Contact Or Cashless - The Great Debate 10
CLH News
Apr/May 2023
By Kamran Hedjri, Founder and CEO, PXP Financial (www.pxpfinancial.com)
As increasing numbers of more pubs and restaurants chains – including make a permanent move to card-only payments, it would seem the days of ‘cash is king’ are well and truly behind us. Major chains such as Prezzo, Itsu and Côte Brasserie have jumped on the trend, and a recent survey revealed that more than 90% of all eligible card transactions were made using contactless payments last year – a record figure. Or are they? As the cost-of-living crisis continues, cash is making a comeback, with record amounts being withdrawn as consumers increasingly rely on notes and coins to help them manage their budgets. Some pubs are even offering a 10% discount for cash. It’s time to ask, is the hospitality trade putting customers off by refusing to accept physical currency?
WHY BUSINESSES ARE TURNING THEIR BACKS ON CASH In December 2022, Chilled Pubs released a statement explaining its decision to stop taking cash payments, citing guest preference, security, and efficiency as the main reasons for making the move. There certainly are benefits to be had from going cashless and reducing crime probably tops the list advances in digital wallets and biometrics make card cloning and other associated fraud increasingly difficult. Not only this but cash is a useful tool for criminals, thanks in large part to it being particularly difficult to trace – it’s no surprise then that when hospitality businesses handle less cash, instances of robbery drop. To strengthen security around cashless transactions further and stay one step ahead of fraudsters at all times, we’re continuing to see major advances and innovation across security technology, including embedded microchips, Near Field Communication (NFC), Address Verification Service (AVS), geolocation, and artificial
intelligence payment systems. For businesses, cashless transactions improve efficiency. That’s because the everyday management of money is easier due to eliminating the need to store, protect, withdraw, and deposit physical money. And of course, lots of us now prefer cashless payments, having become accustomed to them during the pandemic, even for those in society that had never used them before. In fact, less than a fifth of UK consumers still prefer paying in cash.
THE CASE FOR A SLOWER TRANSITION TO A CASHLESS SOCIETY All this is not to say there aren’t downsides to putting up that ‘card payments only’ sign. Despite the robust security measures that are in place with cashless transactions, it is an unfortunate truth that as transaction volumes increase so too does the amount of fraud across all payment channels, including online, mobile, and in-person. This mean that for many consumers, data, privacy and cybersecurity issues are a justifiable concern. Hospitality businesses can address these concerns by using a hosted solution - outsourcing payment security to a trusted partner. They can also deploy point to point encryption (P2PE) to remove sensitive cardholder data from your systems. I also recommend utilising tokenisation, which replaces sensitive card data with a token that can be used across various front and back-end systems instead of the real card data.
LOOKING TO THE FUTURE It’s not just the security of cashless payments that causes concern. Many feel that cashless spending makes it all too easy to overspend at a time when budgeting is front of mind for us all. But with digital wallets such as ApplePay featuring budgeting tools that help users flexibly plan budgets, cashless payments can actually help consumers control and track their spending effectively. We are currently at a crossroads of technology and tradition. Giving customers choice is key, which means having the technology in place to accept a range of payment methods. At the same time, businesses should harness new payment technologies to provide cash-carrying customers the reassurance they need to embrace a cashless future.
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