The signs are pointing to a cashless society, and it’s coming soon. According to a 2020 survey from Travis Credit Union, 59% of Americans prefer to pay with debit or credit cards, while only 29% prefer cash. The 2021 Diary of Consumer Payment Choice reveals that cash payments represent only 19% of US transactions during 2020, which is 7% lower than the previous year. And the Federal Reserve Bank of Atlanta finds that 62% of consumers have started using at least one payment app to make purchases.
Given the decline in the use of cash, should your business join the trend to go cashless sooner rather than later? Paperless payments are faster, more secure, and encourage customers to spend more. Still, a few kinks need to be worked out of the system before everyone can go completely cashless. The type of business you manage and the mindset of your customer base will determine if you should fully transition sooner than later.
Paperless payments are safer
Going cashless reduces a lot of worry. As the amount of money you handle on a daily basis decreases, so too does the risk of money being stolen or lost.
Many businesses feel much safer without cash stored on the premises. This transition eliminates the threat of robbery and the temptation of employees to swipe money from the register.
Paperless payments are faster
Paying with a card takes less time than paying with cash at the register. Just eliminating dollars and coins at the checkout is guaranteed to boost your business’s efficiency.
Peak times with no lines could be a real possibility for cashless businesses. Improved customer service and experience would be a massive benefit.
Paperless payments are more convenient
Employees spend hours each day making change, counting their drawers after closing, and accounting for discrepancies. It is an inefficient system that is prone to error. Printing, securing, storing, and transferring large amounts of money is expensive. For a cashless business, these costs would be a thing of the past.
Electronic transactions provide a seamless means of tracking sales. Record-keeping becomes far less complicated when cash is out of the picture.
In addition to your convenience as a business owner, offering cashless payment is becoming more and more convenient for your customers. Fewer people are even carrying cash today. According to a 2020 survey from Travis Credit Union, only 16% of Americans claim to have cash on hand when they go out.
Paperless payments may exclude potential customers
Not everyone is ready for a cashless society, however. Many feel paperless payments are inequitable for people who do not belong to a bank, own a credit card, or have a device to make digital payments. These people are finding themselves left with fewer and fewer places to purchase the goods they need.
Currently, around 5.4% of the US population does not have a bank account. Some choose not to open accounts because they have had negative experiences in the past and mistrust the banking system. The majority of people without bank accounts are those with lower incomes. According to Pew Research Center, people with incomes less than $30,000 were four times more likely to use cash for their purchases than people with incomes higher than $75,000.
Around 7.1 million American households were unbanked in 2019, according to the Federal Deposit Insurance Corporation (FDIC). Because of the people who stand to be excluded from cashless businesses, several cities are introducing legislation that bans cashless businesses.
Paperless payments mean more fees
Going cashless will result in significant savings for many businesses, but electronic payment systems and peer-to-peer payment apps already charge fees and may increase them as they become more popular.
Currently, consumers pay approximately $120 billion a year for card transactions and interest. For businesses, processing fees for swipe purchases totaled $110.3 billion in 2020. The top ten credit card companies hold more than 90% of the market share between them, and there is no cap on fees credit cards can charge in the United States. Today’s average fee of 2% seems exorbitant compared to the European Union’s cap of 0.3%.
Paperless payments raise privacy concerns
Though going cashless eliminates the threat of stolen or lost money, other risks remain. Expanding swipe payments, mobile wallets, and electronic payment systems creates an increased opportunity for hackers to get their hands on customers’ account information.
As society relies less on cash, the pool of potential victims grows deeper and broader. Furthermore, in a completely cashless society, hacked accounts could leave you with no means of purchasing power.
Paperless payments are the future
Despite the difficulties that still need to be sorted out, predictions call for the United States to be cashless in just over a decade, with Americans paying for everything digitally by 2033.
E-commerce and mobile payment options continue to grow across industries. This factor alone makes cashless payment enablement a priority for your business if you intend to enjoy the benefits of an increasingly digital world.