4 ms·

What's the incentive for a business going cashless? I can see some upsides to it like eliminating the risk of employee theft but the intermediaries take a cut.

ghaff 7y ago
Less of a robbery target as well. And don't need to do runs to the bank, at least nearly as much. Yes, there are intermediaries but some businesses apparently think it's a reasonable tradeoff.
koala_man 7y ago
I imagine that the labor and security required to handle cash is costly. This is the best number I could find: "The cost of cash handling can range on average from as low as 4.7% of cash to over 15% of cash depending on the retail segment." http://www.ihlservices.com/product/costofcash/ http://www.ihlservices.com/product/costofcash/
- mcguire 7y ago
  I hate to cast aspersions on the source, but... "IHL Group is a global research and advisory firm specializing in technologies for the retail and hospitality industries. The company, based in Franklin, Tenn., generates timely data reports, offers advisory services and serves as the leading retail technology spokesperson for industry and vendor events." (Hey, Franklin, TN!) Anyway, here's some more: https://www.cashmatters.org/blog/paying-with-cash-costs-less-time-and-money-finds-bundesbank-study-feb-2019/ https://www.cashmatters.org/blog/paying-with-cash-costs-less... "Key findings "Cash payments are about 7 seconds faster than card payments with PIN entry. "Cash payments are about 16 seconds faster than card payments with with signature. "Cash payments up to €50 are cheaper, since the fixed costs for cash payments are on average lower." https://www.researchgate.net/publication/321386231_Costs_and_Benefits_of_Cash_and_Cashless_Payment_Instruments_in_Germany_Module_2_The_Benefits_of_Cash https://www.researchgate.net/publication/321386231_Costs_and... "The assertion that cash is inefficient is often based exclusively on cost considerations and a purely partial-analytical or business perspective (eg Bloching, 2007; Guibourg & Segendorf, 2007). Benefit aspects are not taken into consideration. Moreover, the empirical evidence is by no means clear-cut. Even in the more business-oriented approaches with regard to costs, cash payments are not necessarily more expensive than cashless alternatives. In Germany, the cost per transaction of cash is even lower than that of debit and credit cards. In terms of cost per turnover, debit cards are cheaper than cash, whereas credit cards are more expensive (Krueger & Seitz, 2014, Chapter 3; Thiele, 2016). In a study commissioned by the ECB covering several countries (Schmiedel et al, 2012), the findings did not reveal a uniform picture: in some countries, cash is the cheapest means of payment, whereas in other countries, cashless payment instruments are the cheapest." https://www.researchgate.net/publication/265496400_The_Economics_of_a_Cashless_Society_An_Analysis_of_the_Costs_and_Benefits_of_Payment_Instruments https://www.researchgate.net/publication/265496400_The_Econo... "We present three case studies that illustrate the welfare implications of substituting one kind of payment method for another. We find that when all key parties to a transaction are considered and benefits are added, cash and checks are more costly than many earlier studies suggest. In general, the shift toward a cashless society appears to be a beneficial one." https://www.bundesbank.de/resource/blob/710096/4f27e9114ce3a08b74b6c6effee04f65/mL/costs-and-benefits-of-cash-2014-data.pdf https://www.bundesbank.de/resource/blob/710096/4f27e9114ce3a... [Ok, so I can't find a good summary quote. But it looks interesting. I think it's module 1 of the first link above.]
  - Nursie 7y ago
    Most of the cashless places I see are also contactless-only, which is certainly going to be faster, if that is a concern.
Nursie 7y ago
Cash handling has costs. Not just risks. This is something that always seems to be missed in the discussion of cash vs credit card or other payment systems. Yes, credit cards come with a cost (heavily limited in places like the EU), but so does cash - - your transactions often take longer with cash - for a small business, someone has to deposit regularly - larger businesses require staff and secure transport of cash - All sizes of business will have various accounting and reconciliation overheads - You have to maintain a float All this stuff takes time and pushes up staffing and other costs. I have no idea if it's comparable to the usual credit card cut, bit it always sticks in my craw when cash customers complain that they should get lower prices because their purchase doesn't involve fees.
scarface74 7y ago
The elimination of employee theft and getting robbed at gunpoint. Most people already pay with cards.

