As mobile wallets become more convenient and consumers switch to a cash-free and card-free shopping experience you as a business owner might be wondering if accepting ecash payments would benefit your business finances. The short answer is yes, it would benefit your business. Being part of the evolving business world means being willing to evolve in order to succeed. It might be time then, for your business to start accepting ecash.
What Is Ecash?
Think of “ecash” as a general term for electronic cash that includes digital wallets, online cash, electronic checks, and more. You might even already use a form of ecash if you use apps like Apple Pay or Venmo.
The idea behind business owners using it is that it helps cut out the transaction fees you might have when accepting credit cards or cash that you then have to deposit at the bank, among other benefits that we’ll get into more later.
Ecash was developed to more easily conduct transactions on the Internet, letting consumers and businesses that may not have access to a debit or credit card participate in online transactions. It’s even been seen as helping certain types of freelancers who operate online, giving them a way to get paid easily for their work without having to deal with traditional payments that could take much longer to get to them. Ecash has been viewed as a way to truly globalize the economy, bringing together what has been building in terms of the global business environment.
Think of ecash as combining the benefits of many other types of transactions. While similar to debit cards and credit cards, ecash enables individuals to conduct transactions with each other. Although it is similar to personal checks, it is much more feasible for even the smallest of transactions and without the fees associated with some other methods of payment.
How Does Ecash Work?
Ecash will work differently depending on which company you’re working with or which ecash payments you’re accepting. Typically customers who pay via ecash will either use a smart card with their cash loaded onto it, or they might use one of the popular apps or online platforms there are that provide ecash payment solutions.
Here’s how the typical ecash system works to illustrate why it’s so fast and ideal for topping up that cash flow in a business: A customer signs up for an ecash app that can be linked to an existing bank account. The customer can then use electronic coins that represent the payment they make towards goods and services. They get this option on many websites or they can use their app to transfer the electronic money.
The merchant’s software then generates a payment request with a description for the goods, price, time, and date, which the card or app will track as a record for the customer. The ecash then is subtracted from the existing ecash balance and sent to the merchant in a matter of a few seconds.
What Business Owners Should Know About Ecash
As fewer and fewer people are carrying around actual physical cash, it only makes sense that more of them are using ecash as an alternative to cash or even to credit cards. Businesses who want to be ahead of the game or those that want to make sure any customer has a way to pay for their goods or services are making the switch to ecash if they haven’t already.
Additionally, when you use ecash there isn’t a third party involved usually meaning the fees associated with a middle man of some sort like with credit cards, don’t exist.
The Risks of Using Ecash
A lack of a middle man and any type of hard-and-fast regulation like there is for other means of payment makes using and accepting ecash a riskier option than accepting actual cash or credit cards. This is definitely something to keep in mind when deciding whether you want to accept ecash and how you might want to go about doing that.
The Pros and Cons of Accepting Ecash
When deciding whether to accept ecash and make it part of your business’s day-to-day, there are pros and cons for you to consider. You’ll have to decide if the pros outweigh the cons and whether ecash is something you want your business to start using to increase customer satisfaction.
Pros of Accepting Ecash
Early adopters of ecash have the advantage of winning over customers who will view the business as a cutting-edge company. This can be a real enhancement to the brand image you are working to build.
More customers will also be accessible through your ability to offer your goods or services in the global market when accepting e-cash. That’s because you are not restricted by local currencies but work within a digital realm of payments. It facilitates your ability to work with people anywhere and at any time.
It’s a simple process for payment that is easy for your business to use as well as for your customers. Keeping it simple means a better user experience for your customers, so they might feel more inclined to return, again and again, to your business. As these transactions also tend to be among the fastest way to receive your money, you will gain further efficiencies and increase your cash flow.
Another advantage: Ecash is considered a very low-cost transaction, especially when compared to accepting credit cards. There are even payment processing companies that could help you process e-cash transactions, offering little to no costs to make the transaction.
In the world of payments where fees keep appearing, your ability to cut out this expense can mean increased profitability.
Cons of Accepting Ecash
When it comes to the cons of ecash, fraud is the primary concern including those making counterfeit digital money that is difficult to distinguish from legitimate money. There are also concerns among governments that criminals and terrorists are using this type of currency to fund their activities.
As of yet, no standard exists for the use and exchange of ecash that is consistent around the world, leaving many to be suspicious of it. This also keeps the risk of accepting ecash higher than other types of payment methods. Any type of hacking that results in the theft of ecash could mean that the fiduciary responsibility may land on your shoulders, particularly if doing so has put you in a position of non-compliance where fees and penalties could also be added to that burden.
However, in addressing these “cons” related to ecash, the good news is that online security is becoming more fortified in terms of multiple layers and tools, such as tokenization, encryption, and the use of biometrics.
The Bottom Line
If you do choose to start accepting ecash in your business, it doesn’t mean you have to forego the other payment methods you are already using like debit and credit card acceptance. After all, it could be quite a while before any paper or plastic payment options completely disappear given consumer and business comfort levels with these long-used items for transactions.
Just think of it as a way to add more payment options to your business to speed payment and cash flow. If you are still thinking about it or have adopted this new payment method, be sure to continue reading up on the latest updates related to ecash so you ensure you are on top of any regulatory and security issues. The more you know, the better decisions and faster actions you will be able to make.
John Rampton is an entrepreneur, investor, online marketing guru, and startup enthusiast. He is the founder of the online invoicing company Due. John is best-known as an entrepreneur and connector. He was recently named #2 on Top 50 Online Influencers in the World by Entrepreneur Magazine and a Blogging Expert by Time. He currently advises several companies in the San Francisco Bay area.