What are the pros and cons of being a cashless business?
It is quite common for business owners to question whether or not their business should adopt a cashless policy. The use of credit and debit cards is more widespread than ever before, and digital wallets such as Apple Pay are enduring significant growth.
Although increasing numbers of consumers are embracing paying on plastic, a global cashless revolution may be further away than one might assume. However, this hasn’t prevented a significant amount of businesses from making the cashless transition. This article will cover the pros and cons of going cashless to help determine whether adopting a cashless policy is the right choice.
Pros of adopting a cashless policy for your business:
Save time and money
Although businesses are indeed required to pay a fee for every business credit card transaction, it is also worth noting that firms are paying in time when employees process cash transactions. Practising effective cash management also takes time, and many businesses routinely spend several hours every day, maintaining accurate accounting records. From counting cash at the end of the day to making trips to the bank, even minutes spent completing these activities soon add up.
Cashless businesses don’t have to worry about this, and by adopting a cashless policy, companies will find themselves with additional time each day to invest wisely in other areas to push the business forward.
Increase efficiency at the checkout
A tap or a swipe of a credit card is far more efficient than the process of counting cash and accurately giving change. Businesses experiencing long queues at peak times may find that adopting a cash-free system can reduce those queues and make the checkout process much more efficient. If customers spend less time waiting in line, there is more potential for them to return for additional purchases in the future.
Reduced reconciliation time
If a business is continuously having to scour through their books at the end of each day to determine why tills are coming up short, it might be time to think about going cashless. Companies will be able to track every single business cash card transaction making the accounting process more accurate, enhancing both the efficiency and bottom line of the company.
Cash businesses will always be vulnerable to theft, and it is not uncommon for companies that have experienced this class of crime to adopt a cashless policy. Accepting only electronic payments will improve the physical safety of both customers and the team, in addition to protecting the business from petty cash theft.
Access to valuable data
Since all cashless transactions come with an electronic record, businesses will also find that they generate a wealth of valuable consumer data. From purchasing habits and spending trends to customer preferences and seasonal factors, this data can be used to inform sales and marketing department strategies to boost the bottom line and drive the business forward.
Increase custom by offering a variety of cashless payment options
As everyone has different preferences, offering as many payment methods as possible can be a significant advantage for businesses. Credit cards are typically the preferred cashless purchasing method, but other electronic payment methods such as PayPal are also popular. In the future, companies might want to look into accepting cryptocurrency payments to ensure that the business appeals to a broad customer base.
Cons of adopting a cashless policy for your business:
To ensure businesses are equipped with all the information needed to make an informed decision about cashless policies, here are a list of reasons why adopting a cashless system might not be the correct decision for your business.
Increased credit card fees
With fees to pay on every transaction, this is why many small businesses either only accept cash or opt to charge their customers an additional fee to pay by card. Other companies elect to factor these fees into their pricing structure, which might mean that some of their potential customers choose to shop with a competitor with lower prices.
The risk of system crashes
All cashless systems are vulnerable to unexpected downtime. If a system outage occurs in the middle of the working day and cash is unable to be accepted as a fall-back option, this could lead to a loss in revenue.
Risk losing customers who prefer cash
Many consumers prefer to pay with cash, and there are a variety of different reasons for this. From needing to maintain a tight hold over their weekly expenditure to simply being accustomed to paying with cash, some customers might feel alienated by a decision to adopt a cashless policy. Careful management of this transition will be necessary to avoid sending a message that this group of customers are no longer welcome to shop at the business.
Vulnerable to banking issues
Although fraud protection measures are becoming ever more secure, this doesn’t mean that a business won’t be susceptible to other banking issues. Just make sure if you set up a business bank account online, your chosen bank can fully support your company with high levels of fraud protection.
The digital services of all major banks will experience some downtime for maintenance, for example. Additionally, technology can be unpredictable. While developers are consistently working on developing more reliable ways to pay for goods electronically, companies might occasionally experience problems in running a cashless business.
While adopting a completely cashless policy might not be the right choice for particular businesses right now, there are many advantages of providing customers with a variety of different ways to pay.