Cash-only businesses may seem lucrative in terms of quick payments, bookkeeping and simplicity, but an all-cash standard may incur a heftier expense: Customers.
Cash-only businesses thrive from cash-drawer-reliant setups, and boosting a start-up business’s potential on a cash-only platform may reduce professional downtime. However, several revealing statistics have shed light upon the trend. Credit card processing has become the new standard—and for good reason.
The Out-Cashed Consumer
Modern consumers utilize credit and debit cards to close a majority of their purchases, with cash becoming infrequent among shoppers. Statistica: The Statistics Portal revealed an astonishing 7.2 percent of shoppers were all-cash-buyers in the U.S. in August 2014. The trend may be capable of hindering businesses reliant on the cash drawer.
Nobody likes inconvenience, and consumers unable to make easy credit card payments may feel alienated. Exchanges may be written off as an interaction worthy of any preference, but the following sales options are hindered by an all-cash system:
- Individual-based returns
- Loyalty programs
- On-account returns
Additionally, customers, it seems, are instantly deterred from all-cash payments upon entering a retail atmosphere. Credit card processing is considered a modern commodity within retail realms, and a consumer unable to access what they perceive as a holistic buying experience may turn away from prospective purchases altogether.
Mobile Payments: The New Retail Realm
Speaking of commodity, mobile wallets and smartphone-accessible payments are on the rise. A Digby.com industry survey revealed several notable statistics surrounding mobile-based retail purchasing, and each proposes an increasingly digital-based future:
- 27 percent of worldwide companies intend to implement location-based mobile purchasing
- Mobile purchases accommodate for 12 percent of Americans’ mobile media consumption time
- Retailer applications capture five times more engagement than non-mobile providers
Increasing mobile trends and heightened technology will likely deliver a new era of retail purchasing. Unfortunately, cash-only businesses may be behind the curve due to massive inaccessibility to such mobile platforms.
Besides consumers strictly “not wanting to pay cash” out of principle, a business operating away from mobile accessibility may appear “shady”, or even “untrustworthy” in modern retail realms. Linking a reliable mobile application—or even a company website—to user accounts promotes a stable, sustainable consumer community.
Cash Volume and Increased Risk
Understandably, security expenses are important. While maintaining an expansive credit and checking system may be expensive, losing money due to theft dominates a store’s potential losses.
Maintaining an all-cash location is considerably more dangerous than utilizing a digital payment system. Modern security technology and information technology solutions are incredibly effective, and provided security measures often provide more than enough coverage to protect an aspiring company.
The Modern Purchasing Standard
Excess cash is also a security risk for the consumer. Additionally, the consumer aversion to carrying around large sums of cash may further limit an all-cash business’s revenue capabilities. A consumer limited to cash is similarly limited to the amount their willing to carry on them. Few people walk around with enough cash to make large-sum transactions.
Security reasons aside, however, the world’s retail atmosphere is evolving towards digitalization, and all-cash businesses may be behind. After all, as companies grow and become more relevant, they’ll likely garner competitors. Feasibility is a consumer benefit, and a consumer may opt to purchase a competitor’s product when a quick card scan or swipe is available.
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