# Is it time for SMEs to go fully cashless?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-03-22
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Cashless Society: Embracing Electronic Payments in UK
Meta Description: Explore the impact of the pandemic on cashless payments in the UK and learn how SMEs can navigate the shift towards electronic transactions for financial success.
URL: https://financedigest.com/is-it-time-for-smes-to-go-fully-cashlesshtml

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_By_ **_Simon England,_** _Managing Director,_ [_Equals Money_](https://equalsmoney.com/)

As a result of the pandemic, the prospect of a cashless society seems more realistic than ever.

The UK especially has seen cashless [payments take preference and prompted the payments sector](https://www.financedigest.com/combatting-economic-uncertainty-in-2023-with-the-payments-sector-2.html "Combatting economic uncertainty in 2023 with the payments sector") to explore and implement new, innovative technologies sooner than planned. Mobile wallets, pre order apps and [spending cards have all seen a sharp increase](https://www.financedigest.com/should-we-be-more-cautious-about-contactless-1-in-4-young-adults-with-contactless-cards-say-theyve-increased-their-spending.html "Should we be more cautious about contactless? 1 in 4 young adults with contactless cards say they’ve increased their spending") in usage.

The race amongst tech firms to present the “next big thing” in [payments](https://www.financedigest.com/the-next-frontier-of-payments.html "The next frontier of payments") technology is on. But with the number of consumers choosing to pay cash dwindling year-on-year, [SME leaders also need](https://www.financedigest.com/55-of-uk-smes-unable-to-access-all-funding-needed-to-grow.html "55% of UK SMEs unable to access all funding needed to grow") to consider the balance of cash versus cashless in their [business.](https://www.financedigest.com/how-to-start-a-business-in-louisiana.html)

**The state of customer-facing cash**

There are certainly downsides when it comes to using cash for your business – specifically how it severely limits a [business’s ability to maintain real-time visibility over its finances](https://www.financedigest.com/6-ways-to-spring-clean-your-business-finances.html "6 ways to Spring clean your business finances"). However, cash also comes with more immediate risks: theft, disease transmission, and [increased human](https://www.financedigest.com/increase-in-sales-of-human-insulin-market-to-scale-revenue-growth-in-the-global-market.html "Increase in Sales of Human Insulin Market to Scale Revenue Growth in the Global Market") error to name a few. These risks, combined with the [trend towards cashless payments](https://www.financedigest.com/top-5-payment-trends-for-2016.html "TOP 5 PAYMENT TRENDS FOR 2016"), are causing many businesses to prioritise electronic payments.

However, cash has yet to disappear completely. A frequent hurdle for SMEs in becoming cashless is the 2–4% interchange fee which can actually cause smaller [businesses to lose money on sales](https://www.financedigest.com/the-ultimate-excel-sales-tracking-templates-for-businesses.html "The Ultimate Excel Sales Tracking Templates For Businesses"). There is a silver lining though: contactless fees tend to be lower than [chip and pin](https://www.financedigest.com/chip-and-pin-in-the-us-why-all-the-confusion.html "Chip and PIN in the US – why all the confusion?"), so it’s safe to assume that going cashless is now more affordable than it

Another consideration for [cash is that a small number of businesses](https://www.financedigest.com/europe-burns-cash-to-help-businesses-in-deepening-energy-crisis.html "Europe burns cash to help businesses in deepening energy crisis") i.e., microbusinesses still lack the necessary infrastructure to go completely cashless. That being said, the cashless [payments processing](https://www.financedigest.com/emvco-streamlines-approval-process-for-mobile-payment-devices.html "EMVCo Streamlines Approval Process for Mobile Payment Devices") market has reached a stage where straightforward, affordable payment solutions are available to most if not all businesses who want them.

The bottom line is that more and more consumers are opting for electronic payments, meaning that [businesses will need](https://www.financedigest.com/what-is-premises-liability-coverage-and-why-does-your-business-need-it.html "What is Premises Liability Coverage … and Why Does Your Business Need It?") to adapt to the new reality that is cashless. But, to ensure [financial success](https://www.financedigest.com/why-teaching-your-children-financial-literacy-from-a-young-age-will-set-them-up-for-success.html "Why teaching your children financial literacy from a young age will set them up for success"), they must chart their own course through this new world of electronic transactions.

**Accepting payments, whatever form they take**

Nowadays, most of us have the necessary resources to go cashless and, currently, only [one in six payments in the UK is made with cash](https://www.theguardian.com/business/2021/jun/16/cashless-society-draws-closer-with-only-one-in-six-payments-now-in-cash). There are significant security and data benefits to card payments too; they make it possible for [business leaders to keep track](https://www.financedigest.com/5-fx-metrics-your-business-should-be-tracking.html "5 FX METRICS YOUR BUSINESS SHOULD BE TRACKING") of where the money is going in real-time. Importantly, the laborious task of “cashing up,” along with all risks and training involved, is removed.

