Key findings: higher tickets, greater revenue
When presented with the option, about one-third of this dispensary’s customers opted for cashless payments – just shy of 10,000 transactions were cash and almost 5,000 were cashless. That’s a lower number than what consumer preference studies might have predicted; the surprising finding is how much more money the cashless customers laid out. Cashless tickets averaged $136.35 versus $109.06 for cash. That’s an average ticket 25% higher for those customers paying cashless.
What’s the overall revenue impact for the dispensary; that is, how much did sales increase simply by adding a cashless option?
Total retail revenue recorded during the study period was $1,764,500.78. Assuming that all 14,942 transactions had been cash-only at the average cash ticket value (i.e., the dispensary was still cash-only), total revenue would have been $1,629,574.52. This means adding the cashless payment option increased the dispensary’s total sales during the study period by $134,926.26, or 8.3%.
Clearly, the increased revenue potential of offering cashless options will be compelling to retail dispensaries. Furthermore, cashless payments can help dispensaries pursue COVID-safe contactless payment, curbside pickup and delivery options. But are there benefits on the expense side of the ledger? Related studies demonstrate that there are.
In analyzing the costs across all Abaca customers over the period in June 2020, we found that dispensaries offering AbacaPay reduced the amount of cash handled by 38%. Evaluating their banking fees, we found that these dispensaries had overall costs of financial services 20% lower than their peers not offering cashless payments. This aligns well with research published by IHL Group in its 2018 Cash Multipliers study, demonstrating that electronic payments reduce the risk and cost of handling cash, cash shrinkage, and other expenses that range between 4.7%-15.3% in total cash sales value, depending on the category of retailer.
Bundling payments to capture synergies
Cannabis banking isn’t an easy problem to solve, but that’s just what Abaca is doing. Whether its banking, payments or lending, businesses can bundle services for an end-to-end tailored solution – and that can boost revenues while reducing operational costs.
Bundling payments with banking can yield faster settlement for the merchant. In most cases, businesses get bank account liquidity in two to three business days. AbacaPay has the benefit of eliminating processing fees on electronic transactions.
Abaca is bringing compliant bank accounts, electronic payments, lending, and other financial services to the cannabis industry through a tech-powered cannabis banking platform in Arkansas, Illinois, Missouri, Montana, North Dakota, Ohio and Oklahoma. The company’s fintech platform also offers access to FDIC insured commercial bank accounts, lending, and merchant services to ancillary cannabis and hemp/CBD businesses nationwide.