With the recent introduction of contactless cards, it looks like a cashless revolution could well be on the horizon. There are currently 20 million pieces of Barclays contactless plastic alone in the hands of British spenders, and it looks like cashless is fast becoming an expected part of our daily buying rituals.
For the average small business owner, the costs of going cashless may be intimidating. But there’s a whole wave of new apps and services starting to make their name in the cashless payment industry. And it’s starting to become more accessible than it ever was for an entrepreneur to get on board.
Cashless payments mean speed and convenience
Estimates by retail giants Tesco suggest that contactless card payments are six seconds quicker than typing in a PIN or exchanging notes and coins. That might not sound revolutionary, but in businesses with a high number of small transactions – such as coffee shops or off-licences – those savings in time could add up to significant increases in the amount of money you can take in each day.
Fifty retail sales per day that are six seconds quicker could mean a saving of 5 minutes, which, during busy periods, could be enough time for 10 more sales from impatient customers that might otherwise have left the queue. They may even end up spending more than they usually would. According to a YouGov survey in 2012, two-thirds of Britons carry around less than £20 in cash, yet they’ll spend an average of £64 on their cards.
But it’s not just about numbers. The ability to take cashless payments could mean shorter, faster-moving queues, and that means happy, returning customers. You’d also be able to avoid the frustration of sending a potential customer away to the nearest cash point – or worse, to the nearest cashless competitor.
But it may take time to see substantial consumer trust
Contactless payments, while certainly faster, are still a relatively new phenomenon compared with cash or Chip and PIN. So there’s still a certain level of doubt over the security of transactions without a PIN. While there is usually a £20 cap for contactless payments in order to minimise fraud damage, many consumers are still wary of new technology.
At the same time, consumer awareness of near-field communications (NFC) payments via smartphones is low. Google Wallet Pay, Zapp and Apple Pay (among others) let you connect your bank account to your smartphone and go contactless with a tap of your mobile. NFC is considered even more secure than contactless cards, as your transactions are encrypted by your own digital signature.
Yet, again according to YouGov, only 9 % of UK adults even know if their mobiles are NFC-enabled.
For small business owners, the barriers to investment are crumbling
Following the trend of cashless, mobile, contactless payment options, companies are starting to introduce mobile solutions for small retail outlets. Small devices – which connect to your phone or tablet through either its charging socket, headphone socket, or even through Bluetooth – allow you to process customers’ debit and credit card payments through an online app.
While there is a small investment upfront – a number of the plug-in devices sit somewhere around the £50 mark – it’s likely to be a much more viable option for small businesses than the typical hundreds that you’d need for the dedicated, more traditional card systems.
The customer receives a receipt by SMS or email, and their money is usually deposited into your account after a specified number of days. There are a number of different companies with services for mobile payments – some UK-based, some with considerable European experience – so it’s worth doing your research before committing.
The continuing move towards cashless payments could lead to faster, more efficient transactions, which could mean higher revenue and reduced costs. Find out how you could make more cost savings with our energy-saving guides.