Cash which includes coins and paper currency may seem to have many benefits such as it does not need any special hardware or software, there is no fee charged to retailers who use it, no excessive interest rates waiting for customers, accepted everywhere, extends anonymity, and is definitely safe from hackers. These are some of the many reasons why paper money has still stuck around even with a steady displacement by a variety of services such as credit and debit cards, mobile payments, and cryptocurrencies.
However, businesses are not reporting or accounting for the hidden costs that accompany cash related payments and transactions and how they easily outweigh the benefits. We tend to think that there is a very little cost attached to carrying cash but that is not the reality. We end up paying cash when we travel to banks or ATMs or any other place to spend/distribute cash. For instance, residents of Delhi together spend 60 lakh hours and 9.1 crores to just obtain cash.
Following are some of the hidden costs of handling cash:
Cost of theft or fraud
For a business that runs and operates on cash theft should be a primary concern. Cash dissimilar to digital payments influx and outflux is a commodity that can be physically stolen by people who have access to your business or home. Fraud is also a possible consequence when handling cash through cheques because it is impossible to know whether the cheque will bounce or not until your customer is long gone. Employees also depict a point of threat due to the easy removal of any trace of a transaction as when the payment is in cash. It is almost impossible to trace back the flow of cash.
Cost of inept accounting and insignificant dataAccounting is a difficult task when handling cash as it has no paper trail. On the other hand, accounting is much easier when there are clear records of every purchase with the price, date, time, and customer details as seen in the case of digital payments which makes the process of accounting less expensive and easier with lesser manual time required. Your business would also need to train employees with proper cash handling techniques and to balance the cash register daily. Spending significant time on accounting procedures also leaves you with lesser time to interact and serve your customers.
Cost of manual counting
Cash requires to be managed at all times, collected, and counted at the end of each day, which takes up a lot of time. On the contrary with digital influxes, funds are automatically collected, calculated, and deposited in the bank. You do not have to manually go to the bank to deposit cash and removal of manual counting also removes the room for silly mistakes.
Cost of recurrent purchases
Any customer while purchasing anything takes into consent the time it takes for the whole process. Today customers and clients value their time more than ever, a longer waiting time period puts off the customers from visiting your store for repeat purchases. People generally avoid stores where they notice the lines to be very long and hence opt to go to a different store.
Cost of discarded carts
As we know that cash takes a long while to count, calculate, accept, and in return provide change at the register in comparison to digital payments, the transaction time taken at checkouts is proven to be a big influence for you to lose customers. Consumers would most likely abandon their purchases as a result of long checkout lines and the unnecessary lengthy process at the cash counter. Long checkout lines put you at risk of losing customers who run out of time or patience.
Functioning as a cash-only business is quickly becoming an unsustainable business model. Offering card payments can help businesses to attract more customers, cut time at the bank, and even manage cash flow better. Overall businesses that have adopted card payments have seen their profits increase drastically. If a business is seeking to develop its functions, payment acceptance is an important place to start. Digital payments protect you from theft. No cash to take makes everyone securer and decreases chances for human error. Nifty and adaptable payment solutions are sure to bring your business better loyalty, improved market share, and upgraded sales. It is time we recognised the cash paradox: while cash may be believed to be the working man’s best friend, it also puts an unfavorable responsibility on the working man.