Cash and carry is not a foreign system in the world of trading. As both a business owner and a consumer, you have certainly heard of this term.
The term cash and carry itself has been around since the 1900s. The emergence of this system started from the thought of the seller who wanted his customers to pay for the goods they bought in cash, then take it home.
So, what does that mean? Let’s talk more about it in the review below!
What Is Cash and Carry Definition?
Cash and carry is a buying and selling system in which consumers have to pay in full before they can get the goods they want.
In traditional practice, businesses that apply the cash and carry method mean that they only accept payments in the form of cash from consumers. However, of course this happened in the past before cashless payment technology was present.
Please also read Let’s Leave Cash and Be a Cashless Generation!
In this modern era, merchants may implement a cash and carry system, at the same time accept non-cash payments, for example payments using a debit card or credit card.
This is especially true for certain conditions, such as customers buying goods in large quantities so that the nominal payment becomes very large.
Of course, consumers feel insecure and find it difficult if they have to carry a lot of money in cash. Therefore, now many business owners are accepting non-cash payments.
More than that, the non-cash payment model is also developing. Consumers have the option of payment instruments not only with a debit card or credit card, but also an e-Wallet.
History of Cash and Carry in the World of Commerce
Speaking of non-cash transactions, this practice is relatively common. For example, the use of credit cards in the United States has been much longer than in Indonesia.
That way, consumers can make transactions easily anywhere, without having to provide cash. In fact, consumers can make non-cash transactions even in small shops.
However, before the existence of cashless technology, cash payments were the most superior transaction method, and had killed the barter or the method of exchanging goods transactions.
Please also read Barter is an Exchange of Goods, Does it Still Exist?
Although it is considered a bit outdated, almost all countries in the world still use cash currency. Not only that, there are also many transactions that can only be done in cash.
Before various cashless payment methods were invented, all trade transactions and payments were completed using cash.
Then advances in technology in the financial sector have further reduced the popularity of the cash and carry system in its truest sense.
Even so, there are still many businesses that implement this old payment system.
However, as previously discussed, businesses have now implemented several adaptations by implementing modern payment systems such as allowing card payments and transactions to be carried out on the spot.
Credit Transactions in Cash and Carry
Basically, payment by credit card in the cash and carry business model remains profitable for the seller.
The credit card issuing bank will pay in advance of the transaction made by a user to the merchant. Thus, the seller does not bear the risk if there are obstacles to the payment of credit card installments from users.
So, even though the payment is made by credit card, the business owner still receives the payment in ‘cash’.
<p”>It can be said that the cash and carry system does not have much effect on consumers’ financial habits, but the use of credit cards is actually a change on the financial side of consumers.
Transacting using a credit card in cash and carry means that it allows consumers to transfer their loans to third parties, namely banks or other financial institutions.
From the consumer side, the use of credit cards needs to be done carefully. This is because payments by credit cards will be ineffective if the bank or financial institution that issues the credit card imposes strict time limits, unfavorable interest rates, and other relatively difficult criteria.
The credit market is a market that is constantly moving and changing in response to events and all problems on a macroeconomic scale and technological developments.
The option of shopping on credit is now not even only by using a credit card, but also with various loan facilities from fintech or financial technology companies, for example paylater.
Please also read What is Paylater? Understanding, Application, and How to Pay for It
The cash and carry system and credit payment methods must support each other in order to create a more conducive market.
For example, if more and more companies or businesses apply the cash and carry system, but banks actually tighten their regulations regarding credit cards, this will affect people’s spending habits.
Consumers will save more and think twice about making transactions, they prefer to save their money, and wait for several months before making large purchases.
However, if banks or financial institutions apply relatively flexible regulations regarding credit cards or other unsecured loans, it will be easier for consumers to make transactions.
For the record, from the consumer side, the decision to shop on credit needs to be carefully considered so that there are no difficulties in completing payments at a later date.
Examples of Cash and Carry
Examples of cash and carry that are closest to our lives are supermarkets or minimarkets. Supermarkets apply this system to all transactions with customers.
From a personal finance perspective, cash and carry is a method that has a positive impact on individuals because it makes them wiser in spending their money.
However, the impact on the economy can be negative because it risks causing a decline in people’s purchasing power, thereby reducing a country’s gross domestic product (GDP).
When the transactions made by consumers are small, the income of businesses in various industries will decline. As a result, the unemployment rate can increase significantly.
The good news is that now businesses are no longer implementing the buying and selling system literally, aka having to be paid in cash.
For example, supermarkets or minimarkets now accept various forms of non-cash payments, including credit cards.
Another example is online shopping. Even though the transaction is done online and the buyer does not actually ‘carry’ the product, the system that requires the consumer to pay first before being able to get the desired item still includes examples of cash and carry.
Unless the online transaction is carried out with the cash on delivery feature.
In the cash on delivery (COD) system, new consumers will pay for the goods in cash when they receive the goods at a place that has been agreed upon by the seller and the buyer.
Stores or retailers that use a cash and carry system usually do not provide delivery services because they want to receive payment for goods purchased with cash.
Restaurants as one of the outlets that always implement this system, now many have opened delivery services.
The reason is that with technological advances that allow consumers to pay through digital wallets, delivery services also allow sellers to receive payments directly.
Please also read Pre Order Definition, System, And Benefits
Main Conclusion
Cash and carry is a trading system that is fairly traditional, but is still practiced by many businesses today.
It is only natural that many businesses choose cash and carry because with this system, businesses can receive payments directly.
That way, there is no retained outside income or receivables that reduce the cash flow of the business.
In the past, cash and carry meant that consumers actually paid in cash, only to be allowed to bring what they wanted.
However, along with the development of non-cash payment technology, now cash and carry transactions do not always have to be paid in cash.
In fact, many outlets accept credit card payments. Even though it is called a credit transaction, the seller still receives direct payments from the bank or financial institution.
These various payment options turned out to be quite important in increasing customer satisfaction. Consumers like outlets that provide multiple payment options.
Therefore, make sure your outlet is the same by using an online cashier application that can be connected to various non-cash payment options, OK!
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