Cash-Only Holdouts Are Fading


February 16, 2014 – By Jessica Dyer

At Padilla’s Mexican Kitchen, staff have been known to recite a list of nearby ATMs.

Customers, meanwhile, have been known to pay their tabs with spare change rounded up from their car.

Because Padilla’s only accepts cash or checks, the occasional would-be diner has been known to walk out once they realize the plastic in their wallet will do them no good.

But the policy really hasn’t caused too many ripples – at least not enough yet to get the 30-year-old eatery to change its ways.

“We just have never taken (credit and debit cards), and it’s worked out well for us,” says Irene Leyba, whose parents have owned the bustling restaurant since 1984.

At a time when even newer payment methods are gaining traction – the virtual currency bitcoin is now accepted at some places around the city – there remain stores and restaurants that don’t take the much-more-ubiquitous debit and credit cards.

That’s despite Americans’ increasing reliance on plastic, which many consumers now wield for everyday purchases as small as coffee.

Noncash payments in the U.S. grew 4.7 percent per year from 2003-12, according to a 2013 Federal Reserve study.

And with check usage waning, it’s cards picking up most of the slack. Credit, debit and prepaid cards made up 67 percent of those noncash transactions in 2012, compared with 43 percent in 2003.

But for some long-running Albuquerque retail establishments, there’s no need to incur what they say is the added expense, hassle and risk of taking cards.

Family Thrift Center has been cash-only since it opened more than 30 years ago, turning down each salesperson who stops by to offer credit-card processing services.

“It would cost us (processing fees) and then we’d have to raise our prices,” said the store’s manager, who declined to give her name. “We feel in general the people who do shop here do have cash.”

And they don’t need a whole lot of it. The store prices some items as low as 99 cents, so the transactions can be small.

Signs alert customers to the store’s policy. If they miss those warnings or find themselves otherwise short on bills, employees will point them to the closest ATM – literally located in the same parking lot.

The manager contends there are other benefits to being cash-only. She says credit-card machines occasionally can lumber through transactions, so making change is more efficient.

“For our type of business, this (policy) has worked well for most all our customers,” she said.

Albuquerque’s Le Paris Bakery also has adopted a cash-only policy for retail customers.

The Northeast Heights bakery used to accept credit cards but stopped several years ago because it had become too costly.

The manager said the bakery had too many transactions go unpaid because customers later disputed charges with the credit-card company – the dreaded charge-back.

She cited a specific incident involving a regular customer who made frequent purchases with a company credit card he apparently was unauthorized to use. Le Paris never received reimbursement for those sales and had to pay a fee on top of that, said Aude, the manager.

Going cash-only at the counter hasn’t created many issues because most of the retail sales are small – a baguette here, a cookie there – and retail traffic represents just a fraction of the bakery’s overall business. (Wholesale orders comprise the bulk.)

Aude said the bakery’s regulars are well aware of the cash-only rule, and new customers are rarely driven away by it.

“We say, ‘Sorry, we don’t take plastic,’ but they come back later,’” she said.

Avoiding credit cards may work for some businesses, but Jay Guthrie of Duran Central Pharmacy said there’s no getting around the fact that people simply aren’t carrying as much cash these days.

The restaurant inside Duran began taking credit cards a little more than a year ago after decades without them.

“I think if you stood out on the corner and asked people how much cash they’re carrying these days, very few are carrying substantial quantities of money in their pocket,” Guthrie said. “They’ve got a debit card or a credit card.”

Americans regularly use cards for everyday purchases, according to a 2013 survey by American Consumer Credit Counseling. The nonprofit organization found that 80 percent of respondents employed a debit card for daily shopping expenses.

Guthrie said the restaurant stuck with cash for so long because it made bookkeeping easier. There was an on-site ATM available, but Guthrie said customer demand drove the decision to start taking cards.

More than half of the restaurant’s customers now pay with plastic, he said.

Even Padilla’s, after decades as a card-free zone, might have to eventually change its ways. Leyba said the restaurant may expand its payment options in the next few years.

“A lot of people don’t carry cash at all,” she said.