Depending on your small business’s industry, location, and customer base, you’ve likely already considered going cashless. And if you haven’t already made the switch, it can feel like the world is moving on without you considering that almost half of millennials prefer cashless or contactless payment while knowing that the CDC advised businesses against handling cash at the beginning of the COVID-19 pandemic. Going cashless, however, isn’t as simple as flipping a switch from “yes cash” to “no cash.” There are genuine pros and cons to keeping cash in your daily operations and the best choice isn’t the same for all small businesses. When deciding whether to go fully cashless, be sure to consider these pros and cons:
Pros of Going Fully Cashless
Keeping cash on hand comes with inherent physical concerns like robberies or fires. By having absolutely no cash on hand the chance of internal theft or miscounted earnings is dramatically reduced. When properly encrypted and using the most updated firmware, cashless payment systems are also unlikely to be penalized on fraud-based charge backs. Businesses who are fully cashless and contactless are often taking advantage of EMV microchip credit and debit cards; according to Square, merchants who use EMV card contactless and dip to pay features will not be liable for fraudulent charges. Beyond monetary security, reducing contact between your staff and customers is still a security boon in the age of COVID-19. By not dealing in paper money, you are likely keeping your staff and customers safer by reducing the transfer of germs on legal tender; even before COVID-19 paper money has been a notorious germ sponge.
Different Operational Expenses
While credit card fees aren’t going anywhere, if you go fully cashless some other fees and expenses may reduce. If your business uses armored cash transport vehicles, that is another cost that would wholly disappear. Even if you deposit your money in person at the end of the day, zero trips to the bank will always be cheaper than some trips to the bank.
Going fully cashless is likely going to help speed up your check-out line and even streamline employee training. Modern NFC and QR Code transactions can happen in a fraction of a second and training new staff to use cashless POS systems is likely to be much easier than their cash register ancestors.
In the back end as well, cashless can lift a major weight off bookkeepers. Every small business owner can count, likely in combined months, their lost time maintaining their sales books. By accepting only card and contactless payment, you can likely take advantage of the slick merchant systems like Square and Clover which organize all your sales records in one place.
Cons of Going Fully Cashless
May Exclude Certain Demographics
Cashless operations have the inherent flaw of alienating, well, people with cash. The people most likely to be affected by the swap to cashless are lower-income people and those without bank accounts. This accounts for more Americans than you may think; the FDIC determined in 2019 that 5.4% of American households were “unbanked” meaning they had no access to a checking account or credit card. If this type of population overlaps with your customer base, going fully cashless may lead to a different kind of efficiency than we listed above: customers simply not being able to shop at your store.
Depending on your choice of cashless POS, you may be paying more fees than switching to cashless is truly worth. Also, attaching card fees to every sale at your store is an unquestionable loss. Big industry players in the cashless POS world generally charge a processing fee of at least 2.3% + 10¢ per swipe for Clover with competitor Square close behind at 2.6% + 10¢ per swipe. These fees can add up especially compared to cash’s processing fee of zero dollars.
System Crashes Mean Service Stops
The frustration and stupefying sensation of essential systems crashing knows no equal. By depending on one system to handle all your transactions and removing all alternatives, you may see a momentary disaster when your Wi-Fi goes down or the POS’s internal system crashes. The beauty of old school cash registers and traditional transaction logic is that the only failure can be in the mind; if you can still count, the show goes on. Technological dependence means putting faith into a system that often you are not allowed to understand the full machinations of. While the biggest cashless POS systems are obviously exceedingly reliable, small business owners need to decide if the lost sleep over cash-related issues is worth trading for the lost sleep they may get with their cashless system.
In the age of information breaches and cyber-attacks, no company is too big to crack. Scanning your customers’ credit card information through your cashless POS system introduces a new privacy concern for both your business and those cardholders: is everyone involved with the transaction comfortable sharing their information with a third party? If that answer is no, cashless transaction systems are likely a nonstarter for your business.
Cashless POS terminals are often connected to your local Wi-Fi network which introduces new cyber threats, as the device is connected and interacting with Internet of Things on your local network. Internet of Things cyber breaches are becoming increasingly common, especially for small businesses. Small businesses with public Wi-Fi networks may want to consider changing their network to private before introducing a cashless POS.
Debilitating for Some, Liberating for Others
Going fully cashless can be equally attractive or impossible depending on a multitude of factors. Beyond what is good for your business, some cities in the United States outright ban fully cashless businesses, so be certain to research your municipal laws before making the switch. Current events are pushing corporations and small businesses away from cash, but the time still isn’t right for every small business to make the hard and fast swap to cashless. Switching to cashless can make your small business patently agile and streamline bookkeeping so efficiently that making the swap is a no-brainer. Small businesses servicing rural areas or exceedingly young or older clientele, however, will likely look at cashless as an unnecessary venture. Sit down with your team and see if the advantages of a flashy cashless operation are worth the fees and technological dependence that come with it.