Last year, an estimated 86.9% of all transactions were cashless. In this modern, digital age, the majority of people find it far easier to pay with their bank cards or through payment apps on their phone than by passing coins and paper notes over the counter. More and more businesses all over the world are deciding to go cash-free, upgrading their digital payment technology and even refusing to accept hard cash. But is this a good thing?
The following article takes a look at the pros and cons of running a cashless business, to help you decide whether or not you should say no to physical currency.
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The Pros of Going Cashless
- No Processing Fees: Handling cash comes with processing fees. If you are a business that accepts coins and notes, you will have to deposit them into your bank account. Banks often charge fees for counting and depositing this currency, which you can avoid if you only accept online payments and bank cards.
- Greater Efficiency: When you don’t have to deal with physical cash, the checkout process is much more efficient. A customer simply needs to tap their card or their phone on the payment terminal and the transaction is complete. Checkout is quicker as a result, so you may not need to hire as many employees to deal with queues on a busy day. There is also no need to count cash at the end of the day or to divide it into individual denominations.
- Reduced Risk: Another problem that comes with cash is its susceptibility to theft. Your business could be subject to a robbery, either in-store or while the money is being transferred to the bank. There is also the risk that a dishonest employee could shortchange customers or pocket some money out of the register. With cashless payments, this risk is eliminated.
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The Cons of Going Cashless
- Transaction Fees: Also going cashless eliminates the cash processing fees, there are still transaction fees to contend with. Credit card companies charge these fees which can add up to as much as 4% of the total payment amount. Cash does not have this problem so you may need to weigh up whether the transaction fee outweighs the processing fee.
- Customer Exclusion: Many people still use cash these days, particularly those from older generations. Refusing to accept any physical currency will exclude a portion of your potential customer base and may result in the unpleasant situation of turning customers away because they don’t own a bank card. However, if your audience are mostly young, technologically-minded people, this shouldn’t be an issue.
- Unreliable Technology: What will you do when your power goes out and your payment terminals don’t work? Cash is reliable as it does not depend on technology. If your cashless system goes down, you cannot accept payment in any form whatsoever, so you will lose out on valuable business.
In summary, there are great reasons to both accept and refuse cash payments. The right decision will depend on the nature of your business and your customer base.
