The continued use of cash is surprising, given its inconveniences and the risk consumers face in carrying it around. Love it or hate it, however, cash is playing an increasingly smaller role in society, especially with pond retailers, distributors, and manufacturers. As cash rapidly becomes obsolete — welcome to the new, cashless world for pond installers!
While many countries are working to make payment systems less dependent on cash, many pond businesses that remain dependent on cash transactions are finding income and profits declining. That’s right — those pond business owners and operators who are ignoring developments like the recently introduced EMV Smart Card technology, Apple’s mobile wallet and other mobile payment vehicles, cyber currencies and the like may find their profits affected.
The Road Toward Cashless
The Federal Reserve estimates that there will be $616.9 billion in cashless transactions in 2016. That’s up from around $60 billion in 2010. Not too surprisingly, governments have been increasingly pushing for a cashless society.
In Germany, strong moves are underway to limit cash transactions, while Sweden is already far advanced toward a cashless society, with many museums prohibiting cash payments for admission. Sweden has especially advanced far along the cashless path, as many banks no longer accept or dispense cash, and bill and coin transactions now represent only 2 percent of commercial activities.
While the elimination of cash is not yet an official policy in Canada, many people within the country are voluntarily moving toward credit and debit card payments at a remarkable rate, with a whopping 77 percent of responders to a recent Moneris survey saying that they would prefer to eliminate cash altogether.
On the Homefront
The movement toward cashless is something that hasn’t been lost on businesses in this country, either, as consumers increasingly move to the many alternate forms of payment, including:
- Contactless payment for in-person transactions through a mobile phone (such as Apple Pay or Android Pay)
- Credit and debit cards
- Credit cards stored in a phone’s SIM card or secure element
- Host card emulation, or HCE (e.g., Google Wallet and Softcard)
- Tokenization, or storing credit or debit card information in the cloud. With tokenization, payment verification, authentication and authorization are still required, but payment card numbers don’t need to be stored, entered or transmitted from a mobile device.
Along with the convenience offered by cashless transactions comes an increased awareness of security concerns. A good example is provided by the new, chip-encoded Smart Cards, which an estimated 90 percent of consumers will soon have.
By now, every garden pond professional should be aware of the so-called liability shift that occurred when the new EMV (Europay, Mastercard and Visa) technology was introduced. No longer will the credit card companies be liable for fraudulent use of the old credit card technology. In essence, businesses such as retailers, contractors, manufacturers and distributors that continue to use the old technology will find themselves — not the credit card companies — liable for fraud.
Finding a suitable approach for transitioning from conventional credit cards to the new EMV Smart Card technology has been difficult. Some merchant processing companies are attempting to persuade businesses to use so-called “semi-integrated” solutions, selling the marriage of existing point-of-sale (POS) systems with the new Smart Cards. Unfortunately, this has not always solved the problem.
Fortunately, there is good news for merchants: true, integrated solutions have recently been introduced. This new tool is a cutting-edge implementation of technology that takes current POS system data and migrates the communication with a chip-processing device. This streamlined process meets regulations, consumer demand and the bottom-line concerns of merchants.
Illustrating the escalating trend toward a cashless world, ATMs may be on borrowed time. Numerous data show that consumers are increasingly embracing other technology for transactions. According to the Federal Reserve, U.S. banks have been progressively scaling back the number of ATMs. In 2015, ATM withdrawals dropped by a record 7.2 percent.
One cash alternative, bitcoin, made its first appearance back in 2009, and today there are hundreds of other cryptocurrencies designed for exchanging digital information. These are mainly used for large transactions. The Internal Revenue Service has ruled that bitcoins and several of its crypotcurrency counterparts are not currencies, but rather investment vehicles that fluctuate in price.
The rise of mobile and electronic payments means faster, convenient and more efficient purchases. Mobile commerce, or M-commerce, is the buying and selling of goods and services through wireless, handheld devices, such as cellphones and personal digital assistants (PDAs). M-commerce represented 34 percent of all transactions globally in 2015.
As M-commerce and other electronic payment methods are embraced by consumers, this move away from cash is also being welcomed by many pond and gardening professionals. After all, using cash has its own transaction costs, including the government’s costs when notes wear out.
And don’t forget PayPal, the online payments system, as it continues to add more merchants. PayPal now has 14 million merchants to complement the platform’s 170 million users. Users are able to pay via PayPal online, their mobile phones, in a store or showroom setting, or at the job site.
Electronic money, or E-money, is the money balance recorded electronically on a stored-value card. Another form of E-money, network money, is software that allows the transfer of value on computer networks, particularly the internet. E-money is a floating claim on a bank or other financial institution that is not linked to any particular account. Examples include direct deposits, electronic funds transfers, online banking and, of course, digital currencies.
Although the digital era has been in full swing for some time, many pond and gardening professionals have yet to invest in the latest technology. Near-field communication, or NFC, is one such technology all retailers ought to consider.
Many mobile payment systems have been introduced in the past few years, including Google Wallet and Apple Pay. Consumers with mobile devices have a digital-wallet option accepted by an ever-growing list of merchants with NFC terminals up and running.
According to many reports, Wells Fargo Bank is expected to launch an NFC-based mobile payment service very soon. With mobile wallets such as this, consumers will be able to enter their credit card information into their phones before shopping with merchants who use NFC technology. To make a purchase, the consumer holds the phone over a payment terminal, taps a button and enters a Personal Identification Number, or PIN.
Another benefit offered by the new NFC technology is integration with social media. Imagine with a quick scan, customers can automatically alert their followers of their location — your store, garden center or special event — along with an invitation to join them. In fact, some of the many Facebook apps available can automatically send a friend request when two NFC-enabled phones are in close proximity.
A pond business can achieve similar results by setting an NFC tag by the showroom’s entrance. A friend (or like) request for the operation’s website can be sent to customers with NFC-enabled phones as they enter the premises.
As money increasingly goes digital, pond and gardening professionals have a new way of handling paper checks. Instead of using an ATM or a bank teller to deposit a check, mobile check deposits, or “remote deposit captures” as they’re known to the banks, let any worker in the field deposit a check into the operation’s bank account simply by taking a picture of it with a smartphone or tablet.
A November 2014 survey from The Pew Charitable Trusts found that 37 of the nation’s 50 largest banks offer mobile deposit. While banks’ policies differ, it’s not unusual for mobile deposits to be subject to daily and monthly limits. Of course, smartphones haven’t yet solved the problem of checks that bounce due to insufficient funds.
Adopting any of these new and emerging payment systems largely depends on what your customers prefer and are willing to deal with. In other words, will your customers embrace or reject these new payment options?
Many individuals and small businesses are currently unbanked and, for a whole range of reasons, would be severely impacted by a cashless society. Around 8 percent of the U.S. population remains unbanked, and 20 percent of households are underbanked, meaning that while they might have a bank account, they also use alternative financial services outside the banking system, according to a recent survey by the Federal Deposit Insurance Company.
The new technologies being created and improved to facilitate cashless transactions and improve security should be good news for every pond business. But, are you really ready for what appears to be the inevitable, cashless society?