The rise of the cashless economy and contactless payments

The coronavirus pandemic has caused many businesses to adopt new ways of working. One significant challenge for small business owners has been adapting to the rise of the cashless economy. 

Contactless payments have become the norm in recent months as consumers avoid cash to lessen their risk of exposure to COVID-19. While business owners may be concerned about going cashless, it’s simple to make the switch to include contactless payments, and the benefits are significant.

Even before the coronavirus crisis, the cashless economy was on the rise in Australia. In March the Reserve Bank reported just 10 per cent of all transactions in 2019 were cash. At the time, credit and debit card transactions were prevalent, yet payment methods such as Tap and Go and via smartphone had already seen an increase pre-COVID thanks to their lack of friction and convenience.

Then, as concerns around contracting coronavirus through the use of shared keypads and cash increased, the majority of Australians have forgone notes and coins to opt for cashless payments instead. A study by Dynata on global consumer trends during COVID-19 found Australians ranked amongst the highest in the world in their preference for contactless payments – only China, Singapore, and the UK surpass us. This data suggests businesses that are not offering contactless payments will need to pivot quickly.

“Consumers want to have choice in how they pay, this is more important than ever given the health concerns around handling cash during the coronavirus crisis. The pandemic has escalated the use of contactless payments with many businesses not accepting, or at least discouraging, cash payments,” says Jon Manning, MYOB Economist.

So, what does this mean for small business owners?

The broader use of contactless payments means businesses will need to change their perspective on how they feel about money and mobile payments.

A recent report by MYOB found while people still love the idea of cash, they don’t necessarily use it. Sixty-three per cent of respondents said they use a card over cash for most payments. It’s a trend which business owners can’t ignore, especially as the push towards contactless continues to maintain health and hygiene as the pandemic continues.

“Our research has shown that 59% of consumers won’t use as much cash as they did prior to coronavirus and 15% say they won’t use cash at all, so it will be more important than ever for businesses to offer choice in payment methods.,” Manning concludes

Three reasons to give contactless payments a go

It’s cheap to go contactless

Businesses can go cashless by investing in a contactless card reader from a little as $60 initial outlay. These card readers process transactions from chip and contactless cards, Apple Pay and Google Pay anywhere and anytime. They usually connect wirelessly, so they are also great for businesses that do pop-up stores.

It’s fast and frictionless

Have you ever paused to think how much time it takes to process a cash transaction or manually process a credit card payment? Contactless payments are fast. On average, contactless payment will take under 10 seconds. There’s no waiting for a customer to key in a pin or for sales staff to count out change. Transactions are frictionless. Since payments are faster and more secure, your customers spend less time waiting in line or at the till. Plus, there is less likelihood of abandoned sales because they aren’t carrying enough cash to complete.

It’s secure

People initially floated the idea that a mobile wallet and contactless payment would prove a gateway for thieves and hacker. Yet the reality is these encrypted transactions make it more difficult for hackers to gain any valuable information. As only snippets of data exist within each sale and identifiable information is limited.

Set your business up to adapt to the rise of the cashless economy with Australia's number one accounting software, MYOB.