By Animesh Chowdhury, Founder and CTO of Goodtill by SumUp
How customers pay for goods in a retail environment has changed immeasurably in recent times. The idea of a predominantly cashless society used to be the rhetoric of forward-looking pundits, but now those buying on-line and shopping in-store are encouraged to use, if are not completely limited to, contactless payments. Government backed schemes, such as raising the contactless limit on credit and debit cards from £30, to £45 and now £100 have made this much easier for the consumer. As a result of such incentives, in the first quarter of 2020 alone, Mastercard recorded that cashless payments grew by more than 40 percent globally and YouGov research found that ATM withdrawals in the UK had fallen by around 60 percent over lockdown.
Undoubtedly, the pandemic has accelerated this change in process and behaviour, but retailers are now realising that it is also extremely convenient for themselves and their customers. They’ve been forced to live test new ways of working and have seen consumers adapting equally as fast. Aside from bringing in new customers and keeping existing loyal customers, businesses have also recognised there are huge efficiencies to be gained. This includes improved processes, interactions with customers, business practices and insights that can make a quantifiable difference to the bottom line.
Faster and higher transactional value
On average, contactless transactions take around 2 seconds, 3-5 seconds quicker than Chip & PIN and 12 seconds faster than lengthy cash payments. Over the course of the working day this time adds up, most notably cutting queuing times and increasing customer satisfaction.
Additionally, although responsible retailers do not want to be seen to encourage spending without limit, cashless payments are a simple way to increase revenue. Drazen Prelec, a pioneer in the field of neuro-economics at MIT, discovered that people are more likely to spend without limit with card payments compared with cash.
Less risk and more convenient
Cash payments not only mean slower transactions, but also bring with them a host of other tasks such as refilling the register with change, reconciling cash at the end of the day and making bank deposits. All of these take up valuable time and expose businesses to the vulnerabilities that come with human error. Going cashless eliminates these tasks and brings the added benefit of maintaining a more accurate and timely watch over the business financials.
Not only do new payment systems bring with them convenience for both businesses and customers, but for many retailers they have become the core system for managing data and workflows relating to inventory, by helping to ensure businesses source the right products, stock them in the right quantities, price them correctly, and as applicable, ship them on time in the fulfilment methods the customer desires. Synchronising inventory data with POS sales reports will ultimately lead to smarter, better-informed purchasing decisions. Not only will this help a business to decide what to keep or discard from the merchandise list, but it will also assist with decisions about minimum stock-levels and re-stocking schedules.
Safety & Security
Another key benefit to going cashless is the increased security it brings businesses. With less trips to the bank and less cash on the premises, retailers are a less attractive option to thieves. Remote cash handling also eliminates risk of fraud and money laundering, making online financial transactions, when used alongside the appropriate precautions, a much safer option.
Keeping your core customers
Moving to cashless payments also provides the ability to gain better access to invaluable data, such as customer buying patterns and preferences. This means that organisations can create tailored offers that better suit customers, which is a vital tool to cultivate loyal and long-term customers in an age where shoppers have more choice than ever before.
The move to cashless payments increases the businesses’ opportunity to offer a personalised experience to the customer including communications, discounts, offers or unique rewards based on their profile or previous purchases. Retailers can use these improved offers or perhaps a points-based loyalty programme to promote more customer loyalty, which in turn increases repeat transactions and supports business growth.
Looking ahead
As we peer tentatively into the years ahead, it seems misguided to not picture a future that is heavily reliant on cashless POS systems. Although in 2019, UK Finance published a report that predicted that just 9% of all payments will be cash by 2028, it seems likely that the events of the past 2 years have changed the face of payments far more than anyone could have predicted.
As we navigate our way out of lockdown, it appears we will be entering into an age of revolutionised sales transactions. There’s no doubt that COVID-19 has accelerated the use of contactless payments, but the benefits have proved to exceed the cause of temporary public protection. With faster transactions, added security, easier personalisation for customers and more it seems cashless payments are here to stay.
