By: Darrin Duber-Smith
In Sweden only 20% of all transactions in the country are conducted in cash, but in the United States? No such luck. We, as a nation, are still struggling with using the chip card machine, which was about 10 years overdue, and soon we will have to grapple with having to input a pin number every time we use our credit card. I'm certain that this will take another 10 years. In some ways, Europe is ahead of the curve; but Americans are a more individually-oriented bunch, and as such are notoriously a bit slower than our friends in Europe in widespread adoption of new behaviors. But what about the idea of taking cash out of the equation? Is this really happening to any meaningful degree?
The U.S. Federal Reserve reported that non-cash transactions have increased by over 5% each year since 2012, so the trend is clearly moving away from cash and towards credit. Surely at larger retailers, cash is no longer king, but many smaller retailers still encourage the use of cash instead of credit so that they can avoid paying the 3% surcharge and make more money on each transaction. Some of these retailers believe that raising the price point of merchandise by 3%, an obvious solution, would make them less competitive. Is this an archaic way of thinking? We here at KnowNow! Marketing say yes. Indeed some small businesses in "progressive" places like New York City and Boulder are dispensing with the cash altogether in favor of providing more efficient customer service. But can refusing to accept cash payments improve customer service?
Visa thinks so. The company claimed in a recent report that businesses in NYC could save more than 186 million hours of labor and generate an additional $6.8 billion in revenue by refusing to process cash transactions. If this is even partly true, then it won't be long before marketers of all shapes and sizes begin to embrace a more efficient business model. Of course, the percentage of the buying public that is considered "un-banked" would be excluded by such a move, and so some marketers that wish to serve a lower-income population would have difficulty making such a shift. But with preference for cash most prevalent among the over 55 crowd, it looks like a largely cashless future is indeed on the horizon. It seems to be only a matter of how quickly it happens.
Discussion: How often do you use cash? Would a refusal to accept cash stop you from patronizing a certain retailer? Do you think this strategy is a good idea? Why or why not?
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