The future of cash looks as secure as ever according to a new report that shows 4 out of 5 consumers still prefer to pay by cash. Despite the popularity of electronic and mobile payments it seems, when it comes to scenarios such as making small purchases, grocery shopping or eating out, cash is still king. So what does the future of cash look like, and what does this mean for your cash management?
The new report into cash usage by Cardtronics surveyed more than 1,000 consumers across the United States to determine the role of cash in today’s society. Despite the general perception that electronic payments are now the most popular form of payment; the report found that 78% of consumers select cash as their preferred payment method for scenarios such as paying someone back. 63% prefer to use it when making purchases in conveniences stores, and 52% prefer to pay in cash when buying groceries.
As well as the scenarios in which consumers prefer to use cash, the report also highlights how different demographics use cash.
Tom Pierce, Chief Marketing Officer for Cardtronics stated that “There is a myth in the marketplace that Millennials have abandoned cash in favour of mobile and digital payments. It’s simply not true”.
Contrary to popular opinion, the survey found that a large proportion of young adults are now using cash more frequently than before as 45% of young adults said that their use of cash had actually increased.
So why is this? Obviously issues around fraud are come of mind for the majority of consumers, and with each new payment method comes new security threats. And this is true of mobile payments. Industry analysts suggest that despite the recent advances made in mobile payment technologies, mobile payment apps and systems will need to evolve significantly before they will encourage consumers to change their payment method of choice.
It is clear then that in the US at least, cash remains king for many consumers. But what about the rest of the world? A 2015 study of Australian consumers by Glory Global Solutions found that 87% of consumers still use cash, with speed and simplicity being the key drivers for cash usage. In the UK the Bank of England state that despite more diverse payment options, the demand for banknotes is growing faster than nominal GDP. The Bank of England echoes the view that the demand for cash is likely to remain resilient on its website and that “cash is not likely to die out any time soon.” In Sweden, where cash usage has declined as the country steams towards a cashless model; there has been a strong resistance from some. Reports of protests and of people hiding cash are commonplace as consumers rebel against the exclusive use of electronic payment methods.
For large and small businesses alike, consumers’ continuing preference towards paying by cash will come as welcome news. As businesses are continually tasked with making sure stores are compatible with an ever expanding array of payment methods, the costs are sure to mount. And it’s consumers who will inevitably bear the brunt of this expense as prices of goods and services are raised to compensate.
One of the key findings from all these sources is that consumers prefer to use cash when making low value purchases. For businesses this means that coin handling, sorting, counting, and processing will remain integral parts of the cash management process for many years to come.
But for businesses who have spent the last few years making sure they are compatible with ever changing electronic payment methods, the idea of investing in cash management solutions seems counter-intuitive. Yet, the outlay for cash management technology such as cash counters (and more specifically count by weight devices), smart safes and even intelligent cash drawers remains relatively low. Plus, the savings generated by these devices in terms of time, resource and reduced cash loss, makes cash management technology a sound investment.
Looking to the future then, it seems that businesses will need to continue to offer a wider variety of payment methods, whilst still retaining the option for consumers to pay using more traditional methods such as cash. And as the costs of implementing new technology stacks up, a continuing focus on cash management is required to ensure processes are optimized and to help businesses reduce both the costs and resource related to the developing payment landscape. Overlooking improvements to more traditional areas such as your cash management could have big consequences.
After all, with organizations such as the Bank of England reporting a strong belief that consumers’ preference towards cash will continue, the idea of a cashless society seems more myth than reality.