Even before the spread of COVID wreaked global havoc, cash was a dirty business. Literally dirty. And the physical dirtiness of cash in the time of COVID has resurrected and accelerated the debate around going cashless.
Most customers already prefer to use a card or other non-cash payment method, and some industries have already gone cashless (including airlines and sports stadiums). Small business options for going cashless have expanded in recent years, making it even easier to accept debit/credit/Venmo/PayPal options from customers with ease.
In April 2017 (back when thinking about germs wasn’t a daily activity), the Washington Post reported on a study by New York University that said the average dollar bill traveling around New York had over 100 different variations of bacteria and viruses lurking on its paper — everything from eColi and strep to bacteria that cause acne to (yep) coronaviruses.
At the start of the pandemic, the Centers for Disease Control (CDC) specifically came out with recommendations to avoid handling either cash or customer’s cards, and said to instead “encourage customers to use touchless payment options, when available.” Many businesses took that advice straightaway and stopped accepting cash altogether.
Commissary Cafe owner Kim Wilson stopped accepting cash in March at her Portland restaurant. Before she made the switch to accepting online payments only, Wilson took all her cash home and put it through a rinse in her washing machine. It simply wasn’t safe to handle any other way.
Are you ready for running your business cashless? The term can bring up confusion or stir up a rant, so check out what the future may look like for you and your business.
The Benefits & Frustrations Of Going Cashless
Many small businesses have already had their hands forced due to COVID-related restrictions and jumped into a cashless model as a necessity. No doubt, when the pandemic is over, some businesses will revert to accepting cash, but others might actually enjoy being unburdened from all those dirty dollars and cents and decide to remain cashless.
For many, however, the notion of a cashless society is an automatic dealbreaker. The concerns range from government overreach to how a cashless system would discriminate against the 8.4 million unbanked households in the United States. According to the Federal Deposit Insurance Corporation (FDIC), cash accounts for 30% of business transactions. (That data does not account for current cash transactions in light of the novel coronavirus.)
Square recently commissioned a survey of small business owners after exploring the data around its transaction histories. While the trends are bending toward a “less cash” society, neither business owners nor customers feel entirely ready to abandon cash entirely. The data from Wakefield research shows that 83% of small business owners say they will never switch to an exclusively cashless business model.
For some small businesses, the benefits of switching to a cashless economy make sense from a practical standpoint. Cashless businesses can reduce or eliminate all of their cash handling costs, including the labor/cost it requires to safely deliver cash to the bank. Automating payments and eliminating cash also improves and integrates bookkeeping and sales receipts, and provides fewer opportunities for theft or error. Face it: cash is slow and clumsy. It’s dirty, too.
The arguments against going cashless including serious equity concerns regarding cashless operations as most of America’s unbanked households belong to minority families. Asking families to purchase cash cards or ask for their payroll to arrive in the form of a debit card could impose an undue emotional and economical burden.
Some businesses and individuals simply don’t want corporations and big banks to singularly have access to their funds and worry about their privacy and their money’s accessibility. Convincing, or pushing, the masses toward a cashless society may be an impractical expectation — even amid a pandemic.
How To Ready Your Business For A Cashless Economy
Going cashless does have its benefits even in non-COVID times. Determining whether it’s the right call for your small business will involve weighing the risks and calculating how much you might save vs. lose by switching to a cash-free model.
According to the Electronic Transaction Association, contactless sales increased by 27% in March 2020. Based on customer preference and the current pandemic, the desire for cashless options is increasing. If you are thinking of making the leap, ask yourself the following questions:
- What are the demographics of my business clientele?
- What percentage of my sales are paid for with cash?
- Can I predict whether my customer base would appreciate or dislike the change?
- How much money can I save by eliminating cash handling fees?
- How much money will I lose from the addition of more electronic transaction fees?
- What clients am I willing to not serve? The very young and the very old, plus 8.4 million households, do not have access to non-cash options. Can you afford not to serve these communities? (Ethically and financially?)
- Are you located in a place required by law to accept cash? (While there are no Federal requirements to accept cash as a legal tender, some cities — Philadelphia, San Fransisco, West Hollywood — and states — New Jersey — have banned, or are in the process of banning cashless businesses. )
While going completely cashless is either terrifying or exciting, the reality is that cash, in some capacity, is here to stay. However, if cash payments amount for very little of your business income, switching over to a fully cashless and contactless payment system could be a good choice.
Opportunities for contactless payment are increasing. The most recent advancement is Near Field Communications (NFC) technology which is vastly more secure than traditional debit and credit payment processing. For an introduction into NFC contactless technology and why it might be a good fit for your business, check out the video NFC Explained: Small Business Tech Tips on our YouTube channel.
Businesses will need to make the best choice based on individual circumstances and preferences. Even if your small business never stops accepting those grimy dollar bills, the technology will continue to advance and the number of customers wanting a cashless option will increase.
Those looking into cashless payment options will want to read our article on the 4 POS Systems For A Cashless Economy or read our 8 Insights on the Cashless Revolution At The Portland Food Carts.Â To read up on all of Merchant Maverick’s pandemic coverage, head on over to the Coronavirus (Covid-19) Guides and Resources hub.
The post A Cashless Future Is Coming. Is Your Small Business Ready? appeared first on Merchant Maverick.