Visa Incentivizes U.S. Businesses to Make the Switch to CashlessPosted August 15, 2017 - updated October 13, 2017 in News
We’ve written many times before about the trend towards a cashless society. With each passing year, more people are using alternatives to cash – debit, credit and mobile payments – to pay for everyday purchases. This isn’t anything new. But what is new is a cash incentive in the U.S. by one of the major credit card players to help phase out cash altogether.
To encourage businesses to embrace a cashless society, Visa is offering cash incentives to companies that ditch cash as a payment method. The Visa Cashless Challenge offers small food businesses in the U.S. $10,000 for doing away with paper and coin money. Visa is hoping to accelerate the trend towards cashless transactions and create a culture where cash is no longer king.
Of course, moving to a cashless society benefits credit cards and the banks, who collected a hefty interchange fee on every transaction, but there are benefits to businesses and consumers as well. You may not realize it, but handling cash has a direct cost to businesses. This in turn is passed down to consumers in the form of higher prices.
The cost savings of making the move to a cashless society is backed up by in a Visa study. The study found that if businesses in just 100 cities made the switch from cash to digital, these cities would get a net benefit of $312 billion per year. In fact, if New York City alone switched to digital, businesses there would earn an extra $6.8 billion in revenue and save over 186 million hours in labour by simply embracing digital currency.
The Trend Towards Cashless in Canada
The Visa Cashless Challenge may not be available in Canada (yet), but that doesn’t mean we aren’t making the shift towards a world without physical money. The Bank of Canada found that cash represents a dwindling portion of transactions. For instance in 2015, only half of all transactions were done with cash. In fact, Moneris Solutions Corporation has predicted that cash transactions in the great white north will fall by an astonishing 70 percent by 2030.
Cashless transactions offer many benefits for consumers – better consumer protection, ease of tracking spending and reward points. So, what’s stopping everyone from going digital? Unfortunately, there’s still a stigma with cashless transactions, mainly surrounding security. In a recent survey, Moneris found that more than six in 10 Canadians (61 percent) would make the switch to the mobile payment if they knew it was secure. Furthermore, 41 percent said they would use mobile payment if it was more widely accepted by merchants.
If you wonder what a cashless Canada would look like, you have only to look as far as Sweden. It has the honour of being the world’s most cashless society. Only a minuscule two percent of transactions are made with cash – and this is expected to fall further in the years to come. Could Canada follow in Sweden’s footsteps? Only time will tell.
The Bottom Line
Instead of fighting it, businesses need to embrace a cashless society. Mastercard and Visa in turn can help ease the transition by ensuring interchange fees are more reasonable and not squeezing the bottom line of small mom and pop retailers. Like it or not, a cashless society is here to stay, so we better get used to it.