Are cashless businesses the way forward?
As technology develops so does the world of credit and debit card payments, from school dinner money to business invoices, the majority of customers expect to be able to pay by plastic.
Proof of the growing trend came months ago, reported by FinExtra during the last quarter of 2017 when for the first time in UK history card payments overtook cash sales.
There are undoubtedly benefits to business owners when it comes to accepting card payments, most are widely reported, however what are the business advantages to accepting solely card payments and no cash whatsoever?
Eliminating cash from your business has been proven to save time, allowing resources and focus to be spent on other areas in need of valuable work hours. Nowhere is this more apparent than within hospitality industries.
Hours of business owner’s and management time can be spent at the end of the day ‘cashing up.’ Visa USA recently carried out a study where three restaurateurs were interviewed, following the removal of cash payments, of which on average they saved 23 hours per week on cash related errands.
For newer businesses this can be hugely appealing, especially when staff numbers can be low and overheads high. This amount of time can equal one employees weekly contracted hours, effectively gaining an extra pair of hands by removing cash from a business.
Time can also be saved in other cash related areas of a company; removing tasks such as depositing cash to banks, ensuring tills are stocked with the relevant float to provide customers with the right change and balancing the books at the end of a working day. All these jobs take up valuable time, which in a cashless business can be utilised elsewhere.
Most card machines integrate with EPOS (electronic point of sale system) or till points, which has two major benefits to cashless businesses. Firstly, it takes the headache out of back end reporting.
Systems work together to run daily reports which can be electronically accessed by owners, managers and accountants alike. These are often cloud based, so the business can be overseen from anywhere in the world.
Reducing the time spent on paperwork and reporting means that owners can focus on customer experience and increasing profit margins. Let’s face it, making tax returns easier can only be a good thing right?
Secondly accepting only card payments can minimise the problems that naturally occur with staff and human error. Electronic automated payments do not require transaction amounts to be entered by the machine users – therefore payments are taken correctly first time around.
Some owners worry about adding gratuity to the credit card transaction, however this can be done via the payment and monitored accordingly.
Start-up businesses considering becoming cashless will also experience less costs when it comes to EPOS equipment, in comparison to accepting both cash and card. The reason for this is that a cashless business doesn’t require a cash draw or safe system. In a time when outgoings can be high, this is an important fact to consider.
Two in five people carry less cash now than they did two years ago, according to Mastercard. This is largely due to contactless and mobile payments making smaller transactions straightforward, quick and easy for consumers. In September 2007 contactless payments were first introduced to the UK by Barclaycard.
This has created a ‘thoughtless purchase’ trend, with customers embracing the ease of purchases – from coffee to petrol pumps plastic remains the payment method of choice.
This fast way of completing a sale has spread quickly across the UK and is set to increase in future years to come. Although some clients won’t even notice that your business no longer accepts cash payments, taking card payments alone often works well within industries that attract a younger demographic.
Spending on credit is now more socially acceptable compared to generations before us. Let’s face it – we live in a time of borrowers who rarely use cash alone!
Business owners often worry about the additional costs in accepting card payments compared to cash, however these can be surprisingly low. The terminology surrounding card transaction fees can be confusing, making it difficult to compare accounts and providers.
Merchant Advice Service suggest comparing accounts on a pound-for-pound basis rather than on rates alone, with this considered transaction costs can start from as little as 0.3% of the sale value.
If you are considering becoming a cashless business, reviewing your account regularly is imperative in saving costs. Once your business is established with a strong card transaction history, rates and costs can then be negotiated elsewhere.
Always get more than one quote when finding a provider or thinking of switching and do not be afraid to use quotes or current costs to your advantage prior to signing a new contract. Speaking to an independent merchant account broker can save you costs on your current account, and reviewing your account annually is a must to ensure savings are the maximum they can be and your business thrives as a result.
The benefits of accepting card payments alone are set to increase in future years, as technology develops from apps to thumb print the payment industry is moving with the times and it’s important your business does too.
This is a hugely exciting period for the growing UK economy, from start-up local businesses to larger well-known brands, the gap between card payments and cash transactions is set to widen.
At Merchant Advice Service, we see the advantages of this to company owners, not only financially but in making businesses more efficient.
We’ve seen industries who ordinarily would only accept cash such as taxi firms, builders and educational institutions make the move towards becoming a cashless business…will you be next?