What is Cashless Payment? A Guide to Understanding Cash-Free Transactions
What is cashless payment? The end of a 2,500-year era.
Cash payments date back to Croesus, the King of Lydia (modern-day Turkey) in 550 BC, who minted the first recorded gold coins to pay his soldiers. Croesus probably didn’t think he was ushering in a new age of commerce. It served humanity well. But it’s over.
Cash transaction value in the UK, the US France, Singapore and South Korea is projected to fall below the 10% value threshold by 2027. More interestingly, massive drops in cash transaction value are being seen in the developing world. In Nigeria, cash transaction value has dropped from 91% to 55% in four years.
As a retailer in this changing world, more cashless payment options means more possible customers.
Cashless Payment is what it sounds like.
Cashless payment is any payment not made with cash. North America’s primary form of cashless payment is the credit card or debit card, and most retailers are set up to accept both.
But the world is full of other cashless payments that are more beneficial to both consumers and retailers. Today, these international options are considered “alternative payment methods.” But so were gold coins in the Lydian age.
Benefits of Cashless Payment
Cashless payment significantly reduces the effort on both sides of a transaction. Consumers don’t have to carry cash. Vendors and retailers don’t have to stock registers, make deposits, roll coins, stack bills or worry about counterfeit currency.
On the selling side, cashless payment gives retailers and vendors insights into customer buying habits and favourite products. It also makes rewards programs easier to administer. For buyers, cashless payment helps with customer retention by making the checkout experience easier.
And, of course, cashless payment opens both buyers and sellers up to the online marketplace. Here more than anywhere else is where retailers and vendors will want to expand their cashless payment options. The world’s a big place and full of customers ready to give you their money if you’re ready to accept it.
What is Cashless Payment security like?
While each type of cashless payment has its own security profile, all are more secure than cash. Most will have versions of encryption, authentication and geo-blocking to prevent unauthorized use.
Popular Cashless Payment Options
We’ve already discussed credit and debit cards, but others are making up ground quickly.
Virtual Credit Cards
These are the digital versions of your credit cards that you access from your device. While linked to your physical credit card, it has a unique number, expiration date and security code that shields the account details from third parties. Virtual credit cards are preferred by B2B companies with multiple employees or sales people charging expenses to the same credit card.
Digital Wallets
This is where you’d put your digital credit card, and any other digital cards you might use, from gift cards to transit passes. The device your wallet is on has its own security protocols and the cards in your wallet are subject to their own security measures, making digital wallets a safer way to spend money. It’s also a safer way for retailers and vendors to collect money because the added security reduces the chances of chargeback.
Apple Pay and Google Pay are the most popular digital wallets in North America, with PayPal and Venmo coming up quickly. Alipay and WeChat Pay are Chinese digital wallets with over a billion users each, including over 4 million users in the US. Africa’s MTN has over 70 million users. And 300,000 Europeans use PayPal on a daily basis.
Prepaid Cards
Prepaid cards are convenient like credit cards, but with less cardholder protection than traditional credit cards because they’re not issued to anyone specifically. They can be lost easily as cash by a consumer, and a retailer or vendor will have a hard time managing chargebacks in prepaid card situations.
Crypto Transactions
While some major retailers accept crypto, it’s not a cashless payment method used very often — for now. Crypto transactions ensure safety due to the blockchain it operates provides full transparency through a shared digital ledger both parties to a transaction can review.
What is the Cashless Payment Setup Process Like?
Assuming you already have a payment processor for credit cards, a POS card reader and an online payment system, all you would need is the ability to accept multiple cashless options — and especially international options.
To do that, first figure out which cashless payment options you should invest in offering. Start by looking at where your customers come from (especially your online customers) and the payment options they would want.
Then, find a payment processor like OTT Pay that can automatically convert your international customer’s payment into American or Canadian dollars with next day deposits
Finally, make it easy for customers to know what cashless payment methods you accept by displaying the associated logos.
When you decide what makes sense for your business, OTT Pay can provide you with POS terminal and eCommerce solutions to accept all kinds of payment methods using an all-in-one Global Acceptance payments solution. Unlock new markets and grow your business with OTT Pay.