How going cashless can benefit your business

Melbourne retailer Cannings Free Range Butchers stopped accepting cash four years ago and hasn’t looked back.

“The fact that I don’t have to think about the cash, I’m so glad I made the decision because it really has made life a lot easier,” says owner Sam Canning.

Cannings Free Range Butchers is one of only a handful of Australian brick and mortar business to go cashless, instead accepting card payments. There are several advantages – no trips to the bank, no end of day counting the cash in the tiller and no security worries about having large amounts of cash on hand.

More businesses are likely to follow Cannings as use of coins and notes declines in Australia. The Reserve Bank of Australia says the use of cash has fallen markedly over the past decade. In 2007 some 69 percent of consumer payments were made with cash and by 2016 only 37 percent were cash.

The fall is due to more people making online payments, which require cards, and more people making in-person payments with cards, particularly with contactless payments. Mobile phone payments are rare.

Sam Canning says he decided to go cashless because he was opening his second store and wanted to simplify things.

“Removing cash out of the equation just made a lot of sense. I didn’t have to go to the bank, didn’t have to do change or deposits. Hygiene is, of course, a big one,” he says.

The business gave customers two months warning that it would no longer be accepting cash and Canning says that while some customers were initially resistant, but supported the decision after the hygiene benefits of not handling coins and notes around food were explained to them.

Coins and notes popular for small payments

Cash remains the most popular method of payment for small sums, with cash accounting for over 60 percent of payments under $10, the RBA says.

This might explain why specialty food stores, cafés, pubs and takeaway food outlets are one of the few merchant categories where cash remains more popular. Perhaps unsurprisingly, younger shoppers (aged 18 to 29) tend to use cash less than older shoppers, those aged over 65.

The Reserve Bank expects the use of cash to continue to decline, particularly as people start using the New Payments Platform. The NPP is Australia’s updated payments infrastructure which allows people to make instant payments into another person or business’ bank account instead of overnight, and so is able to match cash in making the payment proceeds immediately available for use.

The RBA also cautions that some people risk being left behind by the move to cash.

“Some people continue to rely heavily on cash (and to a lesser extent cheques) for their transactions and it will be important to consider the needs of these members of the community in the transition towards digital payments,” it wrote in a paper last year.

Along with the hygiene aspect, there are several other benefits to going cashless which would apply to non-food businesses as well.

Canning says it takes about two minutes to reconcile the tills at the end of the day’s trading, because without cash to count, all of the sales go straight into his accounting software program MYOB.

“Everything is digital. Everything is logged and traced. It’s all there. It does make everything a lot easier,” he says.

Removing temptation from staff

Although this was not his motivation for the change, Canning says it is good to know there isn’t the temptation of cash for any of his 100 staff. “In hindsight, now that I’ve got six stores, I love that I don’t have to even think about that there could be hundreds and thousands of dollars floating around,” he says.

Canning doesn’t believe he has lost any sales as a result of going cash free and says the decision hasn’t held back the business’ expansion to six stores.

Nonetheless, he advises businesses thinking of going cashless to undertake a big marketing campaign in the lead up to the change to explain the benefits to the customer.

“You’ve got to be super confident in your decision because you will cop it initially and you’ve got to be able to hold your head up high and believe that it’s the best thing for the business and this is the way forward,” he says. “It is the way forward and people will get on board.”