In recent years, the trend of going cashless has become increasingly popular among businesses in the UK, including those in the hospitality industry. While there are certainly benefits to going cashless, such as increased efficiency and reduced risk of theft, there are also some additional risks that hospitality venues need to be aware of before making the switch.
Limited Access for Some Customers
One of the biggest risks of going cashless is that it can limit access for customers who don’t have credit or debit cards. According to the Financial Conduct Authority (FCA), approximately 1.2 million UK adults don’t have a bank account, and therefore may not have access to the credit or debit cards needed to make purchases at a cashless venue. This can create a situation where certain customers are excluded from using the venue altogether, which can ultimately hurt the business’s bottom line.
Increased Risk of Cybersecurity Threats
Another risk of going cashless is the increased risk of cybersecurity threats. When a venue relies solely on electronic payment systems, such as credit or debit cards or mobile payment apps, it becomes a more attractive target for cybercriminals who are looking to steal sensitive financial information. Hospitality venues that don’t have adequate cybersecurity measures in place could be vulnerable to attacks that compromise customer data and damage the venue’s reputation.
Higher Transaction Costs
Going cashless can also result in higher transaction costs for businesses. Credit card companies charge businesses a fee for each transaction, and these fees can add up quickly, especially for small businesses. For example, if a business has a high volume of small transactions, such as a coffee shop, these fees can eat into the business’s profits. In the UK, the Payment Systems Regulator (PSR) is responsible for regulating the fees that payment service providers charge businesses for processing card transactions.
Cash Management Challenges
While going cashless may reduce the risk of theft, it can also create challenges in terms of cash management. Cashless businesses still need to keep track of cash transactions, such as tips paid in cash or cash refunds issued to customers. Without a cash register or other system in place to manage these transactions, it can be difficult to keep accurate records, which can create accounting challenges and potential legal issues down the line.
Potential for System Failures
Finally, going cashless means relying on electronic payment systems to function properly at all times. If there is a system failure or outage, the business may not be able to process payments, which can lead to lost sales and unhappy customers. It’s important for businesses to have contingency plans in place in case of system failures, such as alternative payment methods or manual payment processing systems. In the UK, the PSR is responsible for ensuring that payment systems are resilient and can continue to function even in the event of a disruption.
Here are 5 tips for businesses considering going cashless:
- Educate your staff and customers: Before you go cashless, ensure that your staff and customers are aware of the change. Educate them about the benefits of going cashless and how it can facilitate a smoother and more secure experience.
- Offer a variety of payment options: In addition to credit and debit cards, consider offering alternative payment methods such as mobile payments, online payments, and digital wallets. This will ensure that your customers are not inconvenienced and can pay using their preferred method.
- Implement a secure payment system: Security is paramount when it comes to cashless payments. Ensure that your payment system is secure and that you follow best practices such as using encryption and tokenization to protect customer data.
- Provide clear signage: Display clear signage in prominent locations such as the front desk, restaurant, and lobby to let customers know that you are now cashless. This will help avoid confusion and ensure a smooth transition.
- Train your staff: Finally, ensure that your staff is trained to handle cashless transactions. They should be able to answer customer questions, troubleshoot any issues that arise, and ensure that the payment process is seamless and hassle-free.
Capcon provides easy access to a joined-up range of tailored business services spanning audit & stocktaking, reporting & data analysis, employee screening, payroll, corporate due diligence, and other specialised compliance related services tailored for the hospitality sector. Together, we help businesses gain real-time visibility to improve strategic risk, make informed decisions, and increase profits.
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