August 26, 2016
For years there has been an ongoing debate regarding cash vs. non-cash retail transactions. There are currently 30-plus organization investing billions of dollars providing digital, non-physical cash purchasing options and these companies are also now busy polishing their eulogies for the demise-of-cash ceremonies.
But electronic payments have a number of disadvantages; the cost per transaction, frequent hassles and the time-delays for settlements – all troublesome to merchants.
Recently I stopped at a rural coffee/bakery shop for my morning caffeine fix. When I gave the cashier a $10 bill she reduced my tab by five percent. When I asked her if that was a senior discount she replied; “No, with all the costs and other problems with credit-card transaction we give a five-percent discount for cash payments.”
And at a local restaurant the menu clearly states: “Because of the expenses for taking credit cards all bills in excess of $20 paid in cash will get you a free dessert.” With this incentive my wife and I get to enjoy a $7 per-slice German-chocolate cake.
Also, it is not uncommon, at least here in the Northwest, for service stations to reduce the price of a gallon of gas by 6¢ if paid in cash and for merchants to charge 50¢ for credit-card sales of less than $10.
But even with these cost advantages cash has some problems. It has to be counted, deposit slips filled out and then someone needs to get it to the bank – either personally or via an armored car company. One analysis says that even with “smart safes” providing merchants net savings of $500 to $1,000 per month there still is a 40% cost-of-ownership, over $150 per month, for handling cash.
Cash recycling helps resolve the problems of physically handling cash. Many financial institutions now have bill recyclers for their tellers with which they can deposit and dispense cash quickly and accurately. But these products are far too expensive for the average merchant.
And there are currently sophisticated products capable of recycling both bills and coins but they are costly as well – ranging in price from $50,000 to $100,000. Therefore, only big box retailers like Home Depot, Nordstrom’s and super markets with multiple cash register stations can afford them.
According to a recent study by the Boston Fed’s Consumer Payments Research Center, despite the hopes of mobile payments innovators and credit-card brands, Americans aren’t getting any closer to going “cashless.” Almost 40 percent of consumer payments are in cash and the face value of all currency in circulation is growing at a steady 1.7 percent per year. Cash is immortal and you can't hack a $20 bill.
With this continuing love of cash, affordable cash-recycling solutions would give the 100,000-plus cash-intensive smaller merchant locations in North America the cost saving advantages that cash recycling brings to the big box retailers – lower start-of-day cash float and reduced cash-in-transit expenses.
But to receive these advantages merchants with single cash registers need to see cost reductions cash-recycling products similar to what was experienced in the cost of ATMs in the past two decades.
Prediction: With improved technologies and innovative product designs affordable cash-handling options will become available for merchants in the not-too-distant future.
For more information about placing an ATM at your location, call 1-800-925-3266 or email us