That notwithstanding, we can’t write off cash just yet, a significant number of transactions still make use of it. Going completely cashless may even drive customers away, so the best [bet for businesses](https://www.financedigest.com/tough-times-and-risky-business-which-emerging-market-assets-are-a-bet-worth-taking.html "Tough times and risky business – which emerging market assets are a bet worth taking") right now would be to accept both cash _and_ cashless payments. However, businesses should also make every effort to promote cashless as the payment method of choice.

It’s important to emphasise that a 50-50 spilt isn’t the goal here. Yes, consumers clearly prefer cashless – and this should be the focus – but [businesses should also maintain](https://www.financedigest.com/building-or-maintaining-a-successful-business-with-recession-on-the-horizon.html "Building or maintaining a successful business with recession on the horizon") a limited cash capability to ensure visibility over transactions but also reducing certain risks that come with cash being kept on the premises such as theft.

**Internally, cash** **_is_** **over**

It is certainly the case that cash payments will [stick around](https://www.financedigest.com/the-medical-ultrasound-equipment-market-to-stick-around-based-on-organic-expansion.html "The Medical Ultrasound Equipment Market to stick around based on organic expansion"), but business payments are a different story. SMEs have strong incentives to transition away from cash-based expenses modes to a cashless alternative

[Managing expenses](https://www.financedigest.com/understanding-the-different-levels-of-maturity-in-travel-and-expense-management.html "Understanding the different levels of maturity in travel and expense management") is currently fraught with inefficiencies. For one, it’s common for employees to have to [pay for business](https://www.financedigest.com/uks-sunak-to-halve-support-that-helps-businesses-pay-fuel-bills-the-times.html "UK’s Sunak to halve support that helps businesses pay fuel bills -The Times") purchases themselves, keep receipts and – in many cases but certainly not all – be reimbursed. Not only is this process prone to human error on both sides, it also severely hampers the ability of businesses to [keep track](https://www.financedigest.com/will-mays-new-minister-percy-keep-the-northern-powerhouse-on-track-post-brexit.html "WILL MAY’S NEW MINISTER PERCY KEEP THE NORTHERN POWERHOUSE ON TRACK POST BREXIT?") of what is being spent.

When it comes to smaller employee purchases, many [businesses tend to keep a petty cash](https://www.financedigest.com/controlling-your-business-cash-flow-with-effective-accounts-receivables-turnover-ratios.html "Controlling Your Business Cash Flow With Effective Accounts Receivables Turnover Ratios") jar on hand. While it certainly seems like an easy “right on hand” option, this approach forgoes accountability. Furthermore, no matter if spent appropriately or not, petty [cash causes significant accounting issues](https://www.financedigest.com/role-cash-tackling-issue-financial-inclusion-europe.html "The role of cash in tackling the issue of financial inclusion in Europe").

To spare this uncertainty and the labour of handwriting expense forms, businesses should embrace [modern spending management](https://www.financedigest.com/5-tips-for-a-modern-manager.html "5 Tips For A Modern Manager") solutions; they provide all the benefits of going cashless, whilst greatly improving both accountability and quality of life for business owners, accountants and employees.

Chief amongst these benefits is visibility. Businesses can monitor the budget allocated to a given card, keep [track of payments](https://www.financedigest.com/tracking-the-payments-evolution.html "Tracking the payments evolution"), as well as control what the cardholder can buy. The upshot for employees is that they don’t have to spend their own money and hope to be reimbursed – rather, they enjoy a hassle-free [way to keep](https://www.financedigest.com/three-ways-the-data-cloud-can-keep-financial-services-competitive.html "Three Ways the Data Cloud Can Keep Financial Services Competitive") track of expenses and, crucially, receipts.

**Cashless remains the future – we’re just not quite there yet**

When it comes to accepting transactions, it is clear that cash remains widely used. Fortunately, it’s easy for cash and cashless to coexist, enabling [businesses to be cost-effective and acquire the largest possible customer](https://www.financedigest.com/future-proofing-your-small-business-its-time-to-listen-to-your-customers-needs.html "Future proofing your small business – it’s time to listen to your customer’s needs") base

However, in the ever-changing world of payment options, SMEs would do well to [stay ahead](https://www.financedigest.com/staying-ahead-of-risk-this-black-friday.html "Staying Ahead of Risk This Black Friday") of the curve in terms of tech and spending solutions. To make payments and business transactions, cashless is better not only for the [reasons stated above but also for overall business](https://www.financedigest.com/reasons-why-you-should-hire-a-business-broker-to-sell-your-business.html "Reasons Why You Should Hire a Business Broker to Sell Your Business") growth.


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