The concept of a cashless world is nothing new for economists, payments industry analysts and other insiders in the world of consumer spending. The idea itself is simple: An economy where coins and bills are no longer used – or are potentially relegated to a few very limited, niche applications. Instead, consumers and businesses would use credit and debit cards and electronic payments to complete nearly all transactions. Some countries, like Sweden, are already moving toward such an economy, The New Yorker said.
The growing customer preference for cashless transactions
A completely cashless world won't emerge anytime soon, but it's clear customers are gradually using less cash in favor of other payment methods. The Federal Reserve Bank of San Francisco noted cash is still the single most popular method used to complete a transaction, at 32 percent in 2015, other statistics indicate a gradual shift toward other payments. For example, combining utilization numbers for credit and debit cards – distinct but certainly related entities – means cards are used significantly more than cash. In all, 48 percent of transactions in the U.S. involve credit or debit cards.
Another consideration to make is the decrease in cash utilization. Over a three-year period from 2012 to 2015, the use of cash fell by a fifth, dropping from 40 percent to 32 percent. There's no denying it's still popular, but there are few indicators that cash will regain its popularity in the long term.
What it means for businesses
For the most part, businesses are already in good shape in terms of addressing the growing trend of cashless payments, assuming they use card processing software and allow customers to use payment methods besides cash. Having the infrastructure in place already is a major advantage. Any company that doesn't have a solution in place to easily and readily accept card-based payments needs to make implementing one a top priority.
Keeping up with the pace of the shift in payment preference over the coming years is the most salient concern for businesses already equipped to handle card payments. As more people shift to credit and debit cards, the need to handle cash will decrease. At the same time, businesses may want or need to increase their capacity for processing card payments. That's an important consideration for businesses that experience periods of especially busy customer activity.
Consumer preferences in payments have a significant influence on the way businesses process payments. To learn more about preparing your business, get in touch with the experts at Cloud 9 today.