Consider this if you are a small-business owner considering going cashless: Many Americans do not use cash for their weekly purchases. In December 2018, Pew Research Center revealed that 29 percent of U.S. adult consumers had said goodbye to money. In May 2020, YouGov’s survey revealed that less than half (46%) had used cashless payment during the COVID-19 epidemic.
Cashless stores have gained popularity for their many benefits: increased sales, reduced time spent, and more straightforward transactions. The downsides are transaction fees, legislation, and losing customers. It is not something that should be taken lightly. We will explore the pros, cons, and best practices of not accepting cash.
The benefits of cashless payments
Time is a highly scarce resource. Merchants constantly on the go will appreciate the chance to save time. It could allow them to breathe and take their business to the next stage.
Cash transactions are slower. Cashless transactions would reduce the time spent replenishing cash, totaling and comparing amounts to ensure the correct change was given. You can now focus on your other priorities and tasks by eliminating these activities.
Cash-related activities slow down checkout times, resulting in a reduced sales volume. Checkout times are shortened when your staff only has to swivel a tablet to accept payment. Going cashless in your cafe or fast-casual restaurant will help keep the lines moving and process more sales during morning or lunch rushes.
Employees will find it easier to work if you make the process simpler.
Cashless payments are a great way to simplify the work of employees. There’s no need to count coins, replenish cash or reconcile totals at the close of the day. Having all your transactions recorded on a POS leaves less room for error.
Spend more money
When customers don’t pay with cash, they tend to overspend. It’s easier to pay with a phone or credit card. You don’t have to bring the correct money to a shopping trip or restaurant. The experience could be more accurate. You can see the money leaving your hands when you pay in cash. When you pay by credit card, you will not be required to pay until a few weeks later. Cards that offer rewards encourage more spending.
Cash is easy to steal. To protect your money, you need to increase security and monitor it. When employees face tough times, they may dip into little money that owners keep on hand for cash register replenishment. Cash is difficult to track; once it is gone, there is no way of recovering it. Cash businesses are also a prime target for robberies. This is a big deal for owners, managers, and staff. Cashless stores are safer and less likely to be targeted by thieves.
Cons of cashless payments
Many merchants worry about transaction fees when they consider cashless payment. Will the time savings and potential volume increase outweigh the higher transaction fees? That’s a legitimate question. Cash is the best option because you can get your money instantly, and there are no fees. Businesses with high-volume transactions can negotiate lower prices.
Specific customers are excluded.
Cashless transactions may alienate specific segments of customers. Think twice before deciding if your business caters to older, younger, or low-income customers. If you owned a cupcake shop, would you turn away children who had saved money to treat themselves? Are you comfortable excluding homeless customers who pay cash to enter your cafe? Owners have been subjected to online complaints and social boycotts.
Bans on cashless policies
Certain places are pushing for a ban on cashless policies. Philadelphia, the nation’s first major city, will ban cashless stores in July 2019. New York City, Washington D.C., and New Jersey are expected to follow suit. These laws are argued to prevent discrimination towards customers without a credit card or bank account.
What is the best option for your business?
Data-centric technologies will help you determine if a transition is worthwhile. It’s crucial to know your clients before making any decisions. Clover Dashboard Transactions can provide you with insight. As a percentage, track the amount and value of cash-paid transactions. Ask yourself these questions after examining the cash payment patterns of your clients.
- What demographics are the most likely to pay cash?
- Do these clients form the basis of your business?
- Are they able to switch from cash to alternative payment methods?
- Is a cashless payment policy seamless for your customers or a burden?
- Can you afford to lose clients? It would help if you were honest about your willingness to let go of clients.
Talk with customers. Go beyond the data to talk directly to customers to determine if they’re ready for a change.
Negotiate the fees. Ensure that the savings from going cashless are more significant than the transaction costs.
Give your staff and customers time to adjust. Allow for some flexibility in your policy during this time. This may involve keeping cash on hand or allowing your employees to give a freebie to customers with only money occasionally. If you want to keep customers, offering such a concession will encourage goodwill and loyalty.
Be thorough in your communication. Give customers plenty of time to digest the message. Post about it regularly on social media. Signage in the shop is a good idea. Tell your customers at the point of sale.