Customer acceptance of cashless payment has outrageously increased since the COVID-19 pandemic began. Although there is little medical study and evidence to support the transfer of virus via cash transaction, the fear is there and encourages customers to go cashless. Getting out of the house cashless is no longer unrealistic in this current timeline.
Many would prefer to look for the “Card accepted here” sign before walking in the restaurants, supermarkets, or pharmacies. It brings the absolute convenience of quicker transactions, unnecessary human errors, irresistible discounts, and unexpecting loyalty points earned in exchange for mileage or gift cards. This payment trend has sneaked its way into the hospitality sector. Travelers, especially popular among international guests, are often keen on paying for their accommodations and dining through cards, e-wallet, or mobile apps. What does this mean to the hospitality industry? Any challenges and what will the upcoming payment trend be?
What cashless payment really is?
Cashless simply means no cash involved. Payment is cashless if it is made by cards or electronic methods instead of cash, and known as digital payments. This payment methodology has been widely used in amusement parks, festivals, concerts, fairs, during flights, etc. According to the Vietnam Insider, Vietnam market transaction value had soared 177% in the first half of 2020 compared to the same period in 2019. There are many different ways of cashless payment, these include:
1. Bank cards: Credit cards and debit cards are the most used payment forms globally.
2. Mobile wallet applications: There are numerous mobile wallet apps on the market for customers to choose from. This method of payment is quick and functional. Users can send, receive, and store money as they wish. MoMo, Viettel pay, Moca, Airpay, VNPT pay are the few e-wallet apps that have gained popularity in the Vietnam market. The government also has encouraged citizens to pay their utility bills, such as water, electricity, internet, and television cable bills through e-wallet apps.
3. QR code: it stands for Quick Response code, which is a pattern black square grid and can be read by smart devices such as mobile phones, tablets, and computers. After scanning the QR code into the devices would redirect customers to proceed with the payment on a certain payment gateway.
4. NFC technology: is short for Near Field Communication. The technology enables users to pay by tapping a chip card onto a POS/ reader device. It can be credit, debit, wrist band or simply a smart card with a built-in chip using NFC technology. There are phones with NFC-enabled technology which can be linked to your e-wallet or bank cards.
5. Gift cards & vouchers: physical gift cards and vouchers or non-physical gift cards and vouchers (also known as e-gift cards, e-vouchers) are used for customer rewards and birthday presents.
Hospitality industry with cashless payment trend
Undeniably fast transaction in all cashless payment transactions. Hotels now allow customers to deposit money into their keycard. Incorporating the NFC technology, customers can enjoy their stay without the need to carry their wallets around the property. It results in less waiting time for customers and avoids over-waiting queues.
Reducing the fraud of counterfeit money, human errors, robbery of cash internally and externally. It’s also easy to manage and control by the accounting system.
Going cashless let hoteliers track customers’ behavior during their stays. Understand their favorite location within the hotel property, their most spending item, which dining restaurant they would prefer, and much more. From this information, hoteliers can easily record and serve their guests better, achieving customer satisfaction is no longer an “impossible mission”. Keeping up with technology would position your hotel brand above others in the industry. It builds customers’ trust and loyalty, keeps them coming back for their next trip.
Maximize sales and revenue
Due to the ease of payment, customers tend to enjoy and would be willing to spend more than they plan to on added-value products and services such as spas, private tours, brunch package, etc. To promote customers, a few hotels would offer generous discounts if their guest’s accumulated spending exceeds a certain amount at the time of checking out. It can later be exchanged for money and deducted right from their stay expenses, or later used for the next stay.
The challenges for the hotel industry
With endless advantages the cashless payment trend has brought into the hotel industry, the challenges are also there. Below are a few worth mentioned:
While it is secured to go cashless for guests, it is challenging for the hoteliers to make sure their connection is not in breach and stable. Digital translation relies heavily on the Internet connection. To ensure your network is safe and always up and running means strict monitoring policy and IT staff to standby 24/7.
Higher cost with credit/debit charging fees
Depending on the card authorizer, the processing fee might be different. If you own a hotel chain or multinational hotel corporation, you would be treated with special low processing fees, somewhere between 0% – 1%. Otherwise, the normal rate would apply to your guests’ transactions.
Digital transaction knowledge update
At the current rate of technology development, digital transactions are constantly getting created and updated. Be in sync with the new releases and the latest tech to avoid any risk and fraud regarding digital transactions for guests as well as your hotel.
Customer denial to go cashless
The fear of overspending if you do not “see” and feel the money going out of your pocket is stopping customers from moving forward with the cashless payment trend.
The cashless payment trend has been more accepted by customers in recent years due to the COVID-19 pandemic. People are willing to change without hesitation and their adaptation rate is surprisingly high. If it would take an average of 10 years for the old generations to get used to digital transactions, COVID-19 has cut the time by 5th. In 2 years, cashless payment has been casually used on a daily basis. Not only the hospitality industry experienced it, but it is applied in all industries worldwide.
Customers are now expecting us to move on and practice the new contactless experience trend. Front-desk staff can be replaced with self-check-in and check-out via phone or tablets, housekeeping request and room-services getting requests through hotel apps, self-service restaurant receiving orders through tablets integrated into guests table. This is not a fictional movie, it is the reality now. The time is here, and if you are not riding this cashless payment wave, you are missing out. Are you aware of this cashless payment trend? If yes, have you applied it to your hotel practices? How about a contactless experience? Any plan on it yet? Share your thoughts in the comment section below.
We also have an upcoming regarding the Cashless payment trend coming up shortly this week. Register to join us now. There is a limited offer for this webinar. More information can be found @Live webinar: Payments trends in the hotel sector. We see you then!