Businesses Must Take the Right Steps to Thrive in a Cashless Society

Business owners must always be trying to understand the trends that are shaping the direction of their industry. They must also be aware of major economic changes that will affect almost every industry under the sun. These principles will help them succeed.

One of the biggest changes that we have experienced over the last decade has been the transition away from using cash. A cashless society could have a huge impact on the future of business.

Businesses Have to Prepare for the Future of a Cashless Society

Contactless payments and the number of businesses using contactless card machines have rocketed in the past two years. Businesses have to think about the reality that a cashless society will create. If you are skeptical of the direction of a cashless society, then these statistics should change your mind:

• In 2016, only 7% of payments in the UK were made by card.
• By 2018 it was 19%.
• In 2020, half of payments in the UK were made by card and 27% of them were contactless card payments.

While this has been accelerated by covid, it’s been a decade’s long trend that has seen card payments, and then contactless payments overtake cash as the most popular way to pay. Many businesses are adapting by adding electronic means of making payments.

More recently, eWallets like Apple Pay and Samsung Pay have also grown in popularity, further pushing cash down the preferred payment method of customers. Tech-savvy companies are adapting by adding these payment options. This is helping them retain a competitive advantage over companies that either rely on credit cards or solely on cash.

With cards and eWallets being such a popular payment method, it’s important businesses cater to this and invest in contactless card machines that not only accept debit and credit cards, but payments made through smart devices too.

But with cash in such decline, to the point the Government is actively investigating how to protect cash in the economy and ensure it’s available for people who need it, it does raise the question.

Could a cashless society really work?

What would a cashless society really look like?

With the majority of us growing up with cash as a popular payment method, it’s hard to imagine what our society would look like without coins and notes.

But there are many benefits to going cashless.

For customers, it means they don’t have to worry about having the correct change.

It’s also a lot quicker.

There are even more benefits for businesses.

Shop owners and managers don’t have to worry about handling and storing money, meaning it would make cashing up at the end of each day a lot easier.

It also eliminates the risk of fraud by removing the chance of accepting counterfeit notes and also reduces the risk of being a victim of burglary because you have no cash kept on premises overnight.

With everything being cashless, there will be an electronic trail of every payment being made to businesses, making staying on top of finances a lot easier.

What are the downsides of a cashless society?

Although there are many benefits of contactless and digital payment methods, there are plenty of benefits for protecting cash and keeping it in the economy as well.

For a start, there is still a large percentage of the population that’s heavily reliant on cash – particularly older people.

This was recently highlighted in a government report as part of a consultation on the future of cash in the economy.

Plus, while cash payments are on a downward trend, they still made up one fifth of all payments in 2021.

Although this is a lot less than card payments, it’s still the second most popular payment method.

What about people who don’t have bank accounts?

A proposal of a cashless society makes the assumption that everyone has a bank account or access to a bank card or digital wallet.

A government report on financial inclusion has revealed that 1.2 million people in the UK don’t have access to a bank account.

This means they also don’t have access to a bank card to link up to a digital wallet or make contactless payments.

According to the report, it’s mostly 18-24 year olds and the unemployed who don’t have a bank account.

If a cashless society was ever going to work, opening up banking services to a wider number of people needs to happen first, or a high proportion of the population could soon find payments incredibly difficult.

A lot of older people are used to cash, and like the process of physically taking out cash from the bank and paying with notes and coins in shops and restaurants.

Although people can have access to a bank account and everything that comes along with it, it doesn’t mean they use online banking to track their outgoings.

It’s been found that people are likely to spend 12-18% more using card payments than they would using cash.

Because of this, many people like to pay with cash so they know how much they’re spending, and don’t make spontaneous purchases.

Society will be too reliant on technology

We’ve all been there where we wanted to make a call and our phone runs out of battery.

But what if that happens when we try to make a payment?

You’re now able to add your bank card to your digital wallet on a smartphone, which makes payments easier and gives you more room in your pockets because you don’t have to take your wallet with you.

This is a quick and easy payment method but it does have its problems.

If you don’t have enough battery or your phone is being slow, it could stop you from making a payment.

Using cash doesn’t rely on technology, making it a reliable alternative in some situations.

Cash will always have a place, but technology is taking over

Cash is always going to be around.

Too many people are reliant on it to completely get rid of it and a truly cashless society will exclude those who don’t have access to a bank account.

What we do know is that technology is taking over the payment industry.

People find using their card or digital wallet a lot more convenient than cash, with these payment types making up over half of transactions in the UK.

With this, the government needs to cater to new and future technology.

Businesses should also recognise favoured payment methods and make them available for customers.

This includes contactless card readers that accept both card and digital payments.

What Individual Business Owners Have to Understand About a Cashless Society

There are a lot of changes that are being brought on by a cashless society. Businesses have to know how to adapt. Here are some steps that business owners need to take:

• They have to think about the technological competencies of their customers. Tech-savvy customers will be more likely to demand more complex payment options.
• They need to make sure that they offer enough cashless payment options for customers. They can’t rely solely on credit cards if their customers expect Apple Pay and other payment gateways.
• They have to still keep enough cash on hand for customers that do still use it.

There are a lot of steps that business owners can take to succeed in a cashless society. This will give them a greater advantage in the future.