In an increasingly urbanized world, many places are rolling out smart-city initiatives to make things better in different ways. One cool part of that is digital payments tech: a sphere where direct net benefits are expected to be around $470 billion each year.
Using a card, app, or website for payments is super straightforward, clean, and usually a breeze. Because these digital payment options make it way easier to send and receive cash. They also facilitate increasing economic activity and bring a bunch of financial and non-financial perks.
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No More Cash Handling Costs
According to reports, small- and medium-sized businesses pay tens of billions of dollars in cash-handling expenses annually. Cash payments also give way to the removal of costs that involve cash handling and cash transport.
In fact, cashless businesses are not obliged anymore to pay bank deposit fees for cash and coins handling. Cashless businesses get rid of costs associated with armored vehicles for money transportation. And the best part? Cashless businesses do not need to count and deal with registers by their employees. Instead, employees just take care of what they need in order to attract more customers.
Faster Transactions, Happy Customers
A number of companies that have gone cashless report that the key benefits are faster transactions and more customers. The Federal Reserve Bank illustrates several neat examples of such businesses.
For instance, Atlanta’s Mercedes-Benz Stadium figured out that switching to just card and mobile payments not only cut down the time for end-of-day balancing but also made transactions faster and reduced wait times for folks.
Also, Tender Greens calculates that cashing out is about four to five seconds longer than swiping a card. Sweetgreen simply noticed that the cashless spots handled 5 to 15 percent more transactions every hour.
These faster transactions may play a pivotal role in generating revenue in high-volume businesses. In terms of customer satisfaction, increased revenue will be garnered from increased revenue, less error regarding making changes, and overall revenue increase.
The Dark Side of Going Cashless
While market trends and cost savings make going cashless an attractive option in lieu of cash payments, there are reasons not all economies can go cashless.
Did you know how everyone thinks that no one really uses cash anymore in the U.S.? But back in 2017, 6.5 percent of households were unbanked and didn’t have any form of access to financial services. That translates to around 8.4 million households who did not have a bank-issued debit or credit card.
But when you factor in the ‘underbanked’ households that do have a bank account but use other things like money orders, payday loans, or check cashing, the number of people who cannot pay without cash surged up to 24.2 million households-about 19 percent of the U.S. population.
Some people will only use cash when purchasing something or just don’t have another choice. This especially holds true for those who wish to avoid the banking world and keep their purchases private.
According to the FDIC’s 2017 National Survey of Unbanked and Underbanked Households, a third of unbanked households don’t really trust banks, and others avoid banks because they’re concerned about privacy or fees.
Another example is cashless methods of payment; cashless payments depend completely on having good networks. In case there is a network outage or data security issue, those cashless payment methods can be super unreliable or just plain unpredictable.
So whether people want to pay with cash or have to because the network’s down, businesses that only go cashless are kinda shutting those customers out of a part of the economy.
In Conclusion
The whole cashless business thing is really kind of complicated. Right? On one hand, it makes sense for businesses to go cashless because it speeds up transactions, reduces the chances of theft, and cuts on handling costs. However, on the other hand, ditching cash can really leave some people out of managing their money situation.
