Cash is no longer king, and it’s costing businesses $80.6 billion every year. That’s according to the Sage Payments Landscape report on U.S. small and medium businesses.
Sage, which is a market leader for integrated accounting, payroll and payments software, released the results of the sixth annual report focused on the current and future payment trends. The report addresses drivers for innovation, the need for omnichannel retailing, as well as payment security and consumer trust. According to the study, SMBs are losing all that money each year via cash payments.
This report matches well with PYMNTS’ SMB Technology Adoption Index, a quarterly report released jointly with Sage. The index looks at business and technology trends impacting U.S. small and medium businesses.
“Our research proves that cash is bad for business. It’s costly and inconvenient, and appetite is growing for more innovative and flexible payment methods,” said Paul Bridgewater, managing director of Sage Payment Solutions. “The stats we’ve seen come out of this study are part of a wider trend. We know that cash is in decline.”
Citing companies like Walmart, Mastercard and Alibaba as examples, Bridgewater said new payment systems are continuing to move away from cash payments for good reason.
Sage’s new report polled both U.S. businesses and consumers, finding that payment innovation is driven by consumer demand, as more than 90 percent of consumers say businesses must provide a variety of payment methods. In fact, nearly 60 percent of consumers say they’re more likely to frequent that business if it offered payment options. The most surprising may be that the older generation of those over age 50 — those that grew up on cash — say that they’re not only moving away from cash, but some say they use it little or not at all.
The report noted that 37 percent of the 307 businesses polled reported losing cash due to human error, with nearly 65 percent saying they waste hours counting and moving cash to and from the bank each week. Many of them say they believe contactless payments will be the go-to method in just under four years.
“Innovation in the sector has never been greater, but small and medium businesses must keep pace with change. They are the lifeblood of the U.S. economy, and their success is critical to our national growth,” stated Bridgewater.
So, when will cash disappear? More than 35 percent of businesses say they think cash will be obsolete and disappear within the next 20 years.