Payments have been evolving for a long time, but never more than in the past few years. As digital payments solutions have taken center stage, cash and check payments have begun steadily declining. This shift has required that service businesses make a decision: continue with the status quo of accepting cash and checks, or modernize their accounts receivable practices. Let’s explore why the latter is what will help you satisfy customers, stay ahead of competitors and collect more money.
What do Your Customers Prefer?
In addition to recent digital evolutions, most industries have also undergone a mass customer-centered gut check. Businesses of all shapes and sizes are recognizing more than ever that customers’ needs, wants and preferences need to drive their internal decisions, including how to accept payments.
For those in service businesses, the same holds true. How do customers of gymnastics coaches, plumbers and dog trainers want to pay? The answer is clear: digitally. Mobile bill payments increased 5% to 45% in a year’s time and digital wallets were found to account for 29.8% of e-commerce transactions, up around 6% from the previous year. Younger consumers in particular are demonstrating a desire to pay digitally, with more than 50% of Generation Z and Millennial consumers using digital wallets to pay bills.
Furthermore, Chase conducted a study about digital banking attitudes and found corroborative results, including:
- Four out of five survey respondents reported they prefer to manage their finances digitally versus in-person.
- More than 85% of those surveyed indicated they believe they save time by managing their finances digitally.
- The vast majority agreed they feel confident about the safety and security of making payments through digital apps.
So, the question becomes: if your customer base wants to make digital payments, are you enabling them to do so?
What Does the Future Look Like?
Of course, consumer preferences aren’t the only consideration to keep in mind. Service businesses must also think through the issue of payments pragmatically. First, will digital payments continue? The data so far points to acceleration of this trend to date, with experts suggesting it will only increase as time goes on.
Second, how do banks factor into this conversation? A look at the data reveals that physical bank branches are shutting their doors, likely due to decreased demand as more consumers handle their financial affairs digitally. In the U.S. in 2019, there was a net loss of 1,664 branch locations. In 2020, this number increased to 2,284. In March of 2021, data from S&P Global cited a loss of 2,677 over the preceding 12 months.
Since physical branches are closing in greater and greater numbers, it stands to reason that ATM locations will decrease too. As they do, consumers’ ability to access cash as easily as they used to will decrease too. In other words, even if consumers want to pay by check and cash (which data has shown they primarily do not), their ability to go to physical bank branches to get out cash or pick up checks is going to continue to be restricted.
Should I Accept Digital Payments?
With all of this in mind, the answer is clear: service businesses must accept digital payments in order to cater to consumer preferences, prepare for society’s digital financial shift and continue collecting their well-earned pay. The future is bright, if you join the digital payments revolution.
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