With UK high street shoppers now more likely to pay with a card or smart phone than in cash, could a lump sum payment convince you to give up coins and notes for good?
A new Visa initiative is tempting small business owners in the United States to do just that.
In a push to encourage cashless transactions, the global payment company’s “Cashless Challenge” will award a select 50 US-based small food businesses between $10,000 and $500,000 who commit to exclusively accepting card and digital payments.
“At Visa, we believe you can be everywhere you want to be, and that it should be easy to pay and be paid in more ways than ever – whether it’s a phone, card, wearable or other device,” said Jack Forestell, head of global merchant solutions at Visa Inc.
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“With 70 per cent of the world – or more than five billion people – connected via mobile device by 2020, we have an incredible opportunity to educate merchants and consumers alike on the effectiveness of going cashless.”
Visa claimed its research demonstrated in New York City alone, business owners could generate an additional $6.8bn in revenue by going cashless, and save over 186m hours in labour. The annual cost saving from digital payments was suggested to be worth $5bn for New York founders.
“To Visa, a cashless culture means convenience, security and ease of use. That translates to freedom for consumers and merchants alike,” Forestell added.
The shift to a cashless high street in Britain already looks to be underway. This week, the British Retail Consortium (BRC) announced that debit card payments accounted for over 50 per cent of all transactions in 2016, overtaking cash for the first time.
Greater use of contactless played a significant part. An increased transaction ceiling of £30, up from £20 since late 2015, played into the hands of shoppers, who also opted for contactless on low value payments.
Between 2013 and 2016, the average transaction value made by card fell from £30.53 to £25.40, with customers clearly responding to the convenience of one-touch payments.
Without the financial incentives offered up by Visa, card transaction fees mean independent high street traders would be unlikely to banish cash from their stores altogether.
However, campaign work by the BRC has contributed to the EU capping some handling fees on debit and credit card transactions. The retail body claimed Interchange Fee Regulation (IFR) has generated savings worth £500m for UK retailers and consumers.
Regardless, Visa has signalled its intention to bring its campaign to the UK. An official statement claimed it was hoping to bring “similar cashless initiatives to other countries, including the UK”. Meanwhile, Visa chief executive Al Kelly recently told investors that the company was “focused on putting cash out of business”.
Read more from the Business Advice High Streets Initiative:
- Smartphone sales buck downward trend in retail spending
- High street retailers urged to meet consumer demand with same-day delivery options
- Yell and Facebook forge local advertising product
This article is part of a wider campaign called the High Streets Initiative, a new section of Business Advice championing independent and small retailers by identifying the issues that put Britain’s high streets under pressure. Visit our High Streets Initiative section to find out more.
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