Cash dominated the retail landscape for decades, even centuries. Until fairly recently, it was the undisputed payment option of choice for businesses and consumers alike. But times are changing, and while cash hasn’t fallen completely out of favor, its use is in decline and electronic transactions are on the rise.
From a consumer standpoint, paying electronically is faster, easier and less cumbersome. It’s more convenient to swipe a card or wave a smartphone than it is to count out bills and dig through mounds of coins. The frenetic pace of modern life demands payment options that save time, and electronic options certainly answer the call.
From a business standpoint, electronic payment processing saves time and money. Electronic payments allow the day’s receipts to be tallied up quickly and easily, and senior employees and store managers have to spend less time counting cash to make sure it agrees with the register. This saves labor, streamlines sales tracking and ultimately boosts your bottom line.
Recent data confirms that cash’s days atop the retail world are numbered. Right now, only about 25 percent of point-of-sale retail transactions are being completed with cash, and experts predict that number will continue to fall. What’s more is that some merchants won’t even take cash anymore; try using cash to pay for a sandwich next time you’re on an airplane and you’ll stay hungry.
This is big news for retailers, as multiple studies have shown that consumers who pay electronically tend to spend more than those who pay with cash. For one thing, cash makes it impossible to spend more money than you actually have. Once you’re out of cash, you’re done shopping for the day. With a credit card, you can instantly borrow up to your credit limit, or even beyond if your bank offers you a buffer. There’s also a psychological aspect at work; people tend to be more careful with their money if they have to physically hand over a cash payment to complete a transaction.
There’s yet another hidden benefit to the decline of cash: it makes the country a safer place to be. With the exception of identity thieves, criminals don’t deal with credit cards. They deal with cash. As cash transactions continue to become more and more scarce, and as the trend towards a cashless society grows stronger and stronger, it will become increasingly difficult for criminal enterprises to stay in business. Electronic payments are too easy to trace, and electronic money is much more difficult to steal.
However, there are still a few hurdles to be cleared before the cashless society is truly ready to emerge. First and foremost, security still needs to be improved. While the security of online and electronic payments has increased dramatically since they first emerged in the 1990s, there is still a widespread conception among consumers that paying electronically carries risks. Payment processing companies need to replace these anxieties with a heightened sense of security.
Retailers and merchants also need to embrace emerging payment technologies on a wider scale. Near-field communications make smartphone payments fast and easy, and offer consumers the convenience of the so-called “mobile wallet.” Yet, smartphone payment options are only available at a small minority of businesses.
Are point-of-sale transactions the lifeblood of your business? Do you offer the widest possible range of payment options? If not, now is the time to diversify — cash is on the way out, and the sooner you make the transition to the new way of doing business, the better off you’ll be.