The continued use of cash is surprising given its inconveniences and the risk consumers face in carrying it around. Love it or hate it, however, cash is playing far less of a role in society and with car wash businesses. With cash rapidly becoming obsolete, welcome to the new cashless world.

While a number of countries are working to make payment systems less dependent on cash, many car wash operations that remain dependent on cash sales could find income and profits declining. That’s right, many car wash owners and operators who continue to ignore developments such as the recently introduced EMV Smart Card technology; Apple’s mobile wallet, and other mobile payment vehicles; cyber currencies; and the like may find revenue affected.

THE ROAD TOWARD CASHLESS

The Federal Reserve estimates that there will be $616.9 billion in cashless transactions in 2016. That’s up from around $60 billion in 2010. Not too surprisingly, governments have been increasingly pushing for a cashless society.

In Germany, strong moves are underway toward limiting cash transactions while Sweden is already far advanced towards a cashless society with many museums prohibiting cash payments for admission. In other ways, Sweden has advanced far along the cashless path as many banks no longer accept or dispense cash and bill and coin transactions now represent only 2 percent of Swedish commercial activities.

While the elimination of cash is not yet a government policy in Canada, many people within the country are voluntarily moving toward credit and debit card payments at a remarkable rate with a whopping 77 percent of responders to a recent survey preferring to eliminate cash.

Innovations in technology, in particular PayPass and Paywave, have drastically reduced the need for people to carry cash. People can use their smartphone devices to pay for goods much like swiping a debit card.

HELLO PLASTIC, GOODBYE ATMs

Illustrating the trend towards a “cashless” world, ATMs may be on borrowed time with data showing consumers increasingly embracing technology for transactions. According to the Federal Reserve, banks in the United States have been progressively scaling back the number of ATM machines. In 2015, ATM withdrawals dropped by a record 7.2 percent.

Hoping to reverse this trend, Android Pay is looking to change the way users interact with their ATMs by taking plastic debit cards out of the equation. As part of an effort to have more consumers use Android Pay in their everyday purchases and finances, the mobile wallet will now enable users to get cash out of an ATM without having to actually put in a debit card.

Instead, users can simply use their mobile device with Android Pay, tap at the ATM and proceed with the process as usual. No more carrying around a plastic debit card to go to the ATM.

MOBILE PAYMENTS

Mobile commerce or M-commerce, is the buying and selling of goods and services through wireless, handheld devices such as cellular telephones and personal digital assistants (PDAs) and represented 34 percent of all transactions globally in 2015.

M-commerce and other electronic payment methods are gaining acceptance by consumers, while this move away from cash is being welcomed by many in the car wash industry.

PayPal, the online payments system, continues to add more merchants and now counts 14 million merchants to complement the platform’s 170 million users. Users will be able to use their mobile phone online, in apps, as well as in a store or at a car wash.

ELECTRONIC MONEY

Electronic money, or e-money, is the money recorded electronically on a stored-value card. Electronic money is a floating claim on a bank or other financial institution that is not linked to any particular account. Examples of electronic money are bank deposits, electronic funds transfers, direct deposit, payment processors, and, of course, digital currencies.

As an alternative to government issued cash, Bitcoin made its first appearance back in 2009 and today there are hundreds of other cryptocurrencies, often referred to as Altcoins. Mainly used for large transactions, in the United States the IRS has ruled Bitcoins and several of its counterparts are not currencies but rather an “investment” vehicle that fluctuates in price.

MOBILE WALLETS

Although the digital era has been in full swing for some time, many car wash businesses have yet to invest in the latest technology. Near field communications or NFC is one such technology operators might want as part of their marketing campaign.

Many mobile payment systems have been introduced in the past few years including Google Wallet and Apple Pay. Consumers with mobile devices have a “digital wallet” option (a list that’s ever-growing) accepted by merchants with NFC terminals up and running.

According to many reports, Wells Fargo Bank will soon launch an NFC-based mobile payment service. With mobile wallets such as the one Wells Fargo plans, consumers will enter their credit card information in their phones before shopping with merchants who use NFC technology. The consumer holds the phone over a payment terminal and taps a button on the phone or enters a PIN.

Another benefit offered by the new NFC technology is integration with social media. Imagine, with a quick scan, customers can automatically alert followers of their location — your car wash or auto detailing operation, along with an invitation to join them. In fact, one of the many Facebook apps available, “Add Friend,” automatically sends a friend request when two NFC-enabled phones come in close proximity.

A car wash operator can achieve similar results by setting an NFC tag by the entrance, and a friend or “like” request for the wash’s web page will be sent to customers with an NFC-enabled phone as they enter the premises.

NECESSARY SECURITY

Along with the convenience offered by cashless transactions comes an increased awareness of security concerns. A good example is provided by the new chip encoded “smart” cards, which an estimated 90 percent of consumers will soon have.

By now, every car wash owner and operator should be aware of the so-called “liability shift” that occurred when the new EMV (Europay, Mastercard & Visa) technology was introduced. No longer will the credit card companies be liable for fraudulent use of the old credit card technology. In essence, businesses such as car washes and card processorsthat continue to use the old technology will find themselves, not the credit card companies, liable for fraud.

Finding a suitable way to transition from conventional credit cards to the new EMV smart card technology has been difficult. Some merchant processing companies are attempting to persuade businesses to use so-called “semi-integrated” solutions, selling the marriage of existing POS systems with the new “smart cards.” Unfortunately, this has not always solved the problem.

Fortunately, there is good news for merchants in that true integrated solutions have recently been introduced. This new tool is a cutting edge implementation of technology that takes current POS system data and migrates the communication with a chip processing device. This streamlined process meets regulations, consumer demand, and the bottom-line concerns of merchants.

GIVE ‘EM WHAT THEY WANT

Adopting any of these new and emerging payment systems largely depends on what the car wash’s customers prefer and are willing to deal with. In other words, will the customers of the car wash business embrace or reject these new payment options?

Obviously, for the poor, cashless transactions often aren’t practical. Prepaid credit cards are one alternative, as are vouchers that can be purchased for cash and used for a variety of online services.

There are also large numbers who are currently “unbanked” for a whole range of reasons. Around 8 percent of the U.S. population remains unbanked, and 20 percent of households are underbanked, meaning that “they have a bank account but also use alternative financial services (AFS) outside of the banking system,” according to a survey by the Federal Deposit Insurance Company.

In 2014, according to a Gallup poll, 29 percent of Americans didn’t have a credit card, and that figure is rising, in part because Millennials don’t like them. The consumer financial services company, Bankrate, published figures putting the number of Millennials without a “major” credit card at 63 percent. The main alternative, again, are prepaid cards, but they are burdened by high fees, further punishing the poor.

Many studies indicate that older people hold and use more cash while young consumers are more likely to use new payment technologies — except in the United States where younger people appear to use significantly more cash than their elders.

The differences between the worldwide trend and that of U.S. consumers may be explained by the fact that younger consumers apparently buy different products and services and at different venues than older individuals. All of which raises the question: Does your car wash operation offer alternatives to cash that appeal to the groups that make up your demographics.

The new technologies being created and improved to facilitate cashless transactions and improve security are good news for every operator. But, is your car wash really ready for it, and can it profit in the coming cashless world?

Mark E. Battersby is an Ardmore, PA-based freelance writer, specializing in finance and tax issues.