Are Businesses Headed for a Cashless Future?

In 2014, a TSYS survey found that only 9 percent of consumers listed cash as their preferred method of payment; 43 percent preferred to pay with a debit card, and 35 percent preferred to pay with a credit card. Some businesses have responded to these preferences by completely eliminating cash transactions. But some small businesses lack the resources to move to a cashless payment system.

Visa is on a mission to help certain small businesses transition to a cashless payment system, through its Cashless Challenge contest. At this time, only small restaurants, cafes, and food trucks are eligible to apply for one of 50 $10,000 grants designated for upgrading point-of-sale systems. To enter the contest, entrepreneurs must explain what going cashless would do for their business. Contest winners may, after upgrading their POS systems, use any remaining funds for marketing and promotion.

Pros and Cons of Cashless Transactions

Visa may be giving away $500,000, but that’s money the company will recoup with time, because businesses have to pay a small transaction fee on every debit or credit card purchase. Those fees are one potential downside of moving to a strictly cashless system.

In Maryland, businesses are allowed to pass on a surcharge to customers who use a debit or credit card to pay, although there’s a risk that doing so may offend customers. Businesses may also offer discounts to customers who pay with cash.

The most obvious advantage of a cashless system is that it eliminates the risk of loss from cash-register robberies, and from cash-register mistakes that leave the drawer “short” at the end of the day. With a cashless establishment, you don’t need to keep money and coins in a safe, make large cash deposits, or visit the bank frequently. So it can definitely simplify day-to-day operations.

Businesses must consider what’s best for their customers when deciding whether to move to a cashless system. If you own a bodega where many customers make small cash purchases every day, eliminating cash as a payment option could be bad for business.

According to CBS News, roughly one in 13 households have no bank account. These are usually lower-income households that pay cash for most purchases. So for some retailers in low-income areas, going cashless probably isn’t advantageous.

Other Forms of Payment

Those businesses that do choose to go cashless aren’t limited to accepting plastic. Some, like the casual restaurant chain Sweetgreen, offer smartphone apps that customers can use to order and pay for food. Businesses with updated POS systems can also accept Android Pay and iPay, apps that turn smartphones into virtual wallets so customers don’t even have to carry credit and debit cards with them.

Preparing for the Future

A cashless system may not work for everyone, but it’s already working for many businesses. Being successful in business means anticipating and preparing for changes, but also taking time to explore one’s options in order to make educated decisions.

The experienced business law attorneys at Lusk Law, LLC, help entrepreneurs create a solid foundation for their business and offer legal advice every step of the way. Our firm has provided legal counsel and representation to business owners in Frederick County, Howard County, Baltimore County, Baltimore City, Carroll County, Washington County, Anne Arundel County, Montgomery County and other counties in Maryland. If you need legal guidance for your business, please call us at 443-535-9715 or fill out our contact form.

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