Credit card is one of most popular the payment options in the world. People feel it is easy, convenient and light to carry anywhere. Yet, are you ever better off using cash instead? It depends on which side of the transaction you’re on. However, consumers prefer credit:
- Credit card transactions create an electronic trail. If you and your merchant lose your receipts, the purchase record is still with card issuer.
- As consumers you do not have to be afraid of becoming a fraud victim as most consumer credit cards offer fraud protection. Let say if you a a victim of fraud, you will likely get your money back. However, if you use cash, it is hard to get back the stolen cash.
- Benefit of using cards is consumers will receive reward points and collect it. After a while they may redeem the reward point with something valuable such as for travel or dining purposes. Paper money, by contrast, offers zero value after it leaves your wallet. This clearly explains why people nowadays prefer credit cards over cash.
For the merchant, the story is a little different.
Merchant Prefers Cash
Displaying credit card logos drive more traffic to your store and thus increase sales of your business. However if you are really concerned about fraudulent activities, you may prefer cash more than credit cards. This is especially true if you haven’t updated your payment infrastructure to accept EMV credit cards. Despite the fear of accepting cards, you shouldn’t live in a constant fear as cash is not always the better option.
However, you should take special precautions to reduce your own exposure. If yours is a high-volume or high-ticket business, even 0.1 percent in fraudulent purchases can start to add up.
Below are signs that cash is more relevant than credit cards:
- Scan for outliers. Look after consumers who buy expensive products, buy in bulk and those who are price insensitivity. That’s a sign of potential fraud.
- Alert to customers who visit your store repeatedly and too often in a week. Potential fraudulent activities might occur. Just beware.
- Check the back of the credit card. Make sure it is signed. If no signature, insist on cash instead.
The above rules apply to all types of merchants, but if you sell electronics, high-end fashion, jewellery or consumer appliances, know that you may be a more likely target.
The Best Way to Manage Credit Card Risk
You have options. It’s better to upgrade your payment infrastructure for better protection than running a cash basis business. It is not that you totally do not accept cash, it is just improve it. With EMV payment processing, tokenization and point-to-point encryption, you can dramatically decrease the likelihood of fraud in your store.