The global brand that has taken the concept of “personalized” to a whole new level (half caf, 2 pump, non-fat, no whip, no foam latte) has decided to test “no cash” as part of their ever-expanding repertoire. The posh Seattle Starbucks at Second Avenue and University will no longer accept cash as a form of payment – at least for now.
And according to The Seattle Times, this location is the only Starbucks currently testing the no-cash policy to help the company better understand how cashless forms of payment will impact the overall customer experience. The same article also reports that the company is not saying how long the test will last or whether it will be expanded to other locations.
Already seeing extremely positive results with the cashless modality, the company’s mobile payment and ordering app has been so successful it’s been targeted as the reason for slower sales growth at select locations. Due largely in part to excessive lines and overcrowding in stores, resulting from the constant rush of patrons picking up their already-prepared-and-paid-for drinks, Starbucks reports this being a potential deterrent to non-mobile customers looking to grab and go.
Speculation has arisen whether the no-cash test will result in criticism from would-be customers that cannot transact via the cashless modality because they don’t have a bank account and therefore are less likely to be carrying cards. The same article quotes professor of marketing Jonathan Zhang, who studies and consults with retailers on ecommerce and mobile payments, regarding the threat of “unbanked” customer loss at that particular location: “I would expect in that location that cash represents only a tiny percentage of business anyhow. They are not giving up much.” He speculates maybe 5 percent or less.
Another big motivator? The potential of more sales with cashless. Offering cash as a form of payment requires cashiers to make change and this can slow lines down. Zhang also speculates, via the same article, that “they did the math” and concluded, “If we can shave another 10 seconds per order, over a day or over a year, that’s a lot of savings.”
When it comes to making the move towards a cashless society, the US has been slow going. Other countries like China and India have dominated the push towards cashless, with QR Code payments being a big source of momentum. And while the benefits of a cashless society are predicted to be vast, some leaders like China have recently received some push back on the cashless trend.
Ultimately, it remains to be seen how the global population will respond to removing cash from the payments ecosystem and this initiative from Starbucks will provide good insight on America’s willingness to adopt the cashless modality as its sole form of payment.