Your Business and The Cashless Economy
What does moving towards a cashless economy mean for your business?
The use of payment cards rose 7.9% over 2015, and an increasing proportion of these transactions involved contactless technology. Next up is the rise of mobile phone payment, with devices increasingly incorporating NFC technology as standard. Soon many of your customers won’t even carry a credit card.
Welcome to the cashless economy.
What do your customers think about the shift and how can your business benefit? More and more of your customers no longer carry cash; you will simply lose their business if you can’t accept payment cards or, increasingly, contactless payments. That’s a threat, but there are also opportunities.
Understanding what’s coming, how your customers will use these technologies, and ways to gain a competitive edge from changes in payment and currency formats will make sure you’re fully prepared for the cashless economy.
This post will explain what you can do to take advantage of this megatrend.
The speed and convenience of contactless payment
Contactless payment completes transactions in seconds, and many customers now expect to be able to pay this way. Are you starting to see people place their card down on ‘old’ payment devices that aren’t contactless compatible? It happens.
The contactless transaction limit imposed by the credit card companies is currently £30, though this went up from £20 so it’s likely the limit will increase in line with general use and acceptance among consumers. Contactless started as an option for just small purchases but is sure to be available for more substantial purchases, too.
Clearly, consumers appreciate this frictionless payment method. It’s seductively easy to grab a coffee with a tap of their card, or even their phone. If your business can offer this functionality, it might give you an edge over your competition who doesn’t. Convenience means queue-busting; no one wants to wait around to pay.
You can easily provide your customers this convenience with a compatible payment device.
Dealing with customer security concerns
Sure, some of your customers love this type of frictionless payment, but others don’t. Not everyone is an early-adopter. Is there a downside of offering contactless payment?
Some customers are concerned by security implications of contactless technology, being ‘swiped’ on the tube, for example. Even ‘foil protected’ pouches for cards are now available.
What does this mean for your business?
First, it’s important to realise these concerns can be overstated. The reality is that contactless is quite secure and fraud per pound spent is lower than overall card fraud. Contactless transactions can’t be used to clone a card, and a pin is randomly asked for every so often as an additional layer of protection.
The system is likely to become even more secure in future, with the development of encryption keys and device tokens, which are on some devices already.
But you should never lecture your customers. It’s always best to ask if it’s ok to use contactless payment. Customers appreciate being asked for permission, as it shows that you acknowledge you’re asking to be trusted. The key is to understand these emerging payment systems so that you can assure wary customers that your business is honest and reliable.
The future - your business in a cashless society
What happens when we go cashless? Some small businesses have opted to go entirely cashless already. Not processing cash and not having to offer change makes things easier and speeds up the transaction. Could your business make a bold statement and go cashless?
There’s also the possibility of accepting alternate currencies. While it’s far too early to refuse the great British pound, could your business accept Bitcoin? There are also ‘local currencies’ that exist in a number of towns across the country.
For now, these payment options are more suited to marketing efforts. For example, accepting Bitcoin positions you as a tech-friendly, forward-thinking business. Accepting a local currency demonstrates that you’re a supporter of your local economy and an active member of the community. If these are relevant to your business, it’s perhaps worth considering alternative currencies.
As the march towards a cashless society opens up new ideas and technologies for payment options, you can choose how you want to accept payment based on convenience for your customers. But it’s worth remembering that with these new choices there are also some compelling marketing opportunities as well.
How your customers pay is changing. Are you ready?
As the cashless economy becomes a reality, there are threats and opportunities that your business should prepare for.
The ability to accept credit cards, and contactless payment in particular, is now expected by customers. They value the convenience and your business can easily acquire the technology necessary to process payments this way.
But also, be aware of the security concerns of your customers. Always ask before using contactless, and be able to explain the embedded security features to allay any fears, which are often overblown.
New payment methods don’t just mean updating your card processing terminal. For example, operating a cashless business can present you with some marketing opportunities. Is it worth equipping your business so it can accept alternative currencies now - ahead of the curve - in order to uniquely position yourself in your market?
You’re in business and want to get paid, but you can start to think bigger today as different payment options begin to proliferate. Be in front of these trends to prepare and position your business to make the most of the emerging cashless economy.