Ercan Demiralay FCCA discusses the need for business to not only accept card payments, but also prepare themselves for going cashless.
It’s undeniable that cash has taken a back seat to card transactions in the last 10 years. More then ever we’re seeing banks leave the high streets, ATMs disappear and consumers embracing tap technology to make purchases.
Convenience and security are two of the significant reasons for the rise of cashless payment, but what effect will this have on small and medium sized business across the UK? Despite the rise of card transactions, there are still businesses that are cash only, or more commonly offer card payments with a minimum spend amount.
In the wake of the “I don’t carry cash” era these small business owners are going to have to prepare to take the leap because convenience and speed are everything in today's tech driven consumer society.
What is meant by cashless payment?
Traditionally money in the form of material coins or banknotes has been used for people to pay for things. With cashless payment, the physical element is removed from the sale, instead digital information representing money is moved over the internet between the transacting parties.
The cashless concept has become popular and the norm for many businesses around the world, particularly in Sweden where the movement has been implemented and accepted quickly. UK Finance estimates if things were to carry on at the same pace we could start to see a sharp drop in cash by 2026.
In 15 years’ time, the report estimates cash transactions will account for just 10% of all transactions.
So why haven’t all UK businesses gone cashless yet?
It’s been a much debated topic recently, and two answers have been the predominant focus when it comes to understanding why some businesses still prefer cash:
It costs to go cashless – Sure paying by card is quick and easy, but like everything else it comes with a cost. Small businesses can experience hefty charges every time a card payment is approved; this is why businesses who experience less transactions often don’t see the merit in offering card payment options or, you’ll be asked to spend a minimum amount.
The multigenerational society – Believe it or not everyone has the ability to pay with a contactless source, or wants to. Merchantmachine.com released 2019 statistics on the rise of contactless payments and found the approval/disapproval of a cashless society based on age:
Image & Data Source:merchantmachine.co.uk/going-cashless/
Despite these two factors, it can’t be denied that the UK is heading towards a cashless way of life. Even if we don’t become 100% reliant on card only payments, SMEs will still have to adapt to the new way of paying or risk loosing customers.
This leads us to the next question, why should businesses go cashless?
Stay competitive with online shopping - With the growing popularity of online shopping, the more ways you can offer to accept payment in your brick and mortar store, the more likely someone is to buy something from you.
Incentives for focusing on card payments – Big card companies make money from cashless transactions and that’s why incentive programs designed by the likes of Visa might just be in the works for UK businesses who encourage card payments.
Quick and pain free checkout experience – Think like your customer. When waiting in a checkout line, there's a clear difference in speed between cash and card payments. Customers want their items quick and without hassle and that's why cashless thrives, it's fast and easy.
Safe and Simple – No cash or less cash on the premises means your sales stay safe. Your employees can stop going through the time consuming process of till opening and closing procedures along with the need to count money and check the right amount of change.
How can businesses prepare for going cashless?
While a few businesses have opted to go card only, it’s more common for organisations to accept both cash and card payments. If your business only accepts cash you’ll need to come to terms with the fact that cashless isn't the future, it's the here and now.
Regardless if you’re planning to just start accepting card payments or if you’re finding your card transactions are increasingly outweighing your cash intake and think it’s time to go completely cashless, there are some ways to best prepare:
1. Planningis key
Going cashless will take a lot of preparation, not only for your business but also for your customers. It is imperative that this decision is a part of your strategy, your business plan should outline not only how this will impact your business today, but what about 3-5 years from now?
2. Get to know your options
There are quite a few options out there for accepting non-cash payment methods such as iZettle and Worldpay. It’s important that you research and choose what's best for your business. Consider the costs, equipment and services provided for each option:
How will your cashless payment hardware and software integrate with your back office systems and accounting software?
Do they have a dedicated, UK based help team? If you’re new to accepting card payments this might be beneficial for you.
3. Spread the word
There’s nothing more frustrating than a customer ready to make a purchase only to find out they can't pay by their preferred method. Just like a customer might be upset that your establishment is cash only, the same goes for being card only. It might be worth starting a marketing campaign to let your customers and potential customers know that you’ve you changed the way you accept payment.
This won’t be as much of an issue for businesses using a combined method of cash and card payments, although announcing that you now accept card and contactless payments can often be a bonus particularly for new customers.
Going cashless wasn't a business commitment, this was a decision made by society as the option became available. Yes people still use cash, and yes businesses are likely going to take cash payments for quite some time, but be warned for the world is increasingly becoming digital and cash could be on the way out due to new, quicker, effortless payment options.
The content of this post is up to date and relevant as at 15/04/2019.
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