The UK’s economy is becoming increasingly digital, with cash being used for fewer payments than ever before. In order to keep up, it’s important that small businesses adapt to the changes that lie ahead. Here’s the steps you should take to make sure that your business doesn’t get left behind in the cashless economy.
What is the cashless economy?
A cashless society is a country that runs almost entirely without cash payments. This means that their economy is fueled by digital, electronic transactions rather than payments made with coins or banknotes.
In a cashless economy, some of the most common ways to pay are via debit card, credit card, and online transfers, but newer methods – such as mobile wallets on smartphones and even payment via QR code – are also becoming increasingly popular.
Some countries are already well on the way to becoming cashless societies. In Sweden – which is predicted to be entirely free of coins and bank notes by 2030 – electronic payments account for about 80% of all transactions, while China is among one of the countries to have embraced the trend in mobile payment with open arms, with around half of mobile phone owners using mobile payment options.
And the UK is following in their footsteps. In 2017, card payments overtook cash payments for the first time ever. This year, UK Finance estimates that Brits make over 1.5 billion debit card payments each month, totalling a monthly spend of £50 billion.
Why it’s important to keep up with the cashless economy
It seems almost inevitable that the UK will eventually become a cashless society, so it’s important that your business adapts to these changes – or else, you risk getting left behind. But what are the risks of remaining reliant on cash, and what gain be gained from moving towards cashless alternatives?
Cashless payments improve customer service
At one time, the option to pay electronically was seen as a luxury; today, it’s something that most customers expect. Accepting a few different electronic payment options builds goodwill with the increasing number of customers that don’t carry cash. It also means that you don’t risk losing sales; with more people than ever carrying wallets that only contain cards, if you don’t give customers the option to pay electronically, it’s likely that they’ll start taking their business to competitors that will!
Plus, accepting electronic payments methods makes it quicker to finalise a sale – there’s no need to count out coins or notes, and there’s no longer any arguments about which coins are considered legal tender. The quicker and easier it is to finalise a sale, the happier your customers will be.
Cashless payments are safer
When electronic payments and online banking were first introduced, both consumers and businesses owners had concerns about security. Today, it appears that the transition to a cashless society is actually making the UK a safer country to live in.
For consumers, going cashless has one obvious benefit for personal financial security, put simply: if you don’t carry cash, there’s no chance of losing it. Everyone has had coins fall out of their purse or wallet and – if you’re really unlucky – you’ll have washed a pair of jeans without taking the £20 note out of your pocket first. But if all of your payments are made online, via card, or through a mobile app, you simply won’t have any cash to lose.
While there’s always the risk of losing your wallet or having your phone stolen, you can easily cancel your credit and debit cards to make sure that no-one else can use them to make online or electronic payments.
The decline of cash transactions also benefits business owners in a couple of different ways. Firstly, even the most diligent business owner can miss the odd fraudentent note, so the more cashless payments you accept, the lower the risk of accepting counterfeit money. Secondly, having a lot of cash on-site can make you a potential target of theft, so reducing the amount of cash you handle also reduces the risk of robbery.
At a more general level, the cashless economy simply makes it hard for criminals to operate. Almost all organised criminal activities are financed with cash, so reducing the amount of cash in a society makes illegal transactions easier to spot. It’s also much easier to track electronic payments than payments made with cash, which means that, even if you are a victim of theft or fraud, it’s more likely that the perpetrator will be identified and you’ll be able to get your money back.
How to get your business ready for the cashless economy
While cash is still widely used by British businesses and consumers, cashless payment methods are becoming increasingly popular. Rather than waiting until the country becomes entirely cash-free, it’s wise to start planning ahead and taking a few steps to meet the changing demands of your customers.
Accept more electronic payment methods
The most obvious way to start adapting to the UK’s increasingly cashless economy is to expand your accepted payment methods.
If you provide goods or services in person and currently accept cash or cheques, consider investing in a card reader that allows you to accept credit and debit cards. Contactless payment is becoming increasingly popular in the UK, so it’s worth choosing an option that allows your customers to pay without entering their PIN number if you regularly make sales under the £30 contactless limit.
If you sell products or services online, it’s a good idea to accept a few different payment options – such as online card payments, or PayPal. The more options available to your customers, the easier it will be for them to pay.
Switch to integrated, online accounting software
If you don’t have the right tools, integrating new payment methods into your existing accounting system can be a complicated process. Fortunately, Debitoor invoicing software makes it easy for you to accept different forms of electronic payment and record the data in your accounts.
For example, the Debitoor x SumUp integration allows you to accept online card payments. When you use Debitoor to send invoices, your customers will receive an email containing the invoice and the option to pay online via SumUp. The payments you accept via SumUp will be recorded automatically in your Debitoor account, making it easier to keep track of your income.
Debitoor is also fully integrated with PayPal, which allows you to include a payment link directly on your invoice. You’ll pay a small fee based on your PayPal plan, but adding electronic payment options helps you get paid quicker, keeps your customers happy, and makes the transition away from cash much simpler and smoother.
Upgrade your online security
While a cashless economy is much more secure than one that deals with notes and coins, there is, of course, still more that can be done to increase the security of cashless payments. Online banks and electronic payment providers are stepping up their security measures, but there are also many steps you can take.
If you’re concerned about staying secure in a cashless society, check out our blog on security in your invoicing and accounting software – it has tips for keeping your Debitoor account safe, and the advice can also be applied to online banking and digital payment methods.