Cash or Credit?

We have previously discussed the gradual movement away from cash in many retail establishments (see blogs titled “Is Cash Obsolete?” and “When Cash is Embarrassing”).

The movement towards credit-only transactions appears to be driven by efficiency and the problems associated with accepting and handling cash.

Now comes government.  San Francisco is about to require brick-and-mortar retailers to accept cash as payment.  Philadelphia and New Jersey have already banned the growing paperless practice that critics say discriminate against low-income people who may not have access to credit cards.

Investors should take note.  Some business models, such as cashless Amazon Go stores use a combination of apps and credit cards to speed the shopping experience and reduce labor costs.  In low margin businesses, such as retailing, productivity gains are crucial.

Incidentally, Warren Buffett carries cash and a credit card.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA