In a fast-paced world where cards are swiped, PINs are entered and new payment options are literally at our fingertips, we have to hand it to cash. The demand for U.S. currency shows no sign of fading, and it underscores the need for businesses to keep cash secure and efficiently managed.
Even as digital technologies change the payment landscape, cash volume is projected to grow 1.7% per year over the next 10 years, according to the Federal Reserve. Bills, coins and checks still account for about half of all payment transactions, and cash’s volume in circulation has more than doubled (from 13.5 billion to 31.3 billion) in the past 20 years:
Every day, cash is the lifeblood of retail operations, many of which aim to establish reliable, customizable cash management solutions. And cash logistics can be a noncore-function headache for financial institutions, many of which outsource those activities to a firm that understands how to drive down operating costs, attract new commercial customers and generate greater profitability.
So while it might seem like cash is on the way out, those tens and twenties keep rolling in. Here are six reasons why:
1. It’s universal. Cash is accepted everywhere, from big chains to mom-and-pop shops.
2. It’s fast. Credit cards and debit card transactions take more time, in most cases, than having the appropriate amount of cash in hand.
3. It’s influential. The immediacy of cash lends itself to negotiating power. Even larger stores prefer cash to avoid fees that are part of most merchant credit card agreements.
4. It’s anonymous. People like privacy, and cash affords them that luxury.
5. It’s simple. There’s no hidden-fee structure. Just a single, simple transaction.
6. It’s direct. It’s tactile and works in “real time.”
It will soon be time for the next Federal Reserve Payments Study to be published (later this year), and the report will shine a light on payment trends over the last three years, as well as offer predictions for the future.
Meanwhile, we’re also tracking mobile payment technology developments and gauging the public’s perceptions of smart phone use. Currently, the main barriers for widespread adoption of smart phone payments are lack of industry standards, reliability and security concerns. (Only about 3 percent of smart phones have the Near Field Communications technology that enables mobile payments to occur.) Realistically, smart phone payments probably won’t take hold in the U.S. until about 2020.
In 2013, cash is still king. But that doesn’t mean your realm isn’t unique. Each company’s cash management processes and requirements are different, including points of cash intake, estimated daily cash flow and time spent managing cash. Some companies need comprehensive security and loss-prevention measures; others simply want better control of money and employee accountability.
That’s why Dunbar listens to challenges before consulting on answers. We’d like to learn more about you. Let’s start a conversation that leads to the right kind of action. Call us today at 1.800.888.2129.