Retail Trends: Going Cashless
Thursday, March 14, 2019

Categories: Thought Leadership

Retail Trends: Going Cashless

Ever notice the number of gift cards available at the department store? Five years ago, you had a total selection of three to five options. But today, there are gift cards for Home Depot, Best Buy, Marshalls, Walmart, drugstores, cinemas, spas, and countless restaurant chains. There are prepaid gift cards for Apple, Google, and even prepaid VISA for any other chains not listed. We are definitely creeping toward a cashless society. But is cash going away completely? And, what are the implications and new options we need to consider in retail?

Retail Drove Cashless Systems

AliPay and Wechat - Cashless Rise

Let’s face it, retail has been the main driver of the cashless economy. Credit cards started our weaning process. There were early efforts at digital payments using a mobile wallet. No one system truly caught on. In part, there was significant confusion between the telecom companies, eager but non-credible startups, and the glacial paced financial institutions.

Despite the early hiccups of SMS payment and WAP payments that did not catch on, cashless transactions crept in regardless. Besides credit cards, debit cards have flourished. Mobile payments systems like Apple pay, Google Wallet, Amazon Pay, Swish and Paypal have become ‘a thing’. Prepaid cards have completely taken off in retail. NFC (near field communication) systems like Samsung’s are still fighting for a toehold. And, of course, don’t forget about apps. The Starbucks app took North America by storm a few years ago. More importantly, think about WeChat, and Alipay, here. In China, these have become a defacto standard payment methods.

Oh, and we mustn’t forget that cryptocurrencies are on the horizon too. They aren’t used widely, yet… but the future holds promise for them. Bitcoin, Ethereum, Ripple, Bitcoin Cash, Stellar Lumens, and others are elbowing for attention. More importantly, they await the tipping point when cryptocurrencies become the new cashless cash.

 

Cashless Future of Payments for Retail

WIIFM as a Retailer?

Man going cashless and paying with a debit cardAdmit it. In retail cash is a burden! You have to deal with physical bills and coins. They can get lost, or stolen with ease. Or associates can miscount cash transactions. It’s not hard to succumb to the pressure of a long line at the cashier and lose your train of thought. Plus, when you accept cash, it can slow down the whole process, as people fumble for change. Tap-and-pay cards, apps, and NFC phone taps are so much faster.

Then think about the backend. Retail continues to have that archaic task of counting paper and coin currency throughout the day. Again, it is time-consuming. It is also subject to miscounting, and theft. Que up thoughts about the cliche night-time robbery at a cash-drop station. Think too about the need to carry enough change for your daily/weekly transactions. Jonah Creed, owner of Creeds Coffee Bar in Toronto, mentions that “We’d run out of cash all the time, then we’d have to send our driver to get cash.” Going cash free, has its advantages. So much so that Creeds Coffee Bar, is now entirely a cashless retailer.

Cashless Sweden, Finland

Last summer in the Nordics, I was shocked to go into a cashless bank. After completing a bank account transaction, they could not provide cash for my daily spending. This is not uncommon. Many banks in Finland and Sweden are now cash free. To get cash, I would have to book ahead.

The Financial Post calls out that “In Sweden, cash is almost extinct.” This article mentions that “half the nation’s retailers predict they will stop accepting bills before 2025.” Equally surprising is that 20% of Swedes no longer use ATM’s. As a result of this rapid shift to digital currencies, there is a growing concern about digital as a form of discrimination. Immigrants, foreigners, tourists, and many without access to electronic accounts won’t feel there is financial inclusion when the society goes cashless.

Et Tu Philly? Half of Sweden's retailers predict they will stop accepting bills before 2025

But, don’t think this is just in other countries. Cashless is happening in every developed nation. Philadelphia recently made headlines by banning cashless stores and restaurants by summer 2019.

Cashless in Digital Retailing

Clearly, we are nearing the cashless society stage. Even as we step in that direction, cash still has its place in many physical retail stores. Setting aside the rhetoric, and strategic decision to go cashless, retailers need to think about multiple payment options. On the rise too, is the flexibility that customers want to use multiple payment methods for an order.

Split payments and partial payments are a natural want among shoppers. With so many cashless pay methods, consumers often want to divide their bill. Perhaps using up the rest of the funds on a gift card. Then pay the rest on credit card. Or mix the payment between prepaid credit card and their PayPal account. Whatever way a customer wants to pay, your distributed order management system has to be ready to accept, process, and fulfill that request. As we approach that cashless society, be ready to cater to your shoppers’ preferences.

 

Author: 

Charles Dimov, VP of Marketing at OrderDynamics

Charles Dimov is VP of Marketing at OrderDynamics. Charles has 23 years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.

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