Why SMBs Are Ready For A Cashless Future

When Visa announced its Cashless Challenge a few weeks ago, it obviously hoped to make some news. After all, directly incentivizing 50 food-focused small- and medium-sized businesses (SMBs) to opt out of accepting cash entirely — with $10,000 to help pay for technology upgrades — is definitely a newsworthy way of waging the war on cash.

So, although the big interest in the program was not entirely surprising to Visa’s global head of product, Jack Forestell, the depth of that sector’s interest in the program did come as something of a shock.

“I am not surprised that people were interested in the story — what I underestimated was the degree to which almost everyone could make a personal connection to it,” he said.

Visa hoped to spark an interest among merchant partners, possibly helping them take the plunge and move away from cash forever, Forestell told Karen Webster in a follow-up conversation about the program that will launch Aug. 12.

What Visa found, according to Forestell, was news that the campaign actually inspired a bigger act of self-reflection among merchants. These businesspeople suddenly tuned into the fact that cash handling costs — which once made sense when transactions were 90 percent cash — don’t make as much sense when 80 percent to 90 percent of business is now driven by digital payments.

Visa’s interest in staging this challenge, Forestell noted, was to get people thinking about that fact in a fun way. He added the campaign itself is part of a much broader Visa strategy around replacing cash.

A Shifting — But Resistant — Market

The SMB restaurant and food service provider sector was Visa’s first Cashless Challenge target because it is both a segment of commerce that could benefit greatly from digital upgrading, and also one that is slower than other retail sectors to jump on board the digital payments train.

It is also one in which solutions providers have a great interest in working with Visa to enable a cashless future, Forestell noted.

“We have seen a lot of response from developers and tech partners,” Forestell said. These developers are in the order-ahead business, the tableside hardware software business, or businesses that do integration work — and have a keen interest in helping companies tap into the benefits of data, loyalty and rewards that a crumpled $20 in a customer’s pocket can’t ever do.

Learning For The Community

The move to cashless is beneficial, Forestell noted, but that doesn’t mean it’s going to all be obvious or easy. Issues that are well addressed currently with cash — tipping, for example — need to be coded and digitized in a way that makes sense.

One of the byproducts that come from working with the community at large on initiatives like the Cashless Challenge, Forestell noted, is that the team can uncover use cases to solve.

“Tipping is one that comes up a lot, and we have a lot of feedback,” Forestell said, adding that charitable contributions are another.

And though Forestell said he wouldn’t claim Visa has uncovered them all — or that it has every potential issue completely locked down — what it has found is the problems so far have been eminently solvable and, in many cases, improvable. An example, Forestell said, of a gap that can become an opportunity.

“I suspect that when that customer’s favorite coffee shop turns that POS screen around and that customer is asked to make a tip, and all that customer has to do is pick an amount, the rate and the frequency of tipping increases,” Forestell said

What’s Next

The Visa Cashless Challenge is, as Forestell noted, part of Visa’s larger worldwide effort to win the war on cash. And it is lining up some allies to help it get there, with 20 governments around the world embracing some kind of electronic payments to push away from cash.

India, Forestell said, is the most visible example in the last year or so, but around the world from Singapore to Scandinavia, cash is increasingly becoming a historical artifact. (Except in the Commonwealth of Massachusetts, where, Karen Webster noted, going cashless is literally banned by law, as all businesses are required to accept cash by statute.)

“We’ve see a lot in the last 20 to 30 years on what works and what doesn’t, and we are in a good place to advise on how to build the right business and consumer advances,” Forestell said.

And, coming soon, Visa will be helping business in the U.S. (outside of Massachusetts) get in on those consumer advances. Applications officially open on Aug. 15, though Forestell noted that many hundreds of preliminary applications have already been submitted.

“Businesses are waking up to the fact that they don’t want to take on the additional risk and hassle of cash anymore, and that they probably can get their customers there along with them,” said Forestell. “What we really are asking them to explore is taking the leap.”