The retail industry is very wide and includes many types of stores: convenience, clothing, jewelry, and more. These stores can differ in their products, customer service, and deals. However, in terms of in-person stores, one thing remains the same, despite a few exceptions: the payment methods. Customers can typically choose to pay with cash, credit/debit cards, mobile payments, and gift cards or rewards points. Intriguingly, a 2019 study found that cash payments are only used 26 percent of the time by customers, which is four percent less than 2017’s statistic. This begs the question: is going completely cashless a smart decision in the retail industry?
Cashless payments are beneficial for both businesses and customers. Credit/debit cards are the most popular payment method, likely because they are convenient. They help businesses financially by encouraging customers to impulse buy, increasing the number of customers who can shop, and making online shopping possible. They also keep businesses competitive and help build customers’ trust. Mobile cashless payment methods have similar benefits but are even more convenient and secure than credit/debit cards. Cashless methods are efficient, allowing for faster transactions and decreased end-of-day reconciliation times.
Cash’s benefits appear to pale in comparison to those of cashless payment methods, and handling it may simply seem like a nuisance. However, businesses that accept cash can ultimately bring in a wider range of customers, which can help them generate more revenue; many kids and teens use cash when they shop, and some adults prefer cash over card payments.
It has even been shown that for payments under 10 dollars, cash is used 49 percent of the time. Anyone can easily handle and carry cash, and it also doesn’t have any finance charges. Cash payments can even help businesses: it prevents them from paying extra card processing fees, allows them to get money right away, and prevents fraud from occurring.
There are drawbacks to cash, namely the possibility of theft and counterfeit payments, longer transaction and reconciliation times, and potentially less revenue from the limited amount customers carry at a time.
Still, going cashless can have significant repercussions. The biggest problem with going cashless is excluding certain groups of people, such as lower-income individuals who are less likely to have credit cards and bank accounts. People are unhappy with the stores that have already gone cashless and are protesting, leading to cashless-store bans in many places.
Even though technologically advancement in the retail industry is necessary, going cashless is not the answer; all types of customers shop at retail stores, and excluding certain groups will hurt businesses more than benefitting them.