Sweet Things may look a lot like other trendy, independent bakeries, with an endlessly Instagrammable shopfront on London’s colourful Portobello Road, racks of perfectly-piped cupcakes, and dainty afternoon teas.
But then you’ll glance upon a big sign announcing that they are card-only.
Sweet Things doesn’t take cash. Not a single penny.
If you want to buy one of Sweet Things’ colorful cakes, you’ll need to flash your plastic.
This may sound like a bad move, but card payments are the modern way. You can even pay your tax bill with your corporate debit card!
The bakery’s owner Natalie Allen decided to make the leap after going to a cashless cafe in Amsterdam.
Allen might have had her brainwave in Amsterdam, but currently Sweden leads the world in cashless transactions. There are very few places that still accept cash – even banks are phasing it out. Only 2% of transactions made in 2015 in Sweden used cash, and the International Monetary Fund predicts that by 2020, that figure will be less than 0.5%.
So, we’re going to let you in on the two big reasons for taking your cafe cashless sooner rather than later.
Reason #1: Customers prefer cards
In the UK, nearly one-third of all payments made in 2017 used contactless cards – up from 10% in 2015. That’s a pretty big leap in a pretty short space of time.
But that’s not the most dramatic stat: in 2016 card payments overtook cash for the first time. That means more money was spent on card than by cash. That’s not just for retail, where cards have been more popular for years, but across the whole UK economy.
Consumers increasingly prefer to pay by card rather than by cash – that’s reason enough to consider making the jump to cashless.
But here’s the kicker:
Consumers also spend more on card than they do with cash.
McDonald’s reports that across the world, average consumer card spend is $7 compared to $4.50 cash spend, while market researchers Dun & Bradstreet found that people spend between 12 and 18% more on card.
Part of this may be down to how simple card payment has become. While it used to be a time-consuming process involving signatures and multiple receipts, and the card only used to come out for big purchases, but now small payments can just be waved through.
Psychology Today reports that this is because parting with cash is painful – literally.
Their 2008 study found the following reasons for this:
- The more customers were made aware of how much they were spending “the greater [their] aversion to spending” and the “higher the pain of paying.”
- This led to “payment modes such as credit cards and gift cards (vs. cash) being more easily spent or treated as play or monopoly money.”
Simply put, people find it harder to pay cash than to tap a card.
Let’s imagine you’re about to make a purchase; £1.50 for a croissant seems a bit steep when you’re fumbling for change and sorting out coppers. The nightmare being that you might just come up short… eek!
Your customers feel like that, too.
Taking away that barrier when purchasing makes controlling their caffeine addiction a lot harder. You don’t have to fiddle with coins because with a contactless credit card, you’re pretty much guaranteed to have the money on you.
Scott Bilker, founder of debtsmart.com sums it up neatly:
“Paying $5 for a coffee might seem like a lot if you only have $10 in your wallet,” he says. “But if your credit card has a $10,000 limit on it, it doesn’t seem like much.”
But this works two ways, of course. Every time you spend money, it’s going into another bank account, no matter whether it’s the account of a global megacorp or a market trader.
So, why shouldn’t that account be yours?
Going cashless allows you to take advantage of this payment psychology.
Reason #2: Card is quicker
Ease of payment makes for efficiency, making queues zip by.
And fast queues make for happy customers.
This is especially true for the quick service retail industry – delis and sandwich bars and the like, which thrive on a quick turnover of customers, who want to get in, get their food, and get out.
70% of retail customers will abandon ship if queues are too long, or they feel as though they’re moving too slowly, according to a 2014 survey by Essential Retail and this is a figure that holds true for cafes, as well.
So it’s vital to get those queues moving.
Dropping the cash means that customers don’t have to spend as much time in line, watching others count out coins.
It means more efficient processes and fewer customers leaving.
Salad bar chain Tossed made the jump to cashless in two of their central London outlets, opening what’s thought to be the first completely cashless restaurants in the UK.
They kitted these locations out with touchscreen menus with card terminals attached, where customers could make their order before moving to pick it up at a collection point.
This allows the vendors, who in other outlets juggled between making salads fresh-to-order and ringing up purchases, to focus on making food.
The company’s founder, Vincent McKevitt, summed up the reason for the trial by saying that “most operators face speed and capacity issues at lunchtime, but ours are intensified because we make our food fresh-to-order and most guests like to customise their food to suit their health and taste requirements.”
Customer feedback was positive, and since then, the chain has converted most of its 17 outlets to cashless systems.
Meanwhile, new London QSR outlet Carve has built its whole customer journey around cashless payments. Customers make their order and pay for it on a touchscreen, before taking the receipt to a carver who makes their order right in front of them.
Carve’s aim is to “kill the lunchtime sandwich,” and cashless payments are at the core of this battle plan:
“Cashless is not a gimmick. A customer has less than 60 minutes to get lunch and get back to the office,” Carve founder Daniel Bear said to the Evening Standard. “Something has to give, because right now people are queuing for too long for average food, businesses are spending too much on staff training and having to find other ways to make the money back.”
For Bear, cashless is here to stay.
Cashless doesn’t just save your customers time: it saves you and your staff’s time as well.
If you’re reading this, chances are you have a business account. And business accounts aren’t free. You’ll have to pay a fee for depositing cash, for handling it and for withdrawing it.
You’ll have to pay card fees, sure, but there’s another hidden fee with cash transactions: someone has to count it.
Someone has to take the float and sit there physically tallying takings against what’s in the till at the day’s end. This is a laborious process – and one that you don’t need to do with cashless transactions.
Going back to Natalie Allen from Sweet Things, she says that cashless is the way forward – “just give it another five years.”
Going cashless might be a big leap to take, but it seems as though it’s one that all businesses will have to make sooner or later. And with all these benefits, there’s no reason for you not to. For more guidance read Informi’s guide on choosing the best mobile card payment machine.