Checking In On The Changing Ways To Check Out

Evolve Systems -

It was not all that long ago when credit cards didn’t exist and cash was your only option at the register. Technology has dramatically changed the way we purchase goods and services. These changes bring improvements, speed and convenience to our transactions. But these changes also bring risks along for the ride too. Let’s take a closer look at the methods of payment, their benefits and their risk to you as a merchant.

Is cash still king?

Cash or currency is the oldest form of payment dating back thousands of years. In a recent article we noted that by 2017 cash transactions will constitute a mere quarter of all sales transactions.

Cash rewards: as a merchant it costs nothing to accept cash; eliminates data security and identity theft concerns.

Cash risks: as a merchant your exposure to employee theft is high; reduces customer impulse buying; large amounts of cash are dangerous to have on your person and to transport for deposit; nationwide trends indicates cash sales are on the decline.

Is debit the new king?

Debit cards came on the scene in 1966 and have quickly spread in use and acceptance.

Debit rewards: as a merchant debit cards give you instant confirmation that the funds are available making them an excellent alternative to accepting checks; consumers make nearly twice as many purchases with debit cards than credit cards according to the Federal Reserve.

Debit risks: as a merchant you are charged payment processing fees; data security, processing compliance and liability issues must be managed.

How does credit fit in?

Credit cards in their plastic form came into use in the early 1900’s and have become a standard point of sale option.

Credit rewards: as a merchant credit cards offer the most convenience and flexibility to your customers for large purchases and recurring charges; security is evolving rapidly to protect both merchant and consumer.

Credit risks: as a merchant you are charged payment processing fees that vary by issuer or card type; data security, processing compliance and liability issues must be managed.

New options

The latest option for both point-of-sale and online transactions are mobile payment systems from ApplePay and GoogleWallet. These apps allow the customer to pay using an app on their smartphone or tablet instead of an actual credit card.

Mobile payment rewards: as a merchant you will never see the name, account number or security code of the customer; greater speed of transaction; improved security features such as fingerprint recognition and PIN code to authorize transactions.

Mobile payment risks: specialized technology is required to accept this payment type; at this early stage smaller businesses may find it cost prohibitive.

Even though the mobile payment options are slower to be adopted don’t be too quick to dismiss them. A recent report from the World Economic Forum projects that:

As customers lose visibility of their payment choice by identifying default cards in mobile wallets and integrated apps, spending gets concentrated on a single card.

Mobile wallets will be the next technology to change the way we check out. Stay tuned.