Cash is no longer king. This might not be a surprise to consumers, but the rise of cashless transactions is forcing the retail sector to embrace digital transformation at a rapid pace. For small businesses, the demise of cash could make or break them. Embracing cashless transactions opens a huge range of opportunities for small businesses, but leave it too late to change and you risk being left behind.
There is no doubt about it, cash is on the decline. The rise in online shopping and consumer demand for a seamless shopping experience has left no place for coins and notes. In 2018, the UK debit card transactions overtook cash transactions for the first time. Cash transactions fell 15% from 2017 as consumers used debit cards 13.2 billion times in 2018. But it’s not just the rise in card transactions that is causing a diminish in cash use. Recent studies from Which? hit the headlines for reporting that free cash machines are disappearing at an alarming rate. In fact, 1,700 machines started charging withdrawals in the first three months of 2019 resulting in Britain losing 13% of its free ATMs in just a couple of months. The result? Consumers are becoming dependent on their cards and hold little to no cash in their pockets.
The retail sector is mirroring the cashless consumer - it must if brands are to stay in business. Customers expect retailers to accept a range of payment methods, offering not just contactless but mobile and in app. These methods are not just transforming the customer experience at checkout, but making the entire shopping experience much more seamless. No longer are consumers scrambling in their pockets for their cash and finding the exact change for their purchase. Checkout is as simple as tap and go. The future of retail should not view the checkout as a siloed process, but one that integrates into the rest of the shopping experience. The ultimate goal is for payments and whatever process a customer picks to become unnoticed.
However, as larger businesses turn cashless, we must ensure that small businesses are not left behind. Often reliant on cash, small businesses must recognise and act on the opportunities for cashless transactions. Small and independent retailers that embrace cashless transactions cannot just accept more sales, but in doing so, can also attract a much larger customer base both in-store and online.
This is highlighted by Valitor’s APEX research, which showed that having the right payment option is more than twice as important as marketing when consumers buy a product. As the research highlights, The research the risk becomes even more palpable if you consider that with the research also highlighting the damage that can be done by a bad experience. nearly two thirds (60%) of shoppers will not return to a store after a bad experience.
Offering the right payment solution then is a really important factor for customers and consequently retailers too as they look to develop long term, meaningful relationships. High street retailers, in particular, can really leverage payment as a point of differentiation by offering the payment solution that customers want yet still providing personal and local experience. This can help build and cement loyalty and trust far quicker than other channels can.
The death of cash provides other advantages too. In fact, offering cashless transactions enables businesses of all sizes to take a data-led approach. Recent research from Valitor and WBR report that when mapping the customer journey, 61% of retailers start with how people pay in any given channel and work backwards to the point where they first encounter the brand and their products.
Card transaction data enables businesses to understand their audience and make changes to optimise sales, increase personalisation and encourage customer loyalty through fostering a more considered shopping experience. For example, retailers can gain a more detailed understanding of their most popular products, patterns of purchase and customer profiles.
The growth of the cashless society is going to fundamentally change not only the retail sector but society as a whole. The challenge for retailers now though is that it has the potential to make or break many businesses. Leave it too late to change, and you risk being left behind with low customer retention and a drop in customer experience.
Embrace change and you can reap the benefits of accepting cashless transactions, retaining a strong customer base and actually grow your business. Small businesses that successfully adapt will not just secure their future in retail but can become leading examples of how to deliver a high level of customer experience and satisfaction through the combination of the right payment technologies with their existing personalised customer service. Going cashless doesn’t need to be another nail in the small business and high street coffin, but actually, an opportunity that needs to be seized upon.