The Pros and Cons of a Cashless Business
Because of COVID-19 and the boom in online selling sites, many businesses have decided to go cashless. However, before deciding to do so, it is important to consider the different advantages and disadvantages. Here are a few examples.
Since the start of the COVID-19 pandemic, many businesses have gone cashless, since every time you touch paper money or a coin, you have a chance of coming into contact with the virus. Even as vaccination rates increase and we have learned that the virus spreads much more efficiently through the air than via surfaces, many businesses have stayed loyal to a cashless system. So, should your small and medium-sized enterprise (SME) go cashless? What are the pros and cons?
First: Opportunities and Risks
A cashless business is less risky than others in terms of not only COVID-19 but also thefts, making your business much less vulnerable to robberies. In particular, thieves can’t rob your cash register if you don’t have one. Firms with cashless transactions can avoid potential employee theft, which costs US businesses an estimated $50 billion per year.
However, SMEs have to pay for every single credit card transaction. Those fees can add up to a significant loss of revenue.
Moreover, you don’t have to count individual coins and bills to calculate your revenue. Cashless transactions are easy to track and record. However, if your credit card system goes down, you can’t accept any business. You could lose hours, if not days, of revenue.
Second: Efficiency and Inconvenience
While a cashless business spends more money on credit card fees, it might save money on employee wages. You won’t have to pay somebody to count the money at the end of the day. If you, an SME owner, work your own checkout, this won’t apply, but if you employ somebody else, you could save money. Furthermore, most customers can much more easily tap their credit cards than pay cash, thus making the checkout process faster and more efficient.
However, this can become complicated when you encounter customers who don't have a credit card nor want to use it. Elderly people are less likely to prefer using a credit card, and many lower-income people don’t have credit cards; therefore, they can’t patronize cashless businesses. Some jurisdictions do not allow certain businesses to be cashless as it contravenes discrimination laws. The city of Philadelphia and the states of New Jersey and Massachusetts have such laws.
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