Cashless Transactions Can Improve the Odds for Small Businesses’ Survival - Sundiata Tech

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Friday, July 21, 2017

Cashless Transactions Can Improve the Odds for Small Businesses’ Survival

The advent of cashless transactions brought with it, new possibilities in how businesses can accept payments and relate with their customers. Some businesses may have been hesitant to adopt card payments, essentially derived from the human behaviour that often resists any change, in this case, the digital payment process.

The trend is however gradually changing, as the number of cashless transactions appears to be on an upsurge trend in the recent years. Regardless, transactions costs still pose a challenge for many small businesses that do not see the need to part with even a minute fraction of revenue.

Uzoma Dozie, CEO, Diamond Bank Plc, expressed the view that in the end, cashless transactions are in the best interest of any business, not just the big ones but even the small businesses.

According to him, cash based transactions limit small business from 24/7 based banking, and the volume of business transactions that can be engaged in.

“If N216 billion had been stolen from the banking system (between 2000 and 2016), I can assure you a lot more has happened in cash handling. One thing about digital is that you know how much of it was attempted. But, tell me how much cash was stolen, nobody has put a figure to cash, so you’re dealing with the unknown,” said Dozie.

He argues that irrespective of concerns over security, digital payments still offer more peace of mind, saying “there is certainty because you know what the potential threats are and you can safeguard against it. If a small business moves from cash payment to digital payment, it will reduce its operational risks because cash brings with it, human risks, storage, transportation, logistic risks etc.

“The points of failure are limited (in digital), but with cash there are multiple points of failure,” observed Dozie.

One of the biggest benefits of the card based transaction is that customers can make payments far more easily without worrying about tendering exact change. Card payments offer added advantage of better documentation of each sale. Even for subscription based businesses, customers can be encouraged to set up a recurring payment from their bank account and this enables a business to enjoy consistent patronage from them.

Going digital will also help to cultivate budget discipline as the written record will help keep tabs on spending trends which will result in better budgeting.

It is only when a business adopts a digital approach in receiving payments that it is able to gain access to more data which will help it analyse spending patterns and throw up good insights over a couple of years. Controlled spending could also result in higher investing if businesses do not have as much access to cash. When the bulk of payments are transacted digitally, it implies less temptation to spend spare cash that may have come from regular business activities. Invariably, small businesses will have access to more cash in growing their business.

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