The digital revolution has paved the way for many small businesses, but are they ready for a cashless future? A world without paper and coin is coming, whether we like it or not. It’s up to U.S. small business owners to stay ahead of the curve. Otherwise, they risk missing out on an ever-growing market of mobile spenders.
It’s no secret that consumers are abandoning notes and coins in favor of digital payment methods. As of 2014, the majority of Americans carried less than $50 in cash in their wallets, while half kept less than $20. This is great news for businesses who have the infrastructure to accept digital money – but what about those who aren’t ready to make the shift?
In 2018 and beyond, businesses (small, local businesses in particular) must adapt their offering in line with customer expectation. It means accepting digital wallet and mobile payments, as well as readying themselves to take Bitcoin. If they don’t, they stand to lose out – not least on the 100 million contactless cards in circulation.
Is a cashless future on the horizon?
Shoppers increasingly rely on their smart devices for day-to-day problem-solving. They shop online, look at maps, make phone calls, manage their email inbox and read news articles, all with one small device in their hands.
In the near future, consumers will do the same to make payments in shops and restaurants. Mobile payments have been a source of discussion and concern in the retail industry for years, which is finally starting to show. The adoption rate of this technology has been slow. However, it is developing at an ever-increasing rate.
When will the U.S. go cashless?
“There will be a time – I don’t know when, I can’t give you a date – when physical money is just going to cease to exist,” Economist and former US Secretary of Labor Robert Reich.
There’s no telling exactly when Americans will go cashless, and whether “money” as we know it will go out of circulation entirely. However, we can look at digital payments around the world to get a better picture of our future here in the U.S.
The Chinese “cashless” market, for instance, has already eclipsed $5 trillion. In the UK, the average person now carries less than £5 in cash. By 2020, experts predict that more than 2/3 of mobile payments will be for items costing between $20 and $100.
Contactless payments aren’t just for coffees. These findings show that consumers are growing more comfortable making larger purchases using digital methods.
A cashless future is coming, so here are three ways to help your business prepare.
1. Update your till system
If you’re still using a cash register, now is the time to update to an electronic point-of-sale system (POS). A POS will link all of your card and cash payments via the cloud, allowing you to manage inventory, payments, and invoices more effectively. It will even work seamlessly with your small business accounting system.
Many POS developers have already introduced their first updates with mobile payment integration. It is well worth investing in a mobile-optimized POS if you want to future-proof your till system. While there may not be a high enough demand for the technology yet, a cashless future is coming. Those with a head start will find it easier to transition and remain competitive in the market.
2. Understand mobile payments
There is a range of mobile payment methods emerging in the market. These include Apple Pay, Android Pay, PayPal, Square, and Bitcoin. Some payment methods come with their own apps which will sync with your POS. Others will only comply with particular card readers and software. You will need to research each method carefully to find out which are right for your business.
You don’t have to prepare for these methods all at once. Starting with just one (for example, Apple Pay, if the majority of your customers are iPhone users) will undoubtedly set you above others in your market. However, it’s good to have a lay of the land. Keep an eye on any developments in the digital payment market, and be prepared to grow and adapt. Remember to advertise your accepted payment methods where customers can see them.
3. Prioritize security
Many small business owners make the mistake of thinking mobile payments are all about convenience. However, payment innovation requires a balance between customer convenience and security. Consumers will never trust and adopt new technologies without the assurance of security,
Studies show that fingerprint scanning is the most trusted biometric payment method, which is why it has been introduced to smartphone devices. This same research found that 76% of millennials agree it is secure, while over eight in 10 (81%) of over 65s feel the same way.
On this note, research shows that older generations are just as likely to embrace new payment technologies as younger ones. So don’t fall into the trap of thinking it’s all about the millennials. Whatever the age or background of your target customer, a cashless future is coming to all of us.
What does the cashless future hold?
The speed of development offered by mobile technology has grown exponentially over the past 10 years, and it is likely to develop more in the future. According to new predictions, the number of connected devices will increase over 100% in the next three years. This will take the total number of connected devices to over 20 billion.
What remains key is consumer choice. While people want an easy, secure and frictionless buying experience, they also need to be free to pursue their individual needs. It’s not up to you as a business to decide which technology is best for them. Your job is to gradually increase your offering to be inclusive of all digital payment methods so anyone can easily, and securely, benefit from your business.
What’s next for the cashless economy?
Small businesses enabling mobile payments is the first step to a truly cashless and mobile economy. However, the future of digital payments goes beyond transactions and opens up new business opportunities in every sector. This is a critical moment in our collective history, and it’s up to business owners to grasp the opportunity and not fall behind.