In a surprising turn of events, cash payments have seen a resurgence for the first time in a decade, driven by consumers struggling with rising prices. This shift in payment preference has significant implications, particularly for the hospitality industry. In this article, we will explore the reasons behind this trend and how it affects businesses in the hospitality sector. Additionally, we will discuss the challenges faced by businesses that went fully cashless post-COVID and provide insights on how Capcon can assist in navigating this evolving landscape.
The Resurgence of Cash Payments:
According to data compiled by UK Finance*, cash payments increased by 7% last year compared to 2021, totalling 6.4 billion in payments. While cash remains the second most popular payment method, accounting for 14% of all transactions, its revival is noteworthy. This trend can be attributed to consumers’ efforts to manage their limited budgets amidst the rising cost of living.
Managing Limited Budgets with Cash:
As people’s disposable income gets squeezed, they often turn to cash as a more tangible way of managing their budget. The physicality of cash provides a visual representation of spending, helping individuals stay conscious of their expenses. This psychological aspect of cash is why many consumers, like Debbie Clark mentioned in the article, prefer to have cash on hand.
Impact on the Hospitality Industry:
The hospitality industry, which includes restaurants, cafes, and bars, has been significantly affected by the resurgence of cash payments. Here are some key considerations for businesses in this sector:
- Pressure to Accept Cash Again – Hospitality businesses that went fully cashless post-COVID may now face pressure to reintroduce cash payments. As more consumers opt for cash, businesses risk losing customers who prefer this payment method.
- Challenges in Cash Handling: Many hospitality businesses are staffed by a generation that has grown up in a digital payment era and may have little experience with cash handling processes. Reintroducing cash payments can be more challenging than in the past, requiring training and security measures.
- Revenue Tracking: For business owners who continue to only accept card payments, it is crucial to have robust checks in place to flag if cash transactions are taking place but not being accurately recorded. This ensures that revenue is not lost due to cash transactions.
Capcon’s Expertise in Payment Processes:
Navigating these challenges requires sound processes and robust checks to minimise risks associated with all payment types. Capcon specialises in developing customised solutions for businesses in the hospitality industry. With our expertise, we can assist businesses in implementing effective cash-handling processes, training staff, and ensuring accurate revenue tracking.
Mike Porteous, Head Of Operations and Resource at Capcon, comments: “The unexpected resurgence of cash payments has brought new challenges and opportunities for the hospitality industry. As consumers seek ways to manage their budgets effectively, businesses must adapt to their changing preferences. Whether reintroducing cash payments or enhancing risk management and security, Capcon can provide the support needed. As the financial squeeze eases, it will be interesting to see how these payment trends continue to evolve in the years to come.”
Find out more about Capcon’s specialised services to the Hospitality Sector and get in touch.
* Source: UK Finance Payments Market Report