Preparing The Business Case >>

Benefit Identification

3. Cost Reduction

>> Changes in Tender type

While the relative cost between cash and cards will differ between retailers – and is dependent on a variety of factors – there are a number of areas where a reduction in cash will provide savings. It is acknowledged that a proportion a cash costs will be fixed, and variable costs may not reduce unless a significant proportion of cash is converted to card. Acquirers will be able to assist in setting out what can be expected over the short and longer term.

A reduced cash float potentially provides additional savings on insurance - and fewer trips to the bank. In some cases, where a cash float must be loaded – such as at vending machines – the cost of doing so is significant, and therefore the potential savings offered by Contactless are more significant.

A reduction in cash may also provide:

• savings due to reduced staff costs for cash handling/ back end processing;
• reduced insurance costs;
• savings due to reduction in cash shrinkage risk (theft and fraud);
• savings due to reduction in reconciliation errors; and
• savings due to a reduction in errors at POS.

The use of cards provides the retailer with lower risks than other payment types for a number of reasons:

• greater certainty of payment;  
• existence of an audit trail;  
• assured payment - limited chargeback rights, and none for lost and stolen cards; and  
• risk managed by the card; and security of chip and PIN retained for transactions over £15.

>> Reduced Receipt Handling

Since a receipt need only be produced for a Contactless payment where a customer requests one, there are potential savings – although some retailers may choose to continue to produce a cardholder receipt to conform to standardised procedures. The non-production of receipts can provide cost savings – both in terms of the time to produce at the point-of-sale and the paper costs.

A secondary benefit from a reduction in receipt production is a reduction in the number of terminal failures, since a large percentage of failures are often attributed to receipt paper – either running out or causing faults.  

>> Improvements in Productivity

Once the Contactless implementation is established and cards become widespread, retailers may find that they can take advantage of changes in workload associated with processing payments. As more cardholders make Contactless transactions with minimal intervention from retail staff, the resource requirements at the point-of-sale can be reduced or reallocated.