With nearly 80% of Americans preferring cards to cash and smartphone users paying via digital wallet, there seems to be a clear winner in the cash vs credit debate.
For online businesses, cashless payments are a foregone conclusion and even brick and brick-and-mortar stores see fewer bills, coins, and checks. But is it safe for your business to go completely cashless?
Taking online businesses out of the equation, traditional or hybrid online-offline businesses may have a cash vs credit dilemma. According to a 2016 consumer payments study, businesses in these categories have customers that prefer to pay by credit or debit card:
- Department stores
- Discount stores
- Dine-in restaurants
- Gas stations
Fast food chains and coffee shops still see a higher flow of cash sales.
The study indicates that the majority of consumers prefer to use credit or debit cards for larger purchases. It also noted that 73% of Americans use less cash now than ten years ago.
There are many upsides to shifting with the tide of consumers to a cashless model. Not only does it appeal to customers who no longer carry cash with them, but also offers better service, security, and easier financial reconciliation for your business.
Seven out of 10 Americans are reported to hold at least one credit card, from college students to baby boomers. Recent developments like EMV chips and contactless payments mean many banks are phasing older technology to keep up with the demand. And with 2.1 billion digital payment users expected by 2019, staying on top of cashless payments is no longer just a matter of innovation, but a necessity.
Dealing with cash means slower customer service, whether that involves digging for change or counting out bills, and more room for employee error. Credit or debit cards or contactless payments allow businesses to check out more customers quicker, correctly, and more efficiently.
Cashless payment systems significantly reduce the risk of in-store theft and fraud. It promotes customers’ peace of mind, your employees’ safety, and your own business interests; for these reasons, not having to keep cash on premises can be a good thing.
From the employee hours it takes to manage your revenue and collect and store change to bank deposit fees and armored truck pickup costs, cash-carrying businesses have to pay for the privilege. Instead, you can free up your finances and reduce overhead with credit and debit cards, which are automatically reconciled and paid to your merchant account.
Overall, going cashless can improve the quality of business and help you meet customer service needs and scale quicker.
But before you take a stand on cash vs credit, it’s good to be aware of the potential drawbacks as well. These can include potentially alienating customers, the risks of card or digital fraud, and additional processing costs.
Depending on your business sector and target market, you may end up alienating some of your customer base if you go cashless. Having a good understanding of how your customers pay, their preferences, and your industry standards will go a long way to helping you make an informed decision.
Fees for processing credit and debit cards are usually between 2-3% of the transaction value. More customers with cards mean more fees. On the upside, consumers statistically buy more and make larger purchases with cards than cash. You can also look out for competitive payment processing prices.
Cashless systems are not completely secure and you will have to watch out for card fraud. Modern technology and fraud detection do help, but you are still responsible for sensitive customer data and PCI compliance.
If you’re sure that cashless is the right choice for your business, here are a few tips to get you started:
- Track customer payment methods to see how many pay cashless already
- Consider the additional costs of going cashless
- Get customer feedback on how their shopping experience would change without cash
- Create a comprehensive communications strategy from signage and employee messages to online updates
- Allow for a transition period so both staff and customers can get used to the change
Need some professional support?
PayArc global network provides merchants with the ability to scale their business in over 25 currencies. We offer credit and debit card transaction processing with low fees and discounts for select merchants. With PCI DSS protection and over 300 payment integrations, we aim to take the headache out of credit card processing.