Cashless payment options are on the rise and it’s having big implications for small business.
With only one in five Australians preferring to use cash for purchases, credit card and digital payment options are increasingly becoming the standard method of payment amongst consumers.
This trend is only expected to accelerate with the proliferation of alternative payment technologies seeing cash payments almost halving from 69 per cent in 2007 to 37 per cent in 2016.
The popularity of card payments means small businesses need to offer cashless alternatives, or risk going under, according to Sam Allert, managing director at accounting software company Reckon.
“No one can ignore we are moving to the retail sector taking payments by card. Small businesses have to accept card payments, they just can’t be a cash only business anymore,” he says.
“The reality is that I’ve seen lost sales from places that don’t take card payments”
Merchant fees can nonetheless be prohibitive for retailers, Mr Allert says, and he hopes to see these fees reduced as part of reform to the banking sector.
Despite the burdensome costs Mr Allert says there are other pressures that are more prohibitive if a retailer chooses not to offer card payments.
Passing the costs onto consumers is becoming a commonplace way to alleviate these cost pressures, Mr Allert says, but retailers should ensure they consider the product offering and client base when considering whether to pass these costs on.
Benefits beyond closing sales
The benefits of offering cashless payment alternatives extends way beyond closing sales, Mr Allert says, and includes improved security as a result of the reduction of in-house cash.
Card and other payment options that are integrated with POS can also improve access to real-time information, according to Mr Allert, and reduce the need for “double handling” as a result of separate POS and payment systems.
Card payments that are integrated with rewards systems offer even more benefits for retailers, Mr Allert says, allowing retailers to promote repeat sales by leveraging the use of eftpos.
“If card payments are linked to rewards systems then we’re getting more data about clients and the ability to market special offers to them.”