This content originally appeared on HackerNoon and was authored by Dmytro Spilka
\ In an increasingly digitalised world, our high streets are becoming cashless. As we swap notes and coins for contactless payments and smartphone wallets, is it time for your business to jump on board?
\ Gails, Black Sheep Coffee, Itsu, and Pizza Hut are just a few stores no longer accepting cash in 2024.
\ The question is, where could this leave small businesses? While a cashless shopping experience is convenient for savvy consumers, could local stores be missing a trick?
\ With this in mind, let’s explore the benefits of enabling small cash transactions in a digital-first high street. Could it boost small business profits or drive customers away in 2024?
Is Cash Still King?
Small cash transactions help drive profits for local businesses. While card transaction processing fees won’t touch the income of big names on the high street, smaller stores take a hit, especially one-stop convenience stores and brands selling local produce.\
(Image Source: Flickr)
\ Accepting cash in-store also provides consumers with greater spending freedom. While only 12% of the UK population claimed to carry cash in 2024, 1.5 million cash purchases were still recorded in 2023, with more than half of the transactions coming from local businesses.
\ “While it remains the individual retailer’s choice as to whether to accept or decline any form of payment, including cash or card, nearly all (98%) of surveyed businesses stated they would never turn away a customer if they needed to pay by cash,” claims Jason McCartney, Former Conservative MP For Colne Valley.
\ “The Financial Conduct Authority has published research on cash acceptance by small and medium-sized enterprises (SME), which found that the primary motivation for accepting cash is to provide customers with choice.”
The Benefits Of Accepting Cash In A Digitally-Driven Society
Payment freedom has played a crucial role in keeping the high street afloat since the e-commerce explosion.
\ As more point-of-sale systems welcome new payment methods such as Apple Pay, BOPIS, and credit, cash is quickly becoming forgotten on the high street.
\ While it may no longer be the most popular payment method on the block, in smaller doses, cash can actually boost business profits as a pose to card transactions.
\ Here are a few reasons why you should encourage small cash transactions in your local store.
Say Goodbye To Card Charges
Every time a customer makes a transaction using a card, they chip away at your store profits.
\ Card processing charges can start at 1.5% to 3.5%, but in some cases, transaction charges can be as steep as 6-8% per sale.
\
(Image Source: Clio)
\ David Proud, who owns Holme Valley News in Small Business owner David Proud, told Honley News: “We had initially been informed our charges were going up 8%, but after querying the price hike, we have now been informed they will remain at current levels.”
\ “Like most businesses, we are taking more and more card transactions, so it’s important as a small business owner to ensure we are still on the best deal.”
\ For large purchases, this charge is barely noticed, but for local businesses processing small transactions regularly, transaction fees could see your profit sink.
\ Introducing a card limit or encouraging cash transactions ensures that small-format transaction charges remain minimal for a healthier income as a local store.
Maintaining A Reliable Cash Backup
It’s always important to keep a cash float in store. Offering customers services such as cashback or change for note transactions can make your store more accessible for locals still paying with cash.
\ While a store shouldn't abandon digital payments, maintaining a balance is key if you want to engage in business with all locals who step inside.
Reducing the Risk Of Chargebacks
One of the main e-benfits associated with cash-first payments is the fact that you receive your money immediately.
\ For businesses enabling credit-based payment methods, it’s likely that transactions will not go live until weeks after the initial purchase.
\ More importantly, cash-based payments carry no risks of chargebacks. For those who get stung by credit card fraud, credit card providers often demand merchants to repay/refund the transaction to the credit card holder.
\ When switching to cash-based payments for smaller transactions, you save time and money on chargebacks over such small amounts of money. This ensures that your cash flow is secure as you forecast your profits.
Navigating Potential Challenges
While small cash transactions can boost your business profits, they don’t come without their own drawbacks.
\ Some of the potential challenges associated with small-cash transactions include:
\
- Inconvenience: Card limits on small transactions are inconvenient for a large percentage of UK shoppers.
- Security Risks: One of the benefits of going cashless is that your funds are stored digitally. Keeping large amounts of cash in store can open up your business to employee theft and in-store robbery.
- IRS Audits: If your business relies on cash, it can be harder to stay organized and stay on top of human error. Cash-only businesses are sometimes set up to evade tax repayments. This means that those accepting cash only become an IRS audit red flag.
The Bottom Line
At the end of the day, the most successful businesses on the high street are those that maintain a balance when it comes to in-store payments.
\ The key to completing a sale is to offer customers a myriad of payment options. These include cash, of course, but ensure that your POS system is up to date and can also receive card payments and smartphone-based transactions.
\ While cash is no longer king, it still remains an important form of payment that society shouldn't be too quick to forget.
This content originally appeared on HackerNoon and was authored by Dmytro Spilka
Dmytro Spilka | Sciencx (2024-10-05T15:00:23+00:00) Could Small Cash Transactions Boost Business Profits? The Benefits Of Small Payment Cashing. Retrieved from https://www.scien.cx/2024/10/05/could-small-cash-transactions-boost-business-profits-the-benefits-of-small-payment-cashing/
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