoughby said. It could also help slow the spread of COVID-19, as usually multiple people would be touching cash, he said. 

Negatives include security concerns, Willoughby said. He said many people may be concerned about cybersecurity.

He also said people should be wary of overspending.

"There's been some research done that people paying cash less generally pay 12 to 18 per cent more than they would when paying with cash," Willoughby said.

"In essence, when money is abstract it's easy to lose track of it."

Willoughby said stores can choose to stop accepting cash completely, but he doesn't recommend it. 

"The Bank of Canada in the past few months has encouraged sellers to provide that cash opportunity for those individuals — whether it's the people who are the unbanked, if it's people who are impoverished … seniors who may not have access to electronic means," Willoughby said. 

Willoughby said he doesn't think society will ever become completely cashless. 

With files from Saskatoon Morning and The Morning Edition


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