Although much of the cannabis industry is cash-only, innovative solutions to solve this are finally starting to take form and this could mean additional revenue for dispensaries.
Cash only businesses can be a target for criminals, especially for a cannabis dispensary where criminals can be fairly certain that shops are housing both lucrative product and cash under the same roof. Access to the electronic payment system helps reduce cash dependency, improves the accuracy of record keeping, and even reduces the potential for internal theft as it is far easier to pocket cash then to skim electronic payments.
Providing cashless options may even increase the bottom line for dispensaries in other ways. If an individual comes in with $40 in cash and sees a product for $50, he or she may settle for something at the lower price point. With an option to use their debit or credit card, they may not hesitate to make the more expensive purchase.
“One big problem with the cannabis industry’s largely cash-only infrastructure is it requires customers to predetermine the amount of money they will spend each time they go to a dispensary,” Dustin Eide, CEO of CanPay, a company that facilitates debit transactions for cannabis dispensary customers, told mg.
While concrete research on just how much more money dispensaries take in when offering cashless payments is sparse, traditional industries have long benefited from increased revenues when offering customers the ability to pay with plastic. Drazen Prelec and Duncan Simester found that consumers will often pay as much as 100 percent more for an item if they can use their credit or debit cards.
In another study cited by Nerd Wallet, consumers were willing to spend 12-18 percent more on food at McDonald’s. McDonald’s reported that the average consumer spent $7 when using credit debit cards vs. $4.50 for cash transactions.
A customer’s willingness to pay more with a credit card may be explained by the concept of coupling. According to research published in Psychology Today, when consumers pay with cash they can immediately feel the impact and identify with the transaction on an emotional level. Less cash in one’s pocket is easy to detect. When consumers pay with a credit card, they do not feel the impact right away and are detached from any anxiety or worries about spending money.
Offering cashless payments may accomplish more than just increasing the bottom line for dispensaries. It may also help reduce any uncomfortable or shady feeling a customer or patient may have about buying a drug with cash and it may also save the customer in terms of ATM fees.
Cashless payments “help normalize the customers’ retail experience and reduce the need for dispensaries to have ATMs on-premises with expensive fees,” Eide explained.
“It also helps increase revenue for retailers since customers can try new products or purchase higher volumes of product without worrying if they have enough cash on hand,” Edie said.