Given all the noise often made around electronic payments, it can be easy to overlook cash. Despite what electronic payment providers would have you believe, cash is not just alive and kicking in 2024, it's thriving, remaining a prominent and trusted way to pay for many businesses and consumers.
Cash is Going Nowhere
Increasingly, governments and regulatory bodies are reacting to the important role cash plays. In the UK, the FCA is set to soon enshrine access to cash in law, while new Link ATM machines are being trialled to enable customers to make both cash deposits and withdrawals.
It's not just the UK reacting either. Data from YouGov found that over two-thirds (67%) of American adults prefer to use cash for in-store payments. Such is the widespread use of cash in the US that since 2021, 26 states have introduced proposals to ban cashless stores.
This trend is further backed up by the latest PayComplete research, which found that over half (55%) of all retail businesses don’t expect to ever become fully cashless. The resilience of cash is, therefore, undeniable, as it is set to remain in use for the foreseeable future. For retailers, this creates a powerful opportunity to rethink their relationship with cash and explore opportunities to reduce operational expenses and improve customer experience.
While cash continues to be an in-demand payment method that is constantly improved by new technologies like those seen on the latest pound coins and notes, cash management lags behind.
The Cash Chasm
PayComplete’s latest Cash Chasm Report sheds light on this, finding that over a third (38%) of retail businesses still handle cash manually. By manually handling cash, retailers expose themselves to hugely expensive and unnecessary operational costs. In fact, the research uncovered that retail businesses spend, on average, over £332,000 alone on cash security measures, yet despite this, are still losing over £58,000 a year to cash handling errors! That is nearly half a million pounds lost unnecessarily.
However, retail businesses are trying to reduce these losses, with more than a third (36%) of retailers looking to encourage customers to use electronic payment methods instead of cash. Nonetheless, problems remain with electronic payments, creating increased costs in other ways thanks to expensive processing and transaction fees. On top of this, retailers risk damaging their customer satisfaction by diverting consumers away from their preferred payment method.
Other ways retailers are looking to reduce the cost of handling, managing and processing cash is through the introduction of strict cash handling protocols (32%), investing in new counterfeiting technologies (31%), and funding greater integration in payment systems (31%). Undoubtedly, each of these measures will help and is sorely needed, but they fail to solve the underlying problem: the high level of manual processes used in cash management. As the rest of the technology and processes in retail continue to become more integrated, digital, and efficient, cash management is being left behind.
The Rise of CashTech
Some retailers are already reacting to the need for a more progressive approach to cash management. In fact, nearly a third (31%) of retailers are investing in integration between cash handling systems, POS systems, and accounting software, while 28% are investing in cash handling automation solutions. Yet some retailers are going further than this, with nearly one in three (29%) investing in single-supplier omnichannel payment solutions integrated with back-office ERP and accounting tools. So, while some retailers are using tactics like discounts and rewards to nudge customers towards electronic payment methods, others are taking a longer-term, more sustainable approach by making cash management more efficient.
Spearheading the change for a more progressive approach to cash management are recent advancements in hardware and software. Collectively known as CashTech, these new solutions combine smart hardware with software to unify the processing of cash management with other payment methods and operational systems. With CashTech solutions in place, retailers have, for the first time, new data insights into cash management that can be used to reduce discrepancies, eliminate inefficiencies, and create valuable real-time data to improve other business processes. While at the same time improve the customer experience by providing choice with how consumers pay, and additional privacy that only cash can offer.
While cash is here to stay, the processes and systems used for handling and managing cash are being shaken to the core. Cash’s ongoing resilience in the face of challenges like COVID and the push for more electronic payment methods makes it clear that it isn’t going anywhere. This is good news for retailers. Not only is the need to revolutionise cash management systems clear, but finally, thanks to CashTech, the technology that makes it possible has arrived. Acting now and adopting CashTech solutions will not only futureproof retailers but also unlock much-needed operational savings and opportunities for growth.