Is The Future of Retail Cashless?18th Dec 2019
When I started to research this article, like any self-confessed millennial I titled it ‘Why the future of retail is cashless’, there was no doubt in my mind that this is the way things should be, and I’m sure many of my peers would easily make the same assumption.
Apparently it’s just commonplace now that most Millenials and Gen X expect to be able to pay with their phones or card. We don’t carry cash as a standard unless it’s necessary or enforced. I’ve heard many people exclaim angrily while looking at a cash-only parking ticket machine; “Cash only? In this day and age?”.
I’ve even had to turn around from some attractions and drive miles in search of a cash machine, because it’s so built into my experiences with technology, that nearly all businesses will accept card payments.
That said, there have been significant ethical protests against the rise of a cashless society. Many in America and France believe the entire scheme to be elitist, as the poorest in our society often don’t have access to a bank account, or must pay minimum deposits to even open one.Luckily in the UK, a few major banks are now starting to work with charities to offer banking facilities to people who couldn’t ordinarily access them, but there’s certainly still something to be said in the case of convenience vs. elitism.
Luckily, we’re still years away from a totally cashless society. Mastercard predicts that in five years time cash will be practically extinct, but you only need to look at how slow total adoption of self-checkout has been in supermarkets to see that technological advancements still don’t suit everyone in our society. They might be the chosen method for the newer generations, but we still have a huge population who are unwilling or unable to adapt.
So maybe the future of retail won’t be totally cashless, some cities in the US have already enacted legislation to ban them after all, but the benefits of becoming a majority cashless store are really something to stand up and pay attention to as a business. Let’s take a look at the stats and facts:
UK Finance predict cash will make up only 16% of total transactions by 2027
Iit won’t be totally eliminated, but there’s a lot of reasoning here to entice businesses to install more cashless retail infrastructure. We’ll need more self-checkouts, contactless opportunities and apps to support people who do with to adapt to a more convenient method of checkout. E-payments overtook cash way back in 2014, so we’re well on our way.
Sage says cash handling costs UK retailers £17.8bn a year when you account for security, fraud and theft
Cash is, expensive. We know there’s usually a transaction fee associated with card payments, but there’s a lot of infrastructure that goes into cash handling. First of all, it’s the small increments of time lost each day when your staff are handling cash; checkout assistants counting out change, waiting for customers to organise cash, bringing cash to and from the table when dealing with payments at restaurants… the time saved on each transaction may amount to pennies in staffing costs, but when added up over thousands, if not millions of transactions over the year, it gets very inefficient.
Not only that, but some of your most expensive staff; your managers, spend hours each day organising and balancing tills, and counting cash at the end of the day. This can all be managed digitally with cashless transactions.
Businesses also need to either risk their staff’s safety by sending them out to bank large volumes of cash on a daily or weekly basis, and if not they need to pay costly security firms to handle the cash for them.
Fraud is another big problem, credit card fraud is on the decline since the introduction of chip and pin, but cash fraud is still extremely hard to track and deter. Cash theft can also be a problem, from the more obvious robberies, to the smaller day-to-day losses on the tills.
Till theft amounts to an average of a 4% revenue loss each month for UK businesses.
Cashless Technology is Extremely Accessible and Scalable
You’d think that it would be the larger businesses leading the way with cashless technology, but funnily enough it’s the smaller retailers who are the early adopters.
Especially those aimed at quick-fire transactions, who want to focus on giving their staff time to create a high quality product instead, such as artisanal coffee shops. With technology such as Square and Paypal offering very affordable portable 4G card readers, even traders at fairs and markets are going cashless.
Most small businesses can get started with just Wi-Fi, a tablet and a card reader, and as the business grows it’s easy to relate the cost to an ROI.
Multiple Ways To Pay - It’s Not Just Card
Cashless technology isn’t just about credit cards, it’s very versatile. Most people now have e-wallets on their phones which allow them to use contactless technology with their devices to pay.
Businesses can also design specific apps for interacting with their business, these are helpful for creating loyalty schemes, and will allow targeted offers to be sent to the customer based on their buying habits. Apps can also safely pre-store customer payment details and delivery information, meaning in some stores it’s possible to simply scan a barcode and get the item delivered to their door.
Apps also mean business can streamline the process even further, offering functionality such as ordering in advance. This is great for food establishments and reduces any need to queue - extremely convenient for the customer.
And of course, there’s also the most controversial method; biometrics. Biometrics offer the potential to be the most secure and least likely to be hacked security method for cashless payments, but it still causes some worry surrounding which data businesses will be able to collect from us.
The industry as a whole has already recognised the mass decline in the use of cash, between November 2017 and April 2018 1,500 cash machines closed across the UK, showing a marked intent to go cashless.
It looks like most major retailers are set to create dedicated venues where the main objective is to minimise cash transactions, but due to the current state of our society, cash will always need to be an option for the foreseeable future.
Whether we’ll be going cashless by 2025 or much later still seems to be debated, but the trends certainly go to show that any business not considering IT infrastructure for these purposes is going to be left behind by businesses more willing to adapt and invest.