Cashless Retail is a ‘False Economy’

Payment choice matters. The range and popularity of cashless options is increasing, offering businesses more ways to gather income than ever before, but cash remains key. A recent article on financial technology news site Finextra explores why, and how ‘jumping on the cashless economy bandwagon’ may prove to be a false economy.

While the pandemic saw the ‘digital transformation’ of many sectors—including retail—greatly accelerated, cash is the number one payment choice across Europe, with the European Central Bank reporting it was used for 59 percent of point-of-sale transactions in 2022.

Nonetheless, Finextra notes that a huge growth in e-commerce and interest in cryptocurrencies has prompted ‘discussions about a cashless society in the future.’ This, it warns, would be unwise and ultimately costly. Research published in 2021 by Britain’s HM Revenue & Customs shows ‘cash payments had the lowest direct fees associated with them in comparison with other payment methods [with many small- and mid-sized businesses stating] there were no direct costs associated with cash payments at all.’

Beyond costs associated with cashless options, such as transaction fees charged by card providers, a business refusing cash is also turning away customers. Many people are choosing cash payments to help control their finances—especially younger generations—and there are others for whom cashless options are simply not accessible, due to low income, lacking a bank account, or being unable to navigate often complex application and usage procedures. Cash is easy to understand and use, and accessible to all.

Ultimately, it is clear that offering the broadest possible choice will appeal to the widest number of people, ensuring a business can reach a large customer base.