Top 10 Reasons why cash is no longer king for small business

Published: 05/Apr/2018

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1. Security

In a survey of Irish small to medium sized merchants published by Visa*, one third had experienced cash-related crime in the previous 5 years – 28% were victims of robbery and 33% had experienced staff fraud.

2. Speed at point of sale

With the introduction of contactless technology, consumers can tap their card, phone, or other smart device to instantly pay the exact amount and have no need to wait for the sales assistant to count out change.

3. Better cashflow into the bank

In most cases merchants can now receive their card funds into their bank accounts the following day. This means they can pay staff and suppliers from their account and also benefit from giving visibility of their true cashflow to their bank.

4. Time savings

According to research by Visa*, small to medium sized merchants in Ireland were spending 28 minutes per day reconciling card payments, in the best-case scenarios. However, they were spending 94 minutes per day reconciling cash payments, in the best-case scenarios. This worked out at a cost of 1.6 cents per euro for card transactions and 2.5 cents per euro for cash transactions. In turn, this meant the cost of handling cash was more than 50% greater than the cost of card payments.

Shoveling cash picture

5. Escalating costs for cash

The back-office costs associated with cash are very variable – i.e. the more cash taken in, the more resources are needed to count it, secure it and transport it. However, in contrast, the costs associated with card payments are relatively fixed.

6. Consumers adopting technology quickly

According to figures published by The Central Bank** in February 2018, the use of debit cards is increasing rapidly, with debit card payments now almost 4 times the value of credit card payments. In addition, since their introduction in 2012, contactless payments now make up a third of all face to face Visa transactions.

7. Card terminals are now mobile

The arrival of more rugged, mobile point of sale devices (mPOS), means the likes of carpenters, electricians and plumbers can accept payment on location without the risk of carrying large sums of cash.

8. Analyse sales data

Each card transaction is digitised by its nature and the data can be viewed on the payment provider’s portal, or fed into analytics engines, to identify buying patterns and spot evolving trends.

9. Loyalty schemes

Increasingly, data driven services like loyalty schemes, that were once the preserve of only the larger multiples, are becoming affordable and are within the price range of the smaller merchants.

10. Ready for the future

In many cases, customers will research choices online before making a purchase – think of ordering a takeaway or hailing a taxi. As the use of cash is declining over time, merchants need solutions to allow customers to buy using whichever means they prefer.

Small merchants who are focused on cash are paying an unseen penalty. They incur high costs in back-office processing and have serious concerns over security. Consumers, on the other hand, are voting with their feet. They are adopting the new technologies and overcoming any lingering doubts about cybersecurity - this latter trend is set to accelerate with the adoption of security technology such as Blockchain, and legislative changes such as GDPR and PSD2 which are aimed at empowering the consumer.

If we look to Sweden, which is further down the road of moving to digital payments than we are, they anticipate that by 2020 cash transactions will account for just 0.5% of all transactions*.

Far from being king, cash is now looking more likely to be banished.

The views expressed here are my own. This article is intended as brief overview rather than a comprehensive treatment of the issues involved. Paul Bale is Marketing Manager with eCOMM Merchant Solutions Ltd.


* Report on The Future of Payments for Irish SMEs, published by VISA, 2017:

**The Central Bank of Ireland, Statistical Release, Feb 2018: