When was the last time you used cash for a transaction?
Pew Research shows that in a typical week, one in three Americans absolutely do not use cash at all. Another research by Square, a POS and payment processing company, shows that cash purchases went down from 37% in February 2020 to 33% just two months later.
While it’s been common to make large purchases with credit cards or other forms of digital payment, consumers are increasingly using their cards for smaller purchases. In the past four years, the use of cash for transactions under $20 has dropped from 46% to 37%.
This trend isn’t limited to only urban areas. Outside of the top 25 metropolitan markets, the transaction amount at which people prefer using cards to cash dropped from $8 to $5.50 over the last four years.
This really affects venue operations especially given how concession stand items are typically snacks and drinks of lower value. On the FanFood mobile web ordering platform, people typically purchase between $12 to $20 of food and drinks per order at an event or venue. As the percentage of people using cash to complete these transactions decline, venues need to brace themselves and offer a variety of cashless payment options for consumers to choose from.
What does COVID-19 have to do with all this?
In the beginning of COVID-19, digital payments’ allure mostly lied in the fact that people wanted to avoid passing around physical objects like cash or a card. Now that things are slowly getting back to normal, that concern has gradually gone away, especially given that the risk of contracting viruses from passing around cash is very minimal.
Nevertheless, COVID-19 nudged many to give digital payments (perhaps mobile ordering at a concession stand or online shopping on a website) a try — initially for safety reasons — and stayed for other added benefits, such as the efficiency and convenience.
Another aspect that you might not have thought of, is an existing coin shortage that makes cash transactions more difficult. When the economy was in shutdown, there weren’t coins changing hands since most purchases were made online. As a result, there aren’t enough coins circulating in the economy to facilitate cash transactions. So the chances are, consumers either have to prepare the exact cash amount when making a purchase, or risk the business not having the exact change in return. All of this has made cash payments less favorable.
Is society going cashless then?
Unlikely — in the short term. There are still many logistical challenges and even socio-economic issues (such as 4% of Americans who still remain unbanked) to address before we can be entirely cash free. However, as the proportion of cash payments dwindles, it’s important for operators and business managers to prepare themselves in order to position themselves for an economy increasingly less reliant on cash.
How can venues benefit from little to no cash transactions?
Less time and cost involved in cash handling
While many businesses don’t want to eliminate cash as a form of payment in order to make their services accessible to all, almost all businesses would agree that there are trade-offs associated with accepting cash. Counting and exchanging cash is slow and prone to errors; storing and depositing cash can be troublesome and sometimes costly. All this time and resources could have been better spent on serving more customers, optimizing business operations, and investing back into the business.
In addition, with carrying cash comes risks of thefts and misappropriation. You can enforce supervision efforts and stringent protocols to prevent such scenarios, but those processes will cost money and time as well.
Understand your customers with invaluable data
In our blog comparing the pros and cons of POS / kiosk and a mobile web ordering platform like FanFood, we commented that a POS or kiosk only records the “what”, whereas a mobile web ordering platform can tell you the “who”. The former only gives you sales data of how much you’ve sold, whereas the latter gives you access to each customer’s profile and preferences for effective re-marketing and loyalty nurturing later on.
By attributing each order and transaction back to each customer, you can segment your most valuable customers and increase user retention with personalized promotions and targeted campaigns. This not only gives consumers a better experience at your venue, but also help you grow the customer lifetime value and long-term revenue.
Better customer experience and more efficient operations
“Please don’t get rid of it; we really like it!”
Fans at the Kane County Cougars left this comment in their annual fan experience survey, talking about the mobile web ordering option at the Cougars’ concession stands. Instead of waiting in line to order and pay, fans can scan a QR code and order and pay on their phone in the seat. When the order is ready, they get a text alert to pick the food up and skip the lines.
By eliminating the need for waiting in lines, communicating your order to the cashier, processing the payment, and waiting around for your order to be ready, the mobile ordering experience allows fans to stay in their seats and not miss a moment. In addition, by streamlining the order taking and fulfillment process, kitchens and concession stands can finish each order faster and serve more customers. In fact, FanFood has helped both fans and venues save up to 75% of wait time, and allows venues to increase their concession revenue by accepting more orders.
If you want to learn more about how consumers’ mindset around different payment methods has shifted in the past year, you can download our mobile ordering survey report below based on responses from over 3,400 fans.