By Nicolas Straut

For small businesses, accepting all applicable forms of payment including cash, credit and debit cards, and mobile payments, seems like a no-brainer. Why turn away customers who have valid forms of payment?

But when you consider the convenience of cashless transactions, such as not having to keep stock of an array of cash and coins, or spending less time offering change, going cashless seems more and more attractive.

As a former cashier at a drugstore, I can attest that cash can slow down your workflow, especially if you have a long line of customers. The issue only gets worse when those customers are armed with coupons.

If you indeed decide to go cashless, your first step should be choosing a point of sale system that handles credit card payments and mobile payments. If you aren’t accepting cash, you need to accept as many other forms of payment as possible, and a variety of POS systems can help you do that.

If you still aren’t convinced about whether to make the switch to a cashless business, here are the pros and cons of doing so:

Pros of going cashless

Heightened security for your business

Going cashless will reduce the risk of theft from your business by ensuring no cash is held in your store. All transactions will be conducted immediately by card or mobile pay, ensuring that you don’t need to keep cash on hand or overnight in a safe. Plus, this will mean less work for employees who otherwise would need to account for dollars earned and count the remaining cash in the drawer nightly.

Improved experience for customers

In addition to improved security, cashless transactions will go much more quickly for customers even if there’s a long line. This positive experience might just lead them to tell a friend or return for another purchase shortly after. No one likes waiting a long time at a store regardless of how much they like product offerings.

Improved experience for your employees

You also can’t discount that a cashless experience will make life much easier for your employees. Let them focus more on servicing customers and performing other higher-level tasks, rather than counting out change, and they’ll have higher morale and be less likely to leave your business for another job. Driving down turnover and improving retention is hugely important for any business’ bottom line.

Less lost funds during transactions

One small cost that can add up over time is miscalculations at checkout. If a cashier gives back too much change to a customer, that amount is likely lost forever. Human error is a common and understandable issue—and you’ll never eliminate them completely. Cashless transactions greatly reduce the likelihood of such an error, saving you money long-term.

Cons of going cashless

Potential lost business

A major con to going cashless is of course, the possibility of lost business. Some consumers aren’t yet on board with using cards or mobile pay for transactions because they’re unbanked, prefer cash, or might not have cards on hand.

With that in mind, it’s important to know your customers before you make this switch. If your business primarily takes in cash when conducting transactions, making the switch to non-cash payments may deter your once-loyal customers who are assumed to forking over dollar bills with each purchase. If many customers already pay with cards, this switch won’t be as jarring.

Fees associated with credit cards

If you already accept credit card payments along with cash, you know that doing so isn’t free. You need to pay an interchange rate to the credit card company, as well as a markup to your payment processor for handling the transaction.

If every payment you accept it a non-cash payment going forward, you’ll lose a few percentage points of each transaction to fees. Therefore, some of the money you saved from making this switch will actually go towards paying these rates.

The economics may not align

If most of your transactions are for very small dollar amounts, you may take too prohibitive a hit with each card or mobile transaction to make the switch to cashless payments. Again, this depends greatly on your existing business model and customer base.

Potential for legal backlash

Certain cities and municipalities have either instituted or are considering instituting a ban on cashless businesses. Be sure to do your research on how your area has reacted to the cashless business trend, and make sure you don’t make a switch that you’ll have to walk back in a short time.

The question of whether to become a cashless business, as you can see, is hardly black and white. A lot depends on your business’ current economics, your existing customer base, and what your goals are for your business in the long run. If you do think that your in-store experience would be greatly improved by going cashless, make sure that the drawbacks of doing so won’t undercut your bottom line.

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Nicolas Straut is a content associate at Fundera, a marketplace for small business financial solutions, who writes on small business management and marketing. You can contact Nicolas through LinkedIn.

Source: www.fundera.com