ghaff 7y ago

Less of a robbery target as well. And don't need to do runs to the bank, at least nearly as much. Yes, there are intermediaries but some businesses apparently think it's a reasonable tradeoff.

koala_man 7y ago

I imagine that the labor and security required to handle cash is costly. This is the best number I could find: "The cost of cash handling can range on average from as low as 4.7% of cash to over 15% of cash depending on the retail segment." http://www.ihlservices.com/product/costofcash/ http://www.ihlservices.com/product/costofcash/

mcguire 7y ago
I hate to cast aspersions on the source, but... "IHL Group is a global research and advisory firm specializing in technologies for the retail and hospitality industries. The company, based in Franklin, Tenn., generates timely data reports, offers advisory services and serves as the leading retail technology spokesperson for industry and vendor events." (Hey, Franklin, TN!) Anyway, here's some more: https://www.cashmatters.org/blog/paying-with-cash-costs-less-time-and-money-finds-bundesbank-study-feb-2019/ https://www.cashmatters.org/blog/paying-with-cash-costs-less... "Key findings "Cash payments are about 7 seconds faster than card payments with PIN entry. "Cash payments are about 16 seconds faster than card payments with with signature. "Cash payments up to €50 are cheaper, since the fixed costs for cash payments are on average lower." https://www.researchgate.net/publication/321386231_Costs_and_Benefits_of_Cash_and_Cashless_Payment_Instruments_in_Germany_Module_2_The_Benefits_of_Cash https://www.researchgate.net/publication/321386231_Costs_and... "The assertion that cash is inefficient is often based exclusively on cost considerations and a purely partial-analytical or business perspective (eg Bloching, 2007; Guibourg & Segendorf, 2007). Benefit aspects are not taken into consideration. Moreover, the empirical evidence is by no means clear-cut. Even in the more business-oriented approaches with regard to costs, cash payments are not necessarily more expensive than cashless alternatives. In Germany, the cost per transaction of cash is even lower than that of debit and credit cards. In terms of cost per turnover, debit cards are cheaper than cash, whereas credit cards are more expensive (Krueger & Seitz, 2014, Chapter 3; Thiele, 2016). In a study commissioned by the ECB covering several countries (Schmiedel et al, 2012), the findings did not reveal a uniform picture: in some countries, cash is the cheapest means of payment, whereas in other countries, cashless payment instruments are the cheapest." https://www.researchgate.net/publication/265496400_The_Economics_of_a_Cashless_Society_An_Analysis_of_the_Costs_and_Benefits_of_Payment_Instruments https://www.researchgate.net/publication/265496400_The_Econo... "We present three case studies that illustrate the welfare implications of substituting one kind of payment method for another. We find that when all key parties to a transaction are considered and benefits are added, cash and checks are more costly than many earlier studies suggest. In general, the shift toward a cashless society appears to be a beneficial one." https://www.bundesbank.de/resource/blob/710096/4f27e9114ce3a08b74b6c6effee04f65/mL/costs-and-benefits-of-cash-2014-data.pdf https://www.bundesbank.de/resource/blob/710096/4f27e9114ce3a... [Ok, so I can't find a good summary quote. But it looks interesting. I think it's module 1 of the first link above.]
- Nursie 7y ago
  Most of the cashless places I see are also contactless-only, which is certainly going to be faster, if that is a concern.

Nursie 7y ago

Cash handling has costs. Not just risks. This is something that always seems to be missed in the discussion of cash vs credit card or other payment systems. Yes, credit cards come with a cost (heavily limited in places like the EU), but so does cash - - your transactions often take longer with cash - for a small business, someone has to deposit regularly - larger businesses require staff and secure transport of cash - All sizes of business will have various accounting and reconciliation overheads - You have to maintain a float All this stuff takes time and pushes up staffing and other costs. I have no idea if it's comparable to the usual credit card cut, bit it always sticks in my craw when cash customers complain that they should get lower prices because their purchase doesn't involve fees.

scarface74 7y ago

The elimination of employee theft and getting robbed at gunpoint. Most people already pay with cards.