Despite many medical experts declaring that paper currency is not a major source of coronavirus transmission, the percentage of “cashless businesses” is skyrocketing. According to a recent MasterCard study, a whopping 82% of respondents said so-called “contactless” payments, transactions without physical contact, were a safe and cleaner way to pay.

It should come as no surprise that many tactical businesses are facing increasing demands by customers — and regulations — for more secure transactions. But, are you and your retail firearms-related business prepared to operate in the new cashless society?

 

What Is a Cashless Society?

Suppliers want faster, less burdensome payments and customers want convenience as banks continue to roll out new internet and “remote” services while slashing the number of branches and ATMs to further reduce the dependence on cash. A cashless society is emerging that can best be described as one where most, if not all, financial transactions take place through the transfer of digital information instead of physical banknotes or coins.

The barter system was an early precursor of the cashless society. Although barter continues in many forms, today, cashless payments are possible with debit cards, credit cards, mobile wallet apps, point of sales (POS) systems, mobile banking, internet banking and more.

The International Monetary Fund’s efforts to foster global monetary cooperation and secure financial stability envisions a cashless society. In Germany, strong moves are underway toward limiting cash transactions, while Sweden, with a long history and tradition of being early adopters of new technology, has set their sights on becoming the first nation to go cashless.

In Sweden, cash hasn’t been in favor for years, and 900 of the country’s bank branches don’t accept cash deposits. Sweden has advanced far along the cashless society path, with bill and coin transactions now representing only 2% of Swedish commercial activities. After 2023, paper money will reportedly no longer be an acceptable form for transactions in Sweden.

To date, however, no society has gone totally cash-free, remained cash-free or mandated that cash payments must be accepted. Obviously, the fact that cash remains the only option for the so-called “unbanked” must be addressed.

According to the Federal Reserve, 6% of American adults are unbanked, which means they don’t have a traditional checking or savings account. For the unbanked, cashless payment methods are often out of reach. After all, not everyone has (or can have) a bank account, a credit or debit card, or access to electronic payment systems via a smartphone or computer. That leaves the unbanked, as well as many older Americans who continue to rely more heavily on cash, out in the cold.

 

Farewell to Cash

The movement towards cashless hasn’t been lost on businesses, as they long ago began moving toward the many alternate forms of payment, including:

* Bank cards. The biggest advantage to banking cards such as MasterCard and Visa is that they can be used for making all types of digital payments. Card information can be stored in the mobile wallets of digital payment apps to make cashless payments.

* Unstructured Supplementary Service Data (USSD) is a cashless payment option for those without a smartphone. USSD payment processing is performed by calling or sending a text message to a service provider that will either charge the amount of the purchase to an online payment system or add the amount to the user’s phone bill. The merchant then releases the goods or services and the money is transferred to the business’s account.

* Mobile wallet apps. These are mobile applications that allow the user to send, receive and store money. Plus, a user can also make payments to merchants directly from a mobile wallet app that is linked to his or her bank account.

* Direct deposits are the electronic transfer of a payment from a customer into a shooting sports equipment business’s checking account — or vice versa — used daily by governments and businesses to transfer millions of dollars

* Wire transfers, unlike direct deposits, are not free. While direct deposits are most often used for recurring payments, wire transfers are usually only used occasionally.

* ACH payments, or ePayments, are electronic payments made through the Automated Clearing House (ACH) network, a secure system for clearing electronic payments between banks. Direct deposit and direct debit are simple, safe and convenient options a retail firearms-related business can utilize to make and receive payments.

* Point-of-sale (POS) terminals. Traditionally used to read a customer’s credit or debit card, today’s Mobile POS system doesn’t require expensive electronic registers. The Mobile POS operates through smartphones or tablets, while so-called virtual POS systems use web-based applications for its operation.

 

Cryptocurrency as Cash

Cryptocurrencies such as Bitcoin are often compared to the electronic payment systems such as Visa or MasterCard in terms of throughput and network effects. In reality, however, Bitcoin and the other cryptocurrencies have much more in common with paper cash than with its electronic equivalent.

Significant efforts are being expended to increasing merchant adoption of P2P cryptocurrencies such as Bitcoin. Realistically, however, cryptocurrencies are not going to serve as an alternative payment system in cashless stores anytime soon. They will, however, likely play a significant role down the road as the world distances itself from cash.

 

Merchant Fees Are a Factor

Bank cards, such as debit and credit cards, are among the most used cashless payment methods worldwide. Although bank cards come with benefits such as secure payments, convenience and more, they are not without cost to a tactical business.

Both Visa and MasterCard were forced to put their merchant swipe fee increases on hold because of the pandemic. As things normalize, those increases may materialize — increases that could affect merchants and consumers more than past changes have.

The increased impact from increased swipe fees is largely due to the fact that cash customers have historically helped subsidize their cashless counterparts by reducing the total amount that merchants pay in swipe fees. With more consumers using cashless payment methods, merchants may be forced to increase prices across the board in order to maintain profit margins.

 

The Benefits of a Cashless Society

Among the many benefits a tactical business might experience when going cashless are:

* Reduced costs and business risks. Cashless payments eliminate risks such as theft of cash by employees, counterfeit money and robberies. It also reduces security costs, withdrawals of cash from the bank, transporting and counting.

* Transaction speed. Cash payments are time consuming for customers and for the firearms-related equipment business or its employees, with faster transactions and increased efficiency key factors when deciding to go cashless.

* Cash management is expensive. Businesses need to safely store the money, get more when they run out and deposit cash when they have too much on hand. Spending time and resources moving money around and protecting it could become a thing of the past in a cashless society.

 

Technology to the Rescue

The digital era has been in full swing now for some time. Yet, many tactical retailers still have not invested in the latest technology for their business. Near Field Communication (NFC) is, for example, one such technology retailers can use to redefine the customer experience by bridging the gap between technology and everyday consumer interaction.

NFC communication technology is rooted in radio-frequency identification (RFID), which is used by many retailers to tag and track products within their stores. It is also used in contactless payment systems as well as to allow mobile payments replacing or supplementing credit card and electronic ticket smart card systems. NFC also has other applications of interest to tactical retailers and their businesses.

For retailers, there is a double whammy in effect, as NFC technology is being integrated with social media with dozens of apps that make good use of NFC tags. With a quick scan, a customer can make contactless payments as well as automatically review products, options and prices, all while freeing up a clerk.

Around the world today, banks are shutting down cash machines and branches. They are attempting to push their customers into using their digital payments and other digital banking infrastructure. It’s little surprise, then, that consumers and businesses are beginning to favor digital payments over cash.

As mentioned, governments appear eager to transition to a cashless society. Since 2019, the Australian government has prohibited cash transactions over $7,500. In India, the government banned 500- and 10,000-rupee banknotes ($5 U.S. and $138 U.S. respectively) several years ago.

The new technologies being created and improved to facilitate cashless transactions and improve security are good news for every business. But is your retail firearms-related business really prepared for what appears to be the inevitable cashless society?