All around the world, retail businesses are increasingly adopting a cashless business model.

By Craig Gass

Every day, we are moving one step closer to a cashless society. All around the world, retail businesses are increasingly adopting a cashless business model, opting for smaller, integrated mobile terminals over bulky registers filled with bills and coins or old traditional point-of-sale (POS) systems. And by running an integrated payments terminal, businesses can run their accounting system and view their bank account all via one interface. The benefits are evident: it’s more convenient, time-efficient and secure.

In fact, consumers already prefer to make payments with their credit or debit card than with cash. With the rise of card enabled kiosks and mobile wallets, there is no longer the need to carry physical cash anymore, ultimately increasing convenience for the consumer while reducing the risk of robberies for the business. Due to the rise of cash alternatives, 68% of consumers today say they would rather visit a shop that only accepted cashless payments instead of just cash.

However, electronic payments are highly complex and can be very costly, especially given complex interchange pricing rules. There is added complexity that comes with the vendor transactions being processed at the end of their journey with processors and card brands that use antiquated technologies. That is why before making the transition to a cashless business, small and medium-sized businesses (SMBs) must first understand the different vendors required, what reports are generated versus needed as well as the costs associated with payment processing.

The Vendor Ecosystem: It Takes a Village

Let’s just focus on credit card processing. Behind the scenes, at least five different vendors are required to complete a credit card transaction and for a business to get paid; even more if a customer makes a purchase through their mobile device or by mail.

From the e-commerce shopping cart vendor to the payment gateway, processor, card brand networks, acquiring bank and the bank account, each vendor’s role in the process must be accurately tracked for accounting teams to measure cash flow and the business’s performance. And, in the case of a discrepancy, the data and reporting must allow a business to retrace how money moved from the purchase to the bank account in order to pinpoint where a mistake happened.

This audit process requires comprehensive, accurate reporting. However, challenges arise when each vendor comes with its own categorization and style of recording and reporting data. Businesses must match and consolidate the multiple vendor reports for accurate analysis, paying close attention to the time frame and the name of different transaction steps. Ultimately, the accounting team must become an expert on each vendor’s way of doing business and logging in to multiple reporting platforms.

In addition, the multiple processing and monthly fees from each vendor are hard to calculate and can quickly add up. Breaking down and accounting for the charges per vendor for each transaction is time-consuming, as the formats, timing and schemes each vendor uses will vary.

With multiple vendors involved in processing a credit card, businesses find themselves unable to follow what is happening throughout a single transaction to cash. In order to gain a full view of the process, additional resources like employees, time and costs, need to be allocated — all of which are expenses that SMBs find hard to accommodate.

Future-Proofing Archaic Technologies

Many of the vendors involved in credit card processing are using legacy technology systems. To address the move towards a cashless society legacy vendors are left updating the old code in their existing technologies.

While this may work temporarily, these technologies and adjoining reports were not designed to support payments made by EMV cards and NFC mobile wallets, or to be leveraged by departments to improve inventory management, marketing or customer relationship management. Instead, they were designed by software engineers to meet isolated needs.

By continuing to improve older technologies with added layers of code and applications, businesses are left with an expensive to maintain Frankenstein system.

A Multi-Channel Business

Between multiple vendors, disparate reports and added processing fees, how can businesses support the cashless society by no longer accepting cash payments and seamlessly transitioning to modern payment methods?

For a lot of businesses, big and small, selecting a payment solution is an afterthought, with the assumption that all processors are the same or generic. But the reality is that picking the right payments solution can make a huge difference to a business, both operationally and for the customer experience.

Eliminate the use of multiple vendors by identifying payment platforms that combine a merchant account, payment gateway, recurring payments, invoicing and consolidated reporting. With fewer vendors, fees and reports, the guesswork is eliminated and businesses can easily resolve any problems that may arise. In addition, having access to all information in one place keeps operational costs down. By having a consolidated view of customers, businesses can effectively develop marketing campaigns and strategies for continued growth.

SMB businesses need to take the time and effort to choose wisely among the payment processing systems available, and ensure the experience is painless for customers and employees.

Craig Gass is the CEO of Qualpay.

Cashless stock photo by Akarat Phasura/Shutterstock.