Is Cash Payment on the Way Out?
The digital payment drive is increasingly becoming a popular option. Does it mean the end of the world for cash payments? With the evolution of technology, there has been a seismic shift in the way businesses sell their services and consumers buy. As a result, the payment scenario has undergone a transformation, offering consumers diverse payment alternatives, from EMV Chip and PIN to contactless cards, mobile payments and some other cutting edge electronic payment solutions. The new payment opportunities have brought additional flexibility, security, convenience, and choice for consumers.
Are Curtains Falling on Cash Transactions?
While digital payments have evolved, a steady decline is reported on the cash transaction front. A 2015 research report reveals that cash transactions have dropped from 52% in 2014 to 47% in 2015. Barclays data further shows a year-on-year drop in cash deposits, compared to a rise in the number of electronic transfers.
Consumers prefer convenience when it comes to making payments or transactions. They like to pay when they want and how they want. So the demand for a seamless omni-channel experience has been on the rise.
The success of Starbucks app as the largest mobile wallets is attributed to its offer of loyalty points to customers, place orders on mobile, and seamlessly collect their products in-store, without the need to queue. This way it is a win-win for both merchant and customer.
However, development of necessary infrastructure and its accessibility for merchants and consumers can only drive the success of digital payments.
What About Businesses?
The rollout of certain financial products, including credit cards, has helped improve accessibility to digital payment solutions and payment cards. Some countries have started to use limits on cash transactions in order to discourage usage. Sweden has taken some stern steps to reduce cash acceptance. For example, the Stockholm metro and buses do not accept cash and even street vendors prefer card or mobile payments. Additionally, retailers can refuse currency payments from customers.
In Singapore, the use payment cards is the highest in the world, with almost two-thirds of transactions being cashless. In Korea, 40% people prefer to use card for making payments. The Bank of Korea envisions a “cashless society” by 2020.
It is a kind of win-win situation for businesses as well both in terms of finance and convenience. Switching to cashless transactions offers the opportunity to accelerate purchasing process and get greater customer insights. Additionally, cash comes for a price for retailers, involving huge investment in production, storage, transportation, and usage.
What About Customers?
Before going for a cashless payment system, it’s important to understand why customers prefer the new payments technologies. Yes, it is for convenience. The challenge for retailers is to create a seamless experience for customers by offering them both payment systems.
It is up to payment providers to help retailers deliver the best user experience for customers. Payment industry should take steps to make it easy for retailers to accept a multitude of payment options, including cash payments.
Listen to your customers and make it convenient for them pay anytime, anywhere.
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