For many small business owners, there is a necessary shift to digital payments

Making It Work is a series about small business owners who strive to survive tough times.

When Egypt Otis opened its business, Comma Library and Social HubThree years ago in Flint, Michigan, the epidemic was in full swing. But her neighbors welcomed the literature and art she sold in her store to celebrate people of color, as well as the community programs she hosted.

Despite the warm reception, Ms. Otis quickly found that she had a problem with sales: her customers wanted to pay with their cell phones.

“I realized that people hardly kept a physical wallet or card, which limited my ability to sell and make money,” said Ms. Otis. So it upgraded its transaction system to include mobile “click and go” purchases. She said, “People don’t carry money.” “It has become obsolete.”

The number of Americans who say they are “cashless” has jumped in the past five years. Forty-one percent of Americans said they did not use cash on their purchases in a typical week in 2022, up from 29 percent in 2018, according to Pew Research Center survey Released last October.

Small business owners are increasingly turning to cashless payments for several reasons, including higher consumer demand, faster payment, lower labor costs and increased security. Experts say those who wait risk losing revenue.

But there are drawbacks to going cashless, including a learning curve for entrepreneurs who may not understand how to set up digital payments, a lack of access to credit cards for low-income consumers, and privacy concerns.

Juani Romero has been an early adopter of digital payments for her small business. Fifteen years ago, when I founded Mother’s Coffee RoasterInc., a chain of coffee shops in Las Vegas, has begun using Square, a low-cost digital payment system for small businesses.

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

With Ms. Romero expanding her business (to four Las Vegas locations, with two more on the way), It added more payment options, including Apple Pay and Google Pay.

But she noticed a shift during the pandemic: Her customers no longer wanted to use cash, and her employees didn’t want to deal with her. “We didn’t know where Covid came from,” she said. “There were still people bringing in cash, but it was scary and dangerous.”

When the coin shortage happened in 2020, it completely ran out of cash, but Ms. Romero found that it saved labor costs. “My boss stood in line for two hours to deposit money,” she said. “I can’t get an armored car service to collect $100 cash.”

However, customer demand has pushed it back into cash sales, which Ms. Romero said is holding steady at about 11 percent of its total revenue. She said she would be without money if the stock fell below 10 per cent.

The pressure to adapt is increasing. There were more than 2.8 billion mobile wallets in use at the end of 2020, and that is expected to increase by about 74 percent to 4.8 billion – nearly 60 percent of the world’s population – by the end of 2025, according to A study released in 2021 By Boku, a fintech company

The United States lags behind other countries in adopting cashless payments. Among the most cashless countries in the world is Britain, where the pound makes up just 1 percent of all transactions, according to Report from Merchant MachineIt is a payment research company based in London. But in the US, some small business owners don’t understand the intricacies of digital payments.

“Small merchants, they don’t always have the knowledge and resources to know what to do,” said Ginger Siegel, who leads Mastercard’s North American small business segment, which offers training to business owners like Ms. Otis of the Comma Bookstore.

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

Benefits include immediate payment, increased sales, and the ability to sell to customers who may be using other currencies. Kimberly A. said: “You have to set it up, but it’s worth it.”

But some business owners say they’re reluctant to move too quickly, afraid that today’s technology might become obsolete tomorrow. There are compatibility and cost issues to consider, said Wayne Reed, the company’s chief executive fake and problem, an online jeweler who has a physical store, Studio D Jewelers, in Woodstock, Illinois. At his jewelry sales, where items can be very expensive, he said a quick deal might not be appropriate. “We don’t want people to feel rushed,” 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. It is estimated that 5.9 million households were unbanked in 2021, down from 7.1 million households in 2019. Survey by the Federal Reserve.

Another obstacle to adoption is privacy concerns: some people prefer the anonymity that cash provides. Cash is seen as a way for consumers to stay on top of expenses. Recent banking turmoil in the United States has complicated the transition to a digital economy, leaving many depositors to question the security of financial institutions.

But experts agree that cash is unlikely to ever disappear. Consumers in lower-income households continue to rely on cash for payments, according to a Fed survey.

And small business owners say that despite the speed and efficiency offered by 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.”