Will Point of Sale Systems Mean the End of Cash Transactions?
Posted by business on March 19, 2013 in Business Start Up Advice [ 0 Comments ]
The digital age has brought a tidal wave of change to the way small business owners do business in everything from marketing to customer service to point of sale systems.
- Instead of (or in addition to) print ads and billboards, you market directly to your customers via Twitter, Facebook, Pinterest and FourSquare, with your eyes always on the lookout for the next social media craze.
- Instead of being limited to a single bricks-and-mortar store that only sells to people who live in your area, you have access to new customers around the world via a website that’s open 24-7.
- Instead of forcing customers to wait in line at a register at the front of the store, you use a point of sale system that can fit on a mobile device, going where ever the customer is.
And digital technology has changed the way customers shop, too. According to a 2011 survey by Javelin Strategy & Research, 54 percent of respondents said they used credit or debit cards most frequently to pay for goods and services and only 21 percent relied on cash.
By 2015 Juniper Research estimates that the market for mobile payments for physical goods could top $170 billion in transactions, up from $60 billion in 2011, according to Bloomberg.com.
What’s so bad about cash?
From a small business owner’s perspective, cash can kind of be a hassle.
- You have to physically drive it to the bank or hire an armored car service to do it for you several times a week
- You have to make sure there’s adequate change on hand for all those folks who hand you twenties
- It comes with an added security risk (When’s the last time an employee discretely stole credit card slips from the till?)
And, lest we forget the germophobes among you: currency has the nasty habit of transmitting disease — not surprising when you start to think about how many dirty, snot- or spit-pasted hands have handled it. Ick.
What’s the new cash?
As mentioned earlier, credit and debit cards are becoming the most popular method of payment for consumers, but that could change too with the proliferation of smartphones.
The next big thing in exchanging money could be the digital wallet — an online system that allows users to make payments, store payment options, transaction histories, virtual vouchers and loyalty cards.
An early adopter of this method is Cafe Grumpy, a hipster hangout in New York City’s Chelsea neighborhood, where patrons don’t even need to take out a credit card. After ordering, they can simply offer their name and the barista can tap the order into an iPad and the charge goes to the digital wallet app on the patron’s phone, according to an article on Fortune magazine.
New point of sales systems are able to communicate wirelessly with mobile devices, allowing startups and businesses overhauling their checkout procedures to take advantage of the trend.
So has cash been dethroned?
There are a number of businesses and organizations that no longer accept cash payments. Here’s a sampling:
- According to a recent article from American Medical News, medical practices across the country are no longer accepting cash payment from patients — the trend driven by the fact that more and more patients prefer to pay with plastic.
- The State of California Franchise Tax Board no longer accepts cash payments at field offices in Los Angeles and Oakland in an effort to increase employee safety, reduce wait times, and reduce the cost of handling cash.
- United Airlines requires passengers pay for drinks and snacks with debit or credit cards.
- As Sweden moves toward being a cashless society, public buses no longer accept cash (tickets are prepaid or purchased using a text message), many small businesses only take cards, and even some banks no longer handle cash, according to an article on CBSNews.com.
And as mobile sales technology improves and expands, you can only expect to see more businesses to end cash transactions.
Major retailers, including JC Penney and Urban Outfitters, have recently announced plans to reduce the number of cash wraps in stores — or eliminate them entirely — in favor of mobile POS, according to an article on Retail Solutions Online.
What’s more, it’s perfectly within businesses’ legal rights to refuse to accept cash — there’s not federal law that says a private business or individual can’t decide what form of payment it accepts.
But don’t go planning cash’s funeral just yet
The last time folks were sounding the death knell for legal tender was more than 60 years ago, when the credit card was invented. We might be going out on a limb here, but we’re guessing that you might have a George Washington or two hanging out in your wallet as we speak.
The value of U.S. currency in circulation in 2010 was $1 trillion. Over the next 10 years, cash volume is expected to grow 1.7 percent annually, according to the Federal Reserve Bank of San Francisco.
And Mike Lee, the CEO of the ATM Industry Association, recently wrote that cash is simple, quick and tangible — and long-term, more people trust the bills in their actual wallet than the bytes in a digital wallet.
Then there’s the fact that the digital wallet hasn’t taken off because of the high level of coordination needed between merchants, credit card companies and/or banks, device makers, mobile service providers and app creators.
Even the would-be assassin of cash itself — Square — realizes that cash isn’t dead. In fact, it recently released its “Business in a Box,” which includes two credit card readers, an iPad and stand, receipt printer and a cash drawer.
So while it’s tempting to relieve yourself of the headaches of handling cash for your small business, don’t throw out your tills just yet.
Learn more about point of sales systems on ResourceNation.com.
Photo courtesy of playboy on Stock.Xchng