The 2020s have been a period of colossal changes in consumer behaviour across the board, from panic buying toilet paper and the move towards online shopping in the wake of the pandemic, to customers putting increased value on experiences as lockdowns lifted and the current financial situation has caused people to tighten spending. Just as customer habits have shifted, so too has the retail and hospitality landscape to keep up with the new expectations.
Matching these shifts is an evolution at the heart of businesses – how they take payments. Historically the phrase ‘cash is king’ was never truer than on the high street, but currently 95% of businesses accept payments other than cash. Combining this with data from recent report between Dojo and YouLend which found that 44% of cash-only businesses stated that they plan to add additional forms of payment in the coming years. Cash’s crown appears to be dulling.
The motivation behind card-accepting businesses is strongly influenced by internal practicalities, such as easier accounting or improved cash-flows, or external factors largely driven by customer requests. In fact, over half of businesses acknowledged customer preference as the main motivator to move away from cash-only and provide more payment options in a bid to boost the customer experience. The current financial climate has changed the way customers think about experience, with 24% saying that their expectations have increased according to a recent survey by Dojo. In fact, payment method choice was mentioned by 13% of customers as something they wish could be improved so there’s a clear need for businesses to provide the right mix between cash and card payments. In the end, it’s all about making them feel welcomed and providing small touches that can make a difference – payments ease being one of them.
Those with a penchant for drama could be included to say that ‘cash is dead’, but we’re not quite there yet. Though the data shows a majority preference for cashless payments, it shows a clear advantage towards providing a mix of payments to customers. Some businesses have a preference for cash over card payments so as not to have to pay for processing fees, or the initial cost of set up, but the benefits of a good payment system greatly outweigh these negatives.
When card payment machines became more openly available some years ago, the market began to flood with simple, single-use card machines that simply process payments. This led to a misconception as to the benefits and value of card payments, with the set-up and running costs not being offset by the value they provided. Unfortunately until recently, face-to-face payments processing remained largely unchanged, meaning bricks and mortar businesses missed out on the data and insight that digital channels offer.
Merchants’ expectations too are developing as they are increasingly competing with not just their neighbouring stores, but also the entire digital landscape. Thankfully, the overall trends we are seeing is that these single-use machines are becoming a thing of the past, being replaced by value-add tools and technologies that enable businesses to uncover data and insights for merchants, as well as enhanced security.
This new trove of data empowers hospitality and retailers to provide improved experiences to their customers across both on and offline channels. The ability to predict when additional staff will be needed, or tracking spending trends, coupled with better fraud detection and easier compliance have made some businesses lean towards operating in a cashless model – but this thinking is flawed. It’s crucial that businesses understand that not all customers are able, or comfortable using card and digital methods to pay.
Some customers may prefer to use cash for a variety of reasons, such as concerns around security or a lack of access to card or digital payment options. In order to provide the best possible experience for their customers, businesses need to both understand the reasons behind their preferences and offer a mix of payment options that cater to their needs – curating a customer experience around their preferences.
With only 5% of businesses only operating on cash only model, and around half planning on continuing to shun other payment methods for the years to come, cash-only businesses times are numbered, especially considering just under 10% of consumers tend to pay with cash. We are however very far away from a time where we will be operating as a cashless society. There are too many mitigating factors that would make it a detriment to merchants. The right mix of payments between cash, credit and debit, and alternative forms of finance will be key for businesses to succeed and grow in 2023, providing the best experience to their customers, increase loyalty and growth.