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The UPS Store Small Business blog
  • 24 May 2021
  • Taylor Miller

Considering Going Cashless? Here Are 5 Things You Need to Know About Cashless Payment Systems

The bottom line of every small business is anchored on cash flow. Cashless payment systems have become ubiquitous where sales can come through a myriad of new ways. With the rise in secure mobile technology, the growing comfort and ease of online shopping and the benefits of contactless payments, we are living in the golden age of cashless payment systems. And both consumers and retailers are feeling it. In August 2020, a National Retail Federation survey found that 67% of retailers accept some form of no touch cashless payments.

person paying with cashless payment

There are, however, many things to consider before turning your business into an all-cashless enterprise — including the pros and cons of digital/mobile payments and contactless credit cards. We’ve rounded up five things you need to know about the move to cashless commerce.

  1. Pro: Safety
    Many businesses, especially in this 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 incorporating cashless payment systems and cycling less cash through your business, you are enhancing the safety of both your employees and customers.
  2. Con: Fees associated with going cashless
    If you are considering turning your small business into a cashless enterprise and are concerned about the fees associated with providers, you are not alone. The fees associated with processing cashless payments will indeed affect the total transaction price and your overall profitability. Factor into your decision-making the speed and efficiency of utilizing a cashless payment system (which have their own fiscal benefits) against those processing fees. Additionally, the good news about living in the golden era of cashless and digital payment systems is that you can shop competitively for the right solutions for your small business.
  3. Pro: Quicker sales transactions
    Anytime someone pays with cash, it is a much slower process to count the money and then disburse the change back to your customer. By utilizing cashless/digital payments, a customer can easily pay and be on their way in less time than it would take to go through a cash transaction process. Another related “pro”: By incorporating cashless and digital payment systems, you also avoid counting errors at the end of the day in your cash registers, thereby increasing your financial accuracy.
  4. Con: Unbanked and underbanked customers
    One of the most concerning aspects of moving to entirely 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 do not have the ability to qualify for a credit card. A business that refuses to accept cash payments could push away potential customers. This is something to consider especially if you are providing an essential product or service within your community.
  5. Pro: Greater incentive to spend
    It has been proven that people are more likely to make a purchase when they are not paying with cash. Psychologically, a person paying for something with their credit card or a digital payment app feels as if the transaction is less tangible. 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 perks like airline miles.

While you weigh the pros and cons of going cashless, the basic formula is to consider the needs of your customers against those of your small business. COVID-19 quickly accelerated a mutual desire within both parties to adopt more cashless and digital purchases. It is probably safe to assume that the pendulum will never swing back to where it once was, as customers are more comfortable than ever with tapping their cards or syncing their mobile devices toward your point-of-purchase systems. However, do consider that the decision to go cashless does not need to be a zero-sum game. You can promote it as the best and safest option for your customers while still providing cash options for those who need it. After all, a dollar is a dollar.

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