Friday 13rd Mar 2020
Last year in the UK saw a record increase in card use, along with a similar decrease in cash use - of around 16%. Driven by changing consumer habits, and younger demographics that prefer the convenience of contactless cards or smartphone payments, this trend is sure to continue. The question is, could some retailers move to card-only in the near future?
One of the biggest benefits for retailers that choose to go cashless is that they no longer have to keep and look after large amounts of cash, which is a big security concern for small and large businesses alike. The transaction is processed instantly, with a small cost per transaction (or a subscription-based model), rather than having to spend resources on taking cash, looking after it, and getting it into the bank. Errors in cash counting and accounting can also be significantly reduced.
The speed of transactions is another. Generally, contactless payments are rapid, requiring very little processing by the vendor, which means that more payments can be processed in any given time. This reduces the burden on employees, who can concentrate on other areas of the retail business.
Bricks-and-mortar retail outlets rely heavily on regular income, and those that offer smaller purchases will likely find that encouraging card use also means an increase in those smaller transactions. Where once people tended to use only cash for smaller purchases, it’s now far more convenient to use a card rather than need the change - and this does encourage people to spend a little more, where they once might not have had enough physical cash on them.
Many charities have highlighted the significant issue of poverty, with those struggling to make ends meet more likely to have no access or no use of a bank account. This means they predominantly use cash, and a card-only retailer could be locking these people out. It’s a problem that many have highlighted, and retailers would be wise to do their research first before making the change as a result.
As card payments are all fully electronic and recorded, there’s also a concern that data breaches will increasingly reveal more and more about a person. Everything from interests and personal details, to routines and financial situation could be revealed where payment details and a person are linked. While electronic records can be useful, they also have their negatives.
The final drawback is the reliability of technology. Connection disruption and service outages can render a retailer completely unable to take card payments, where cash can in almost all cases be taken with little more than a pen and paper. As technology improves, this is an issue that should decline, but it’s still a very real consideration; particularly for mobile retailers.