September 26, 2019
Don’t believe predictions about decline of cash
With the many digital forms of payment – credit and debit cards, mobile payment apps, and cryptocurrencies – you might think cash is on its way out.
Far from it. In fact, a cashless society in the coming years in North America and in many places around the world is just a fantasy. Properly managing cash is crucial if you want to stay competitive.
Consider the following
- U.S. cash in circulation has grown at a 5 percent-plus rate every year for the past 20 years.
- Cash is the most frequent payment form in the U.S., at 31 percent of consumer transactions, more than electronic payments, credit or debit cards or checks.
- Even with the growth of internet sales, e-commerce remains a small player, representing just 7 percent of transactions in 2019.
Payment of choice
A big factor sustaining cash’s popularity in North America is the nature of shopping in general. Cash is by far the preferred method of payment for smaller purchases. Consumers use cash for 55 percent of payments under $10; and for 32 percent of payments between $10 and $25. Consumers average about 22 such lower-end purchases per month, compared to just 12 payments monthly at $50 or more.
Another factor that keeps cash popular is that more than 75 percent of all transactions – goods, food, transportation and personal services – take place in person, despite opportunities to shop online. Cash is the preferred payment method for 39 percent of in-person payments.
For Americans with lower incomes – less than $50,000 per year – 63 percent prefer to pay with cash. This socioeconomic group comprises 70 percent of the U.S. population.
When it comes to gifts of money and other financial transfers from person to person, cash heavily dominates, at 80 percent of such transactions.
In large part because cash is the real thing – it doesn’t merely represent money. Who hasn’t at some time savored the look, feel and promise of a crisp, new $100 bill in hand? Even Dan Schulman, president and CEO of PayPal – a dominant player in the business of cashless payments – says, “I would never predict the death of cash over the next decade or two. I think cash is going to be with us for a long time to come.”
Implications in retail
It’s clear that in order to serve the needs of a diverse customer base, retailers must continue to offer various payment methods at the register or risk losing valuable customers. No matter how many other options are available, cash will continue to be prevalent due to cultural, necessity or even privacy concerns.
Managing cash transactions – whether for a single family-owned retail store or for a chain of any size – doesn’t need to be burdensome and labor-intensive.
You can streamline your operations, increase the control and visibility you have over cash and even cut costs with a comprehensive platform that gives you options for your operations today and helps you plan for the future.