According to the Reserve Bank of Australia’s consumer payments survey, cash is no longer king at the checkout.
The RBA reports consumers are using cards more frequently, with the share of cash transactions dropping to 37% of payments last year, down from 69% in 2007.
As cash dwindles at the checkout, SmartCompany’s investigation into payment methods – in particular traders employing a minimum spend on card transactions – reveals that some businesses are ahead of the curve, and have already reinvented their business models to capture the change in consumer behaviour. For some businesses that means rethinking traditional cash-reliant transactions. For others, changing the business to a cashless one is proving beneficial for customers and businesses alike.
Creating a good customer experience
Whatever the choice, being strategic in payment offerings is important for business longevity, says business consultant Bri Williams from People Patterns.
Providing your customers with easy payment offers is a way to stay relevant and lead in a changing transactional landscape, Williams says, noting that traders need to be mindful of customer behaviour and experience.
“Be a leader in going cashless,” Williams advises.
“It’s the way we are going. There are myriad reasons people don’t carry a lot, if any, cash anymore. Rather than worry about that, you need to stay current and provide options at the checkout – don’t put up a barrier that says minimum spend only or a surcharge, reduce friction at the checkout to encourage a memorable shopping experience.”
Learnings from changing business models
Variety Club CEO Janette Connolly says her organisation’s adoption of mobile card facilities to gather donations was in response to a change in consumer behaviour. Now, the not-for-profit has cash and card revenue options, and picks up valuable customer and geographical data in the process.
“We can now look differently at our campaigns, too, and see what areas are most likely to respond at varying times,”says Connolly.
Three years ago, management of shopping and eating precinct Kensington Street in inner Sydney revamped its revenue model to introduce cashless payments across its stores.
One year of planning and two years into full operational mode, the cashless model is booming, particularly within the food and beverage area Spice Alley, which attracts more than 3000 people (a high proportion of which are regular customers) daily.
“The cashless system has been excellent for us,” says Marcus Chang, CEO of Kensington Street Holdings.
“In the early days for the first year, we had maybe three or four complaints and we are getting 3000 people through a day, so it was a small number.”
However, Chang notes that not everybody is open to cashless transactions, which led Spice Alley to creating options for their more change-resistant clientele.
“We find some older people prefer to pay cash, so we allow them to buy a cashless card that is preloaded with funds to spend at Spice Alley outlets.”
While customer behaviour was a driver of the change, there was also the element of hygiene to consider. “We operate with food,” Chang says.
“We don’t want to touch cash, it is dirty around food. The customer keeps hold of their card at all times, so we just concentrate on the food.”
Chang says “tap and go” was the primary choice for customers, but payments were also received from cards without a chip.
“Tap and go is quicker and it has streamlined processing of transactions front of house, as well as in the backend of the business. It’s also less stressful and safer for staff in not having to handle money, there’s no mistakes, we don’t have to have armoured escorts to make bank deposits; and we can therefore employ people of all ages and not worry about having large, hefty security on site. And, there is no worry about counterfeit money,” he says.
“China Town has a bad reputation for card skimming so we wanted people to be in charge of their own money: tap and go when you are ready. It’s all about them.”
Spice Alley isn’t the only business going cashless. Melbourne cafe Pope Joan decided to go cash-free earlier this year after three break-ins led them to rethink their payment options.
According to a SmartCompany report, the move was largely welcomed by customers, with operations and event manager Morgan Brady acknowledging that in today’s climate, cash-only businesses are the real pain point for people.
Brady advised other businesses that may be considering similar big changes to their operations to think of these changes as community-first.
“I think being a small business, you really get to know who your customer is; it is not lost on us that they make a choice every time they come to Pope Joan to support us,” Brady says.
Chang agrees that having a customer-centric approach is crucial to success. “We want to make things easier for people,” he says.
“If you have good food, good service, customers will get on board.”
Mastercard seeks to help as many Australian retailers as possible, to grow their businesses by embracing all forms of payment to provide customers the choice to make transactions whichever way they want to, with no restrictions.