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The UPS Store blog
  • 12 October 2020
  • Taylor Miller

Considering Going Cashless? Here Are the 5 Things You Need to Know

As a small business owner, it’s important to be aware of the ever-changing trends in business operations. One of the more timely trends is the rapid growth of consumers going cashless with the rise in usage of mobile phone payments and contactless credit cards. In May 2020, a YouGov survey showed that 46% of Americans have been using cashless payments during the pandemic.

There are, however, many things to consider before turning your business into a cashless commerce – including the pros and cons and whether it’s feasible for you. We’ve rounded up five things you need to know about the move to cashless commerce.

  1. Safety
    Many businesses, especially at the moment, have made the immediate decision to go cashless to reduce the amount of cash exchanged from person to person. The U.S. Chamber of Commerce identified that, on average, a $1 or $5 bill changes hands from person to person about 110 times a year. By excluding cash from your
    customer paying with credit card
    business, you are greatly reducing the risk of coming in contact with germs between your employees and customers.
  2. Fees associated with cashless
    If you are considering turning your small business into a cashless business and are concerned about the fees associated with card payments, then you are among the many business owners in this same predicament. The fees associated with card payments can range anywhere from 1.95% to 2.50% of the total transaction price. The good news is that often times you can negotiate the fees with the credit card companies as a way to save.
  3. Quicker sales transactions
    Anytime one pays with cash, it is a much slower process to count the money and then disburse the change back to the customer. By going cashless, a customer can easily use their cashless form of payment with the business’s point-of-sale system and finish the transaction in less time than it would take to count cash. You also avoid having to worry about employees not counting their drawers correctly.
  4. Incentive to spend
    It has been proven that people will spend more when they are not paying with cash. Psychologically, a person paying for something with their credit card feels as if the transaction was less real. A customer is not physically seeing the money taken from their hands or wallet. Also, many credit card companies encourage higher spending to reach incentivized goals such as cash back or airline miles.
  5. Unbanked and underbanked customers
    One of the most concerning aspects of moving to a cashless commerce is losing out on the customers who are without bank accounts. There are many people who refuse or are unable to have a bank account or the ability to qualify for a credit card. A business that refuses to accept cash payments could push away potential customers. There are many businesses who still accept cash as payment in a pinch.

As the world continues to change, it is best to be prepared to adjust your business practices to the present times. We are currently experiencing a fast-moving trend of progressing toward a cashless society where businesses in an array of industries do not accept cash. As COVID becomes the driving force for cashless purchases, businesses are having to think quickly about ways that they can change their payment protocols to meet the needs of their customers. There may be many pros and cons to no longer accepting cash, but it is best to make the necessary changes where you see fit for your company and for your customers.

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