Stop the Cash, Stop the Spread of Germs: The Case against Cash in the Post Coronavirus World.
By Nate Stevens, Founder and Executive Chairman of Punchey, Inc & Kunal Mehta, CEO of Punchey, Inc
The spread of the deadly Coronavirus has your customers thinking twice about the touchy hand-to-hand nature of cash. Cash is perhaps the most germ infested item in the world that a person can touch on a daily basis.
As the global infection rate increases and consumers become more careful about what they touch it begs the question why do businesses still transact with cash? What is the cost of cash, both in terms of theft, time to deposit it, and now… in terms of safety. What is the benefit, and ultimately is there a better and safer alternative? The answer is simply yes.
Recently, some central banks have begun taking cash out of circulation to prevent the spread of Covid-19, and even begun burning some notes to take further precaution. The move by these central banks have been applauded by financial experts as well as health regulators who note that touching cash can spread the virus at an alarming rate. Other central banks are currently debating whether or not to continue printing actual paper notes, leading to a cash rush at many financial institutions and the rise in alternative assets like bitcoin and gold.
Businesses across the world are also starting the process of banning cash, although they do face significant resistance from local authorities. Historically, change in the banking system has always been met with sharp criticism and reluctance, often due to the multiple layers of bureaucracy within central banks and financial institutions. Has a central banker or financial institution ever said yes to the first proposal, probably not.
Let’s go over the data, today in America well over 90% of the adult population has access to an active debit card. This figure has been reported to be a conservative number, and as the economy and money supply increases only more debit cards will be issued to serve the needs of Americans on a daily basis. Furthermore, many businesses are now requiring a chip insert at checkout. The biggest benefit to using a chip reader, besides better protection for both you and the merchant, is no longer needing to obtain a signature. Businesses and consumers can dramatically cut down contact now by not requiring a signature, this means no longer touching that dirty pen at the supermarket or touching someone’s iPad screen at your local coffee shop. Why are we not a society of contactless payments?
China is probably the global leader in contactless payments, by some estimates over half of the Chinese population today uses contactless payments as their preferred method. The Chinese government is not stopping there, they are encouraging businesses to invest heavily in contactless payments with the vision of making China 100% contactless by the end of the decade. Now imagine if we as American’s could come close to that figure in addition to using other methods of contactless payments, like a chip card reader, ACH payments etc.
Cash Versus Electronic Payments Pros & Cons
Considering going cashless in a post covid world? Smart. Accepting electronic payments (credit, debit, gift card, and ACH/Echeck) is not only convenient, it’s also significantly safer than cash. Especially in a covid or post covid world.
The spread of the deadly Coronavirus has your customers thinking twice about carrying and handling cash and coins to pay your business. Cash is perhaps the most germ infested item in the world that a person can touch on a daily basis. Below is a quick overview of why you should transact digitally and how to transition to a completely paperless, cashless system that’s more hygienic and convenient for your patrons.
Why Does Cash Even Exist Still? Common Misconceptions.
Before we get into the case against cash… let’s talk about why cash even exists now that electronic payments are ubiquitous throughout most of the world. Here are some common misconceptions of small business owners when deciding to accept cash either partially or exclusively.
Taking electronic payments is more expensive than cash?
Actually no, if you have the right interchange plus pricing plan, cards don’t have to be expensive. In fact most debit card transactions come in at well under one half of one percent. And to think there’s not a cost to cash? Think again, not only is cash germ laden it actually has hard costs associated with it. Typically cash acceptance runs at 3-7% when considering all the hidden costs to handling and depositing cash:
|Hidden Cost||Estimated Percentage of Sale|
|Incorrect change given||.5%|
|Theft at the point of sale or from staff||1%|
|Securely transporting cash to the bank||1%|
|Loss in interest earning by not having sales deposited immediately||.25%|
|Chasing cash from customers||3%|
|Bad debt/invoices never paid||1%|
Total cost estimate? 6.75% versus 1-3% for card deposits. You do the math!
I can skip paying taxes if I accept cash, right?
Not only does it reduce your credibility with customers it’s also illegal. You’re in business to get rich, not break the law. And besides, how many people ever became wealthy by not paying their fair share of taxes at the end of the day? Businesses that keep a second cash drawer or refuse digital payments for fear of having to pay taxes are being penny wise and pound foolish.
I know cash is an inferior way to get paid, but don’t I have to accept cash?
It’s time to challenge all conventions. With a global pandemic shocking the conscience of customers and businesses alike, now’s a great time to reconsider how you do business and implement new initiatives.
First consider, 94% of US consumers have a bank account… which means they also have a debit card to pay electronically according to Mastercard’s research. So they won’t blink when you say you prefer electronic payment methods.
Next, what about municipal regulations?
While you should abide by any town or city ordinance and/or speak with your lawyer, given the health concerns surrounding Covid-19, it seems any business would be well within their rights to reduce contact points with potential points of transmission; for example cash currency that has been in circulation and touched by hundreds before you.
Here’s a quick summary of the case against cash:
|Pros of Eliminating Cash||Cons of Eliminating Cash|
OK, what are the right steps to moving to a cash and covid free environment?
So you’ve decided to make the change and move to a fully electronic payment business environment. What steps do you need to take to make this initiative be successful?
Here are the steps and considerations below:
Step 1: Get a low cost interchange plus payment program
Step 2: Setup the right card present payment hardware
Step 3: Add convenience with card not present, completely contactless payment options
Step 4: Post a sign that given health and safety concerns your business is no longer (or at least prefers debit and credit card payments.