What changes will you have to make to your business?
Cashless payments are becoming more popular than ever with UK cashless spending rising to £223m a day. Credit cards, debit cards and mobile wallet payments such as Apple Pay and Google Pay are becoming increasingly popular.
Well this isn’t science fiction – it’s actually happening.
By 2023, Sweden hopes to be a completely cashless society, with only 13% of Swedes using cash for purchases in 2018.
What would be the benefits for a business or a society to go completely cashless?
- Safer payments
Online transactions keep a record of every payment received and made, meaning you’ll always be able to account for each and every transaction and they’ll be stored digitally.
As we know, cash payments can be harder to trace compared to digital transactions. Using cash can make it harder to reconcile your accounts or it may produce issues with proof of payments or lost receipts.
Online transactions will ensure security which we do not get with regular cash payments through complex encryption.
- Saves your time
Working with cash payments is more time consuming than you might realise. Businesses that deal with large amounts of physical money need to store it securely then physically get more when they run out and take the time to deposit it at the bank which can also be a long, drawn-out procedure.
Businesses would no longer need to protect or move cash around as it will always be in one secure place and held accountable by the bank or other holding company.
- International payments – made easier
If you’re on a business trip in a foreign country you may need to buy local currency and anyone who travels for work will understand the annoyance and inconvenience of having to figure out the exchange rates of GBP to the local currency and back.
However, if both nations handle cashless transactions then your mobile, or any similar electronic device such as a card terminal, will handle this for you.
- Decreased risk of robbery
Keeping cash in a register or even a safe leaves your business at risk of theft or robbery.
Any business owner who keeps physical money on the premises will understand the potential threat of losing it or having it stolen.
Keeping all your money securely online would be in the business’s best interests and would make the premises less attractive to burglary.
What are the challenges?
However, going cashless will raise a lot of challenges, such as:
- Reliance on technology & internet servers
Although the risk of theft will decrease, online transactions rely on permanent connection to internet servers, which can fail or be hacked, exposing personal information to a possible breach.
If defences are breached then hackers could potentially drain the bank account leaving no immediate source of finance.
Technical problems can also leave you with no access to your money, causing problems if there’s no alternative back-up.
Not only does it prevent you from accessing your money, there is no way to accept payments if your system crashes.
- Your finances are managed by your bank and the government
Cash-in-hand gives you a degree of flexibility, control and freedom over your money. Banks and increasingly governments have increasing oversight seeing what it’s been spent on and where it’s going.
Money could be withdrawn at source for bills and fines which eliminates some agency about payment periods. It’s rare but occasionally banks can overextend and go out of business.
What if your bank closes down? What happens to all your money if you have no alternative?
- Accessibility and exclusion
1.3 million people in the UK still don’t have access to a bank account. Also many seniors, children and people from deprived areas without access to banking facilities will have difficulty paying and receiving payments as they will be prohibited from purchasing which could impact the amount of business you receive.
Sarah John, Chief Cashier for the Bank of England said: “The tangibility of cash is a key benefit, allowing them to physically calculate and budget their spending. Digital payments don’t yet work for everyone.’’
“Technological advances in payments have the power to support financial inclusion. But they currently tend to be designed for the mass market rather than for vulnerable groups, meaning vulnerable groups are rarely early adopters of new payment offerings.”
Talking about a cashless society is not a pie-in-the-sky fantasy.
According to Britain Retail Consortium, coins and notes have already fallen behind debit and credit cards as the third most popular way to make payments.
As a business owner or director, you need to be aware of these subtle and seismic changes to the wider world that will affect your company whether you approve or not.
Contact us today and we’ll arrange a free initial consultation with one of our expert advisers.
They’ll use their knowledge to let you know where you can improve and tighten your plans and procedures and get ready to surf the next big wave of change – not be swamped and submerged by it.