For many small-business owners, the shift to digital payments is essential

For many small-business owners, the shift to digital payments is essential

“Making It Work” is a series about small business owners trying to get through tough times.

When Egypt Otis opened his business, Comma Bookstore & Social Hub, three years ago the epidemic was in full swing in Flint, Michigan. But her neighbors welcomed the literature and art sold in her store, which celebrated people of color, as well as the community events she organized.

Despite the warm welcome, Ms. Otis quickly realized she had a sales problem: Her customers wanted to pay with their cellphones.

“I realized that people were barely carrying wallets or physical cards, which limited my ability to sell and make money,” Ms. Otis said. So it upgraded its transaction platform to include tap-and-go purchases on mobile devices. “People are not carrying cash,” he said. “It’s becoming obsolete.”

The number of Americans who say they are “cashless” has increased over the past five years. 41 percent of Americans said they did not use cash for their purchases in a typical week in 2022, up from 29 percent in 2018. Pew Research Center survey Released last October.

Small business owners are increasingly switching to cashless payments for a variety of reasons, including increased consumer demand, faster checkout, lower labor costs and increased security. Experts say those who wait run the risk of losing revenue.

But going cash-free has drawbacks, including a learning curve for entrepreneurs who can’t figure out how to set up digital payments, a lack of access to credit cards for low-income consumers, and privacy concerns.

Juani Romero was an early adopter of digital payments for her small business. fifteen years ago, when he founded Mothership Coffee RoastersAfter a chain of coffee shops in Las Vegas, he began using Square, a low-cost digital payment system for small businesses.

“I was a young business woman and not smart,” she said. But Square saved $3,000 a month in merchant fees for credit card processing.

As Ms. Romero expands her businesses (there are four locations in Las Vegas, plus two more), It added more payment options including Apple Pay and Google Pay.

But he noticed a change during the pandemic: His customers no longer wanted to use cash, and his employees didn’t want to handle it. “We didn’t know where Covid was coming from,” he said. “There were still people bringing in cash, but it was scary and dangerous.”

When the coin shortage hit in 2020, they ran out of cash, but Ms. Romero found it saved labor costs. “My manager stood in line for two hours to deposit cash,” he said. “I can’t get an armored car service to take $100 in cash.”

Still, customer demand has prompted her to return to cash sales, which Ms. Romero said has held steady at about 11 percent of her total revenue. She said she would go cashless if the stock fell below 10 per cent.

The pressure to adapt is mounting. More than 2.8 billion mobile wallets were in use at the end of 2020, and this is projected to increase by about 74 percent to 4.8 billion by the end of 2025—about 60 percent of the world’s population. A study released in 2021 by Boku, a fintech company

The United States lags behind other countries in adopting cashless payments. The UK is among the most cashless countries in the world, with the pound making up only 1 percent of all transactions, according to A report from Merchant Machine, a London-based paid research firm. But in the United States, some small business owners don’t understand the complexities of digital payments.

“Small merchants don’t always have the knowledge and resources to know what to do,” said Ginger Siegel, who leads the North America small-business sector at Mastercard, which helps businesses like Ms. Otis of Comma Bookstore. Provides training to owners. ,

Ms. Otis said she saw an increase in sales when they started offering mobile payments, which speed up the checkout process. “As a retailer, you want to make the experience as efficient as possible,” she said. “It’s a matter of survival.”

Benefits include instant payments, increased sales and the ability to sell to customers who may use other currencies. “You have to set it up, but it’s worth it,” says Kimberly A. Eddleston said.

But some business owners say they are hesitant to move too fast, worried that today’s technology may be obsolete tomorrow. And there are issues of compatibility and cost to consider, said Wayne Reed, chief executive of forged and fabricatedAn online jeweler with a physical store, Studio D Jewelers, in Woodstock, Illinois. In his jewelery sales, where the items can be expensive, he said quick transactions may not be suitable. “We don’t want people to feel that they have taken their decision in haste,” he said.

Despite advances in technology, many Americans still have little or no access to financial services such as credit cards and mobile wallets, although this is slowly improving. According to estimates, 5.9 million households had no bank account in 2021, down from 7.1 million households in 2019. a survey by the Federal Reserve,

Another barrier to adoption is privacy concerns: Some prefer the anonymity that cash provides. And cash is considered a way for consumers to be cost-conscious. Complicating the transition to the digital economy, the recent banking turmoil in the United States has caused many depositors to question the safety of financial institutions.

But experts agree that the cash is unlikely to run out. Consumers from low-income households continue to rely on cash for payments, according to the Fed survey.

And small business owners say that despite the speed and efficiency of cashless payments, cash is still a viable option for their customers.

“At the end of the day, I know the people I serve,” Ms. Romero said. “I would feel conflicted if I didn’t do the right thing.”

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