Visa Inc. has a new offer for small merchants: take thousands of dollars from the card giant to upgrade their payment technology. In return, the businesses must stop accepting cash.

The company unveiled the initiative on Wednesday as part of a broader effort to steer Americans away from using old-fashioned paper money. Visa says it is planning to give $10,000 apiece to up to50 restaurants and food vendors to pay for their technology and marketing costs, as long as the businesses pledge to start what Visa executive Jack Forestell calls a "journey to cashless."

"We're really viewing this as the opening salvo," said Mr. Forestell, Visa's global head of merchant solutions, of the potential total $500,000 commitment.

Consumers at those stores would be able to pay for goods or services only with debit or credit cards or with their cellphones. In exchange, Visa is offering to pay for upgrades to merchants'technology at the checkout line so that they can accept contactless payments, such as Apple Pay . The $10,000 incentive can also help cover some of the merchants' marketing expenses.

Visa will pick the participating merchants from an application process that starts in August. Online-only shops are excluded.

Visa has long considered cash one of its biggest competitors and has been taking steps to chip away at it. Getting rid of cash is a priority for Visa Chief Executive Al Kelly, who took over latelast year, especially as cash and check transactions continue to grow globally.

"We're focused on putting cash out of business," Mr. Kelly said at Visa's investor day last month, adding that converting check and cash to digital and electronic payments is the company's"number-one growth lever."

Some merchants have already stopped taking cash. New York City-based 2nd City, a Filipino taqueria, hasn't accepted cash since it opened its doors in 2016. Michael Ryan, the co-owner andco-founder, said he never ordered cash drawers or a safe. By not having to count cash, visit a bank or order change, Mr. Ryan estimates, the manager on duty saves about 23 hours a week.

The restaurant, which mostly caters to millennials, has had "very little" push back from customers, Mr. Ryan said. He added that the downside is the fees that his business pays to the cardissuers.

Indeed, many merchants prefer cash because they don't have to share the revenue with card companies. Credit-card interchange fees, which networks like Visa set and that merchants pay to the banksthat issue their cards, are on average around 2% of the transaction amount, according to the National Retail Federation, the largest trade group that represents merchants in the U.S.

"The idea that merchants don't want to accept cash is a myth," said Mallory Duncan, senior vice president and general counsel at the National Retail Federation.

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Visa Takes War on Cash to Restaurants