MAG Insights

Announcements from the MAG & Featured Articles

Also in this Issue: PayThink Dumping Cash Won't Work for every Merchant , or all Consumers (MAG Quarterly- Volume Five, Issue Four)

By Laura Townsend, SVP Operations, Merchant Advisory Group

December 7, 2017

While some merchants are testing no-cash payment models, the idea won't be universal.
There are some consumers who don’t have access to credit or even financial services for a variety of reasons. 

Eliminating cash would not be an option for those unbanked or underbanked consumers. Otherwise, those consumers have to pay some hidden and costly fees to access payments cards and often times that population of consumers are those least able to afford those fees.


Merchants such as Shake Shack are testing models that would eliminate cash as a payment option. Bloomberg News

But on the pro-cashless side, cashless can enable operational models and experiences that could enhance or create new service opportunities otherwise not available. 
Order ahead for pick up in store, curbside delivery, or home delivery are some examples of new service models being introduced. 

Self-service kiosk for order/pay or non-traditional self-checkout (ie. Scan & Go) are other service models that are being introduced offering unique experiences of customer convenience, control, and speed of service which are enhanced by the fact cash isn’t involved. Associates can be redeployed as you suggested to “host” the experience or focus on more effective and valuable roles.
Finally, certain industries such as airlines have experienced an adoption curve for digital payments that was relatively fast and extensive due to a high cost of carrying cash since cash sales become a very small portion of your total sales. 

Those industries have essentially eradicated cash and checks as a result. However, unless results show that the ROI exists to eliminate cash 100%, the reality is cash operations and the infrastructure for merchants to support cash still remain along with foundational costs, such as coin replenishment costs, time value of money for employees to manage cash operations, deposit processes, armored car pickup costs, theft, etc. Like the airlines industry, each merchant would need to determine that ROI before taking the leap. 

Merchants should focus on the payment types that fit the customer experience they are trying to achieve and operational model that supports that experience. Then the ROI with the incremental costs and considerations will determine whether to proceed or not whether it is cashless, cash, or other alternative payment methods.

October 16 2017, 11:00am EDT