Recent payment headlines, including those of our own blogs, are full of exciting technologies such as contactless payments, QR-code-based payments, omnichannel commerce, tap to mobile (TTM) and more. Yet, while these technologies are revolutionizing payments and helping merchants in exciting new ways, many merchants still operate under a cash-only model, not accepting electronic payments of any type. For software developers, these merchants represent an untapped opportunity worth pursuing.


NMI recently surveyed 300 small business owners and 1,000 consumers in the U.S. and U.K. to better understand their situations, habits, and desires. The survey results provide strong support for the idea that cash-only merchants must invest in modern electronic payments solutions.


Cash-only merchants can’t afford to lose sales


In today’s pandemic-impacted marketplace, most merchants can’t afford to miss out on sales. According to the survey data, 78% of SMB merchants said they’d lost a sales opportunity in the past month because a customer didn’t have cash available. Additionally, 84% of cash-only SMB respondents said at least one customer had left a negative review because they only accept cash at their business, with nearly a third (32%) saying customers have left 4-6 negative reviews.


On the consumer side, nearly half of respondents (49%) said they could not make a purchase because the business they were shopping at only accepted cash. In addition, more than a third of these affected consumers (37%) also said they didn’t return to the vendor where their purchase was denied due to a lack of cash.


Cash-only operations can also affect employee tips. In the past 12 months, 41% of consumer respondents said they were unable to tip a worker anything because they didn’t have enough cash. Twenty percent also said they could not tip as much as they wanted to because they didn’t have enough cash.


Cash-centric verticals create niche opportunities for ISVs


The most common settings where respondents said they were unable to make a purchase because the business they were shopping at only accepted cash included food trucks, local restaurants and coffee shops, and farmers’ markets.


More specifically, below is a breakdown of places where consumers indicated they’ve been unable to make purchases due to the business only accepting cash:


1. Food truck: 40%

2. Local restaurant/coffee shop: 36%

3. Farmers’ market: 30%

4. Street vendor: 28%

5. Bar: 21%

6. Festival: 18%

7. Transportation: 16%

8. Street performers: 15%

9. Concert: 14%

10. Sporting event: 14%

11. Landscaping services: 6%


The cons may outweigh the pros when it comes to cash-only business models. Trends like missed sales, negative online reviews, non-returning customers, and lack of employee tips carry significant consequences. However, many cash-only businesses may not be able to incur the costs for an advanced payment solution or don’t want to disrupt their business models.


Tap to mobile is the affordable solution for cash-only businesses


Considering that 92% of cash-only SMB owners are open to using tap to mobile, a shift could be imminent as the technology develops and makes digital payments more accessible than ever before.


If you’re unfamiliar with TTM, the payments technology turns everyday smartphones into functional payment acceptance devices within minutes. This enables cash-strapped SMBs and micro-merchants who cannot afford expensive payment terminals to accept contactless payments from contactless-enabled cards and devices like phones, wearables and tablets.


While TTM solutions might be buried deep on some payment company’s product roadmap, NMI is at the forefront of developing tap to mobile solutions and is ready to help power the next generation of entrepreneurs. Whether you are a payment solution provider or an ISV looking to expand your app’s payment capabilities, we’re ready to serve as your trusted partner. Contact us today to learn more.

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