Our society is rapidly becoming cashless, and it’s becoming more common to find businesses transitioning to an entirely cashless operation. Some notable companies that have gone or will soon be completely cashless are Fenway Park, Six Flags, Gillette Stadium, Jo&Joe by Accor and more.
In 2021, the Federal Reserve Diary of Consumer Payment Choice reports that cash only accounts for 19 percent of all payments. This raises a debate on whether businesses should begin eliminating cash transactions altogether. Although going cashless has many benefits, hospitality should strongly consider a digital tipping solution to keep from negatively impacting hospitality service workers (e.g., housekeepers, bellhops, and valet drivers).
Read on to learn about the pros and cons of going cashless and how digital tipping saves the plight of hospitality service workers.
Why Businesses Are Going Cashless
There are many reasons why business owners and operators would want to go cashless.
Lower Labor Costs
Routine tasks will disappear if you go cashless, therefore saving staff time. You won’t need to set up cash floats, refill cash registers with change, or reconcile cash and deposit checks. Further benefits include minimizing the risk of human error in your business as your bank reconciles all cards and mobile transactions. And your company doesn’t have to hire cash handling expenses, like an armored truck transport service, to handle large quantities of cash.
Your business could see more significant sales if you encourage cashless transactions. Cashless payments allow you to handle a more substantial number of transactions. By having shorter lines, you’ll have happier customers, resulting in more repeat business. One example is a 28-location restaurant called Tender Greens, which decided to go cashless in 2018 after noticing their cash transactions dropped significantly. The president and CEO of Tender Greens, Danyelle Bruno comments, “Even if they[customer] like our food better, if our line is extremely long and moving more slowly than a competitor, then there’s a good chance they’ll go somewhere else. Being able to speed up the line translates directly into more revenue for us.”
Minimizes Fraud and Theft
Switching to a cashless system significantly reduces the possibility of theft since it is much easier to track digital transactions and identify discrepancies. Third parties handle payments through cashless payment processors, so there is no cash on hand to steal. Physical money is at risk of theft and is almost untraceable after being stolen.
It Saves Time and Money
Cashless checkout may save time at the register and improve efficiency in other business areas. A credit card or digital wallet transaction, think Apple Pay and Google Pay, takes much less time than dealing with cash and making change. Going cash-free at peak times can significantly speed up the checkout process, reducing the wait time and encouraging customers to stop in.
As of late, COVID-19 cases are back on the rise, going cashless aims to limit contact and ensure the safety and well-being of your customers and employees. Because hospitality has a high level of human contact, cashless systems can help prevent the spread of bacteria by keeping cash in wallets.
Cons of Going Cashless
The following reasons may discourage your business from going cashless.
Leaves Out Potential Customers
There is a potential backlash against cashless businesses because they exclude approximately 5.4 percent of U.S. households who are “unbanked,” meaning they have no checking or savings bank accounts. It is also problematic to go cashless if many of your customers prefer cash payments.
Additional Fees Apply
You may be able to serve more customers by going cashless, but you must consider the financial implications. Businesses already pay over 70 billion in fees to swipe-based transactions. There is also a probability that the major credit card companies will increase transaction fees in a cashless society. There is currently no price cap in the United States.
Despite the convenience and speed of electronic payment processing, there are potential issues. Payments cannot be processed when the payment processor is down. Due to the cashless nature of the business, operations will cease until the cashless system stops working. Although outages can occur due to a technical malfunction or malicious attack, the issue may be as simple as a fault with the power system or internet service.
What a Cashless Society Can Mean for Tips in the Hospitality Industry
Before and during the pandemic, housekeepers, bellhops, and valet drivers worldwide were hard-hit. Many put their lives at risk while facing reductions in hours and job cuts. Going cashless means they no longer receive tips because most guests don’t carry cash.
These workers are adversely affected by the growing cashless economy and increasingly strict work rules, limiting their opportunities to receive tips. Many customers may want to tip the employee generously for outstanding service, but without cash, no tip happens and there’s a missed opportunity to increase their take-home pay.
Digital Tipping in a Cashless Society
Digital tipping is a simple, fast, and secure means to substitute cash tipping, when cash in unavailable. Customers can scan QR codes with their smartphone or tap on links in text messages or emails to access an easy-to-follow payment screen. These payments are routed directly to either the business or employee bank account. After submitting a tip, the customer can also rate their experience in addition to leaving comments for additional operational insight about the service(s). All this in about thirty seconds.
Digital tipping makes tipping easy and affordable and is helping hardworking frontline staff bounce back from the financial impact of COVID-19, the current high cost of living expenses, and the fact no one carries cash anymore. It also provides detailed reports to suit all types of companies to receive visibility on each tip transaction information.
Let buku Help Determine if Cashless Tipping is Right for You
We’d love to discuss how our cashless tipping solution can benefit your business. Schedule a demo today to learn how cashless tipping helps to reward your frontline service workers.