Like physical cash payments, cashless payments also come with their own unique set of risks for consumers and businesses. From electronic fraud and cybersecurity threats to reduced privacy, financial exclusion, and reliance on digital payment infrastructure, such risks are operational and structural, and never a reason to forego digital payments altogether.
Flexibility during implementation and ongoing maintenance is key. Implementing a hybrid digital payment model and alternative cash-to-digital payment solutions can significantly reduce the above risks for consumers and businesses. Here are some of the most common concerns you need to know about digital payment methods, and how modern, inclusive payment solutions are already addressing and preventing these issues.
Key Risks Associated With Cashless Payments
Cybersecurity and Fraud Risks
Digital payment methods and systems (and the PII they often store) can be high-value targets for cyber criminals and fraudsters. Skilled at identifying vulnerabilities, hacking into systems with weak passwords, or crafting sophisticated phishing schemes to secure data, and more, these cyber criminals are continuously upping their game to get their hands on sensitive personal and financial data. Traditional, bank-issued debit cards and credit cards also present a handful of risks, including fraudulent chargebacks and data breaches (and exposure).
To mitigate these risks, businesses are investing in highly secure, prepaid and controlled-use digital payment solutions. These payment technologies limit or otherwise never store sensitive personal information or customer banking data, significantly reducing data exposure and ultimately checkmating cybercriminals and fraudsters.
Financial Exclusion
Businesses that refuse to accept cash and instead fully embrace digital payments risk excluding their unbanked or underbanked customers. Not only can their otherwise loyal customers (or new prospects) not make a purchase and secure the goods and services they need, but these businesses are losing revenue (and customers) unnecessarily.
Cash-to-Card® Kiosks and similar inclusive digital payment solutions bridge the gap. They allow cash-only or cash-preferred consumers to quickly, securely, and anonymously convert their cash into a prepaid debit card that they can use on-site, online, and anywhere major credit cards are accepted.
Privacy and Data Concerns
Standard digital payment methods and infrastructure, such as debit and credit cards, and more, keep an extensive digital footprint of user and transaction data directly connected to the user/buyer.
To protect today’s consumers, businesses can offer their customers modern, alternative payment methods that collect limited-to-no data, keeping buyers safe by significantly reducing data exposure.
Overspending and Payment Control
When making a payment is too seamless, it can encourage overspending among consumers, especially those paying via a revolving credit method. To significantly improve personal spending control and budgeting concerns, stored-value cards (SVCs) and other digital prepaid solutions come with built-in spending limits and alerts, giving consumers full control over their spending (and budgets).
Technological Dependence and System Reliability
Whether due to weather issues or system-related failures, technology can let us down at times. Fully digital payment environments can face operational hiccups (at best) or a total shutdown (at worst) in the event of a system disruption or outage.
Ensuring customers have flexible payment access, such as cash-to-digital payment options, and that staff are fully trained to troubleshoot any issues that might arise, will drastically improve your operational resilience in the face of disruptions or failures.
Fees and Cost Exposure
Let’s face it—traditional credit card networks and banking products charge payment processing fees and chargeback fees that chip away at net revenues and ultimately, your profitability.
Businesses can significantly reduce fee exposure by rolling out alternative digital payment models, such as Reverse ATM™ technology and more. The savings don’t end there. These modern digital payment technologies also simplify reconciliation by allowing businesses to forego manual accounting, reducing time-consuming staff duties. The result: accurate insights into transactional data and improved operational efficiency.
While digital payment solutions come with a unique set of risks, businesses can mitigate the majority of them by implementing a flexible payment infrastructure.
Ready Credit’s digital payment solutions help businesses avoid these risks by significantly reducing fraud exposure, maintaining accessibility for cash users, and operating efficiently in digital-first environments without excluding their cash-only customers.