The COVID-19 pandemic poses major threats to financial markets across the world. Retailers and businesses worldwide are taking drastic measures following the World Health Organization’s directive on issuing cashless transactions to help fight the spread of the virus
While some retailers began disinfecting or destroying banknotes to eliminate the spread of the virus, others opted for contactless payments, completely banning the use of cash in their stores to keep employees and customers safe.
All these changes indicate a behavioural shift wherein modern societies are gradually moving towards a cashless society. Even the most unwilling are keen to adapt to the new normal.
A cashless future
From debit and credit cards to POS equipment and digital wallets—the cashless industry offers multiple solutions to businesses for more secure transactions and less risk for contagion.
Some of the benefits of going cashless for businesses include:
- Faster Service
Cash transactions require facing customers, which increases your staff overhead. Adapting cashless method is a much faster and more efficient way of doing business.
- More security
Moving to a cashless transaction system benefits both businesses and consumers as it reduces the chances of losing money to theft.
- Easy and Fast Reconciliation
Going cashless spares you the hassle of counting, sorting, and reconciling all the cash. Customers pay directly to your business’ bank account, promoting cash flow while reducing overhead costs.
Top 5 Payment Methods for Cashless Transactions
Here are some common digital payment methods your small business can adapt during this pandemic:
1. Banking Cards (Debit/Credit/Others)
Apart from offering security and flexibility, banking cards allow customers to enjoy more convenience and control than any other payment method.
There are several banking cards available for payment transactions, including debit, credit, and prepaid. These cards generally provide 2-factor authentication for secure payments, like a secure PIN and OTP. Visa and MasterCard are the most popular systems of banking card payment.
Advantages of Banking Cards
- Banking cards connect seamlessly with PoS (Point of Sale) machines, ATMs, shops, wallets, online transactions, and e-commerce websites.
- Consumers can set up transaction limits based on the card type.
- International banking cards can be used across the globe for multiple currencies.
2. Mobile Card Readers (PayPal, Square)
PayPal’s reader is one of the most popular options available for cashless transactions. It allows retailers across the world to accept payments from major cards, as well as Android Pay and Apple Pay. It works conveniently once connected to their associated payment app on either a compatible smartphone or tablet.
Slightly cheaper as compared to PayPal, Square card reader offers similar functionality and can be used alongside a free mobile app. Transaction fees vary between 1.75% to 2.5%. Payments are deposited within one working day.
Benefits of Mobile Card Readers
- The app is very easy to use and enough for mobile merchants taking cards on the go.
- Best for small business owners as they are free to get started.
- Completely secure and allows you to accept multiple payment modes, including credit/debit cards, mobile check-ins, and invoice payments. Apart from Visa, Mastercard, and American Express, contactless card readers also accept Samsung Pay, Apple Pay, and Google Pay.
3. Point of Sale
A PoS is where sales are made. From a macro level perspective, a PoS may be a market, mall, or a city. From a micro level, a PoS is the area where a customer completes a financial transaction, such as a checkout counter. It is also known as a point of purchase.
In this case, the checkout counter works with a device that accepts all form of cashless payment. This setup is a hybrid solution for businesses that have a density of both cash payers and cashless payers.
Advantages of PoS
- There is no fund transfer limit for the regulator.
- Merchant’s bank and payee bank may set a limit based on their own discretion.
4. Mobile Wallet Applications
Mobile wallet apps such as Google Pay, Samsung Pay, and Apple Pay are rapidly gaining a lot of traction due to their convenience and security as payment methods. These apps allow users to send, receive, and store money in their virtual wallet by simply linking their bank account.
A mobile wallet user can also send money just by entering their email ID, phone number, unique ID, or by scanning a QR code.
Advantages of Mobile Wallets
- The data stored in mobile wallets is encrypted, securing confidential customer information.
- Pay within seconds just by holding your phone over the payment terminal and verifying the purchase.
- Some mobile wallets even allow you to add small business credit cards to pay for your business expenses.
5. Direct Deposit and Direct Debit
Both direct deposit and direct debit refer to electronic payment from one bank account to another. A completely paperless setup, these transactions can be done over telephone or mobile, reducing the transaction time and the manual effort involved.
Advantages of Direct Deposit and Direct Debit
- No need to accept the payment or deposit funds to your account, unlike cash or a check, with fully automated transactions.
- These payments are routed either through secure payment gateways (the link between online store and merchant account) or third–party processors.
- With electronic payments, you’ll get rid of the hassle of printing long checks or paying to mail them, saving business costs.
Adapting to the new norm
COVID-19 has propelled us into a more digital society sooner than we thought.
There are multiple benefits of going cashless, including faster customer service, reduced employee overhead, and low risk of human errors. For fintechs and online payment firms such as PayPal and Square, the pandemic has presented a great, long-awaited opportunity.
For your small business, it’s a new norm that’ll take some getting used to but will bear fruit in the long run.
Learn survival tips for your business in this time of crisis. Check out our Business Continuity articles.