Spice Alley food and beverage manager Craig Macindoe says going cashless has many benefits.
Spice Alley food and beverage manager Craig Macindoe says going cashless has many benefits.  Steven Siewert
Shops and restaurants are going cash free and payment policies such as "$10 EFTPOS minimum" and "2 per cent credit card surcharge" are likely to disappear as consumer preferences change and lower interchange fees kick on July 1.

At Spice Alley in Chippendale, Sydney, all the six Asian food vendors run a card only economy. When you walk in, a sign declares: "Spice Alley is cashless. Tap and go cards accepted or get a reloadable kopi-tiam cash card at the pay station".

Spice Alley food and beverage manager Craig Macindoe said when the business first launched with a card only policy 14 months ago he experienced some backlash from customers who did not like the feeling of having their purchases tracked by "Big Brother".

But most customers were happy with the system, he said, and customers who still wanted to use cash could buy a reloadable gift card and get a refund when they leave.

"It makes sense. Personally I do 100 per cent of my shopping on my card, and it shows you all the money I've spent," he said.

"It's also easier to spend money on the card, so we have a greater average spend," he said.

Mr Macindoe said going card only has the benefit of easy accounting and reconciliation, improved hygiene because food handlers no longer have to take gloves on and off and keeping the food vendors more accountable.

Robbery, tax evasion and human errors in cash handling are not easy options when all the payments are made electronically, he said.

"We don't carry any cash down here. We don't have to worry about people robbing us. We don't have to worry about operator error," he said.

Mr Macindoe reckons it is "inevitable" that more vendors will embrace card payments in preference to cash.

Spice Alley's adoption of cashless policy is notable given it is less than a kilometre away from Sydney's Chinatown, which was targeted the Australian Taxation Office as having "pockets of businesses that look abnormal".

Two years ago, 40 officers from ATO did a thorough crackdown in Haymarket, visiting 168 businesses in the area in a month.

The emergence of a cashless food court reflects the transition to a cashless economy. The latest paper from the Reserve Bank of Australia shows cash accounted for 47 per cent of consumer payments by number in 2013, a significant drop from 69 per cent in 2007.

RBA says the cash economy will continue to decline as consumers increasingly adopt cash alternatives, such as contactless cards and mobile phone payments.

Despite all this, cash will continue to remain an important part of the payments system for the foreseeable future, the central bank said.

Andrew Rothwell, co-founder of payment provider Tyro, said hygiene, safety and convenience are driving merchants to go cash free.

One of Tyro's merchants, Cannings Free Range Butchers in Melbourne, decided to go cashless so butchers do not have to handle coins and notes often riddled with pathogens like E. coli, shigella or staphylococcus bacteria.

Mr Rothwell said card only will also become more common particularly for pop-up vendors who are concerned about safety.

"When you're bagging $1000, $2000, $3000 a day, I would feel a bit queasy going home with that amount of cash. I would much rather take the EFTPOS device with me," he said.

It also has the added benefit of saving the time spent on counting cash and going to the bank branch for cash deposit, he said.

Mr Rothwell said he expected card payment surcharge and minimum EFTPOS transactions to become less common as competition fires up among small businesses.

"At the lower end of the town they find it actually quite difficult to apply a surcharge. If you buy a little cup of coffee and there is a surcharge it leaves a bad taste in your mouth," he said.

He added RBA's lower interchange standards – capped at 0.8 per cent for credit cards and 15 cents or 0.2 per cent for debit cards – will kick in on July 1 and if they flow through to the merchants there will be more merchants accepting card payment for low value transactions such as cups of coffee, burgers and a couple of spring rolls.

"It should drive cashless payments further and further," he said.

http://www.afr.com/technology/rise-of-cardonly-shops-and-lower-interchange-fees-drive-cashless-economy-20170202-gu46li