EFTPOS vs. Cash: Which Payment Method Reigns Supreme?
The business world is rapidly changing with the advancement in technology and financial tools. Payment systems are also constantly changing. Consumers also crave convenience, speed, and security in their transactions.
For decades, cash has been a mode of payment. However, the rise of EFTPOS (Electronic Funds Transfer at Point of Sale) has changed the industry for good. It has impacted the industry in a good way. It promises speed, ease, and advanced security features.
Today, we are looking at the pros and cons of both cash and EFTPOS.
Let’s get started.
The Rise of EFTPOS
EFTPOS is a system that allows customers to pay using a debit or credit card. After the rise of the internet in the early 20th century, this technology was introduced to businesses. Now, it has become an integral part of retail and service industries worldwide.
With EFTPOS machines, businesses can sell their goods through direct fund transfers. Its popularity has been rising in recent years due to the numerous benefits it offers.
Let’s look at the benefits of EFTPOS.
Benefits of EFTPOS
Here are some key benefits of using EFTPOS.
1. Affordability and Speed
One of the best things about EFTPOS is the speed at which the transaction can be processed. These transactions are quick and hassle-free. Customers can pay with a single swipe or tap which reduces the waiting time at checkout.
2. Security
Generally, these transactions are considered more secure than cash. All EFTPOS transactions are encrypted. Some of the systems also boast features like PIN verification and two-factor authentication.
3. Convenience
Well, it is no secret that EFTPOS is one of the best ways to pay for anything nowadays. It is convenient for customers and also businesses. For instance, tracking sales data with EFTPOS machines provides business owners with valuable insights into consumer behavior and sales trends.
4. Accurate Record Keeping
If you are using EFTPOS, then every transaction is recorded digitally. It makes it easier for businesses to manage their finances, monitor inventory, and more. It also reduces the risk of human error and simplifies tax reporting.
5. Loyalty Programs
It is especially great for customers as many EFTPOS systems allow businesses to integrate loyalty programs.
Drawbacks of EFTPOS
Despite being a great technology, this also comes with a few drawbacks. We have listed some of them here.
1. Dependency on Technology
Well, we know that EFTPOS systems rely heavily on technology and the internet. Outages and tech issues can occur at any time, hampering your ability to process payments.
2. Transaction Fees
Businesses should also know that EFTPOS also incur some fees. This fee can add up over time. This is especially difficult for businesses that operate with thin margins.
3. Initial Setup Costs
To set up EFTPOS, businesses need to invest significant money in hardware and software initially.
Benefits of Cash
Well, cash has been the preferred payment method for centuries and it continues to dominate in markets where the penetration of technology is not up to the mark. EFTPOS may have transformed the payment method landscape but cash is still one of the most popular options for many.
Here are some benefits of using cash.
1. Universal Acceptance
The first thing about cash is that it is universally accepted. Thus, it is a reliable payment option for any traveler or customer. No matter where they are, cash is going to be the best way to pay for things.
2. No Fees
It’s obvious that businesses don’t have to pay any fee while accepting cash. Due to this reason, it is a cost-effective option for small retailers. This can also lead to lower prices for customers as businesses can pass on the savings.
3. Privacy and Anonymity
Using cash at the shop doesn’t require you to give out personal or financial information. So, it offers a level of privacy for individuals. This is especially great for people who value privacy.
4. Tangible Value
Cash provides a physical sense of spending for many people. It allows them to stick to a budget and control over spending.
5. Accessibility
This type of payment is accessible to everyone even to those who do not have a bank account.
Drawbacks of Cash
Well, despite many advantages, cash also has some drawbacks. Here is the list.
1. Inconvenience
It would be inconvenient for people to carry large amounts of cash. It is also inconvenient for people to make exact payments without change. Apart from this, cash can be stolen or lost.
2. No Tracking
It would be difficult for people to track their cash transactions. This can also lead to discrepancies in financial records for businesses. Businesses may not be able to manage cash flow without proper records.
3. Cost of Handling Cash
Handling cash in large quantities can also be a troublesome process for businesses. They may need to invest in cash-handling processes to run their business efficiently.
A Comparative Analysis
When you compare EFTPOS and cash, there are several factors to take into account. Without proper analysis, you cannot say which payment methods reign supreme.
- Consumer Preferences: Businesses should also consider consumer preferences into account when selecting the preferred method. Nowadays, the younger audience tends to favor digital payment methods including EFTPOS and mobile payments. Older consumers still prefer cash due to familiarity.
- Business Needs: Businesses should think about the unique needs of a business when choosing between EFTPOS or cash. Small businesses may prefer cash due to small amounts. On the other hand, businesses with high volumes may want to utilize EFTPOS.
Which Payment Method Reigns Supreme?
In the end, it all depends on what a business needs and what consumers want. Both payment methods have their advantages and disadvantages and are suitable for different needs.
When we think about it, a hybrid approach to this emerges as the most practical solution. It allows businesses and consumers to choose the payment method that fits their needs.
However, in recent years, the EFTPOS payment method has been on the rise and consumers are also shifting toward this.
Wrapping Up
Well, both payment methods are widely used in the world. But the choice between both ultimately hinges on individual preferences and specific circumstances.
EFTPOS offers speed, security, and valuable sales data, making it the best choice for modern-day businesses. On the other hand, cash offers tangible value and privacy. So, it appeals to those who value privacy.
Most businesses use both payment methods for the convenience of their customers. Most likely, it is going to remain the same in the foreseeable future.
Hope you’ve understood both payment methods and why businesses are using them.
Finance Writer
