Shopping Trends and the Effect on Cash Management

Did you know in today’s digital age that the demand and use for cash remains resilient? Many people find this fact surprising, especially since in recent years cash has faced an increase in competition from other payment methods―such as credit and debit cards, electronic payments and online services like Venmo and PayPal. But, according to a study conducted by the Federal Reserve, cash is still used and preferred by a wide-range of individuals across various age and household incomes.

The survey concluded that cash accounts for 31 percent of all transactions, making it the most frequently used payment method. Typically, consumers prefer cash instead of other forms of payment because it’s quick and convenient―specifically for low-dollar amount transactions. The Fed’s report also found consumers prefer to use cash as a back-up payment instrument if their preferred method is unavailable.

Shopping Trends

This high usage of cash along with the continued growth of electronic and mobile commerce are changing how customers shop and their payment habits. Despite the increase in paperless and online transactions, cash continues to dominate in-person retail purchases.

The Fed’s study determined there were two motivating factors for cash controlling the payment method for in-person transactions. Reason one is consumers’ opportunities to use cash are limited to primarily in-person transactions. Consumers are more likely to use cash for situations at brick-and-mortar stores, vending machines, parking meters and taxis versus not in-person transactions like online purchases and bill payments.

Payments in-person

Reason two is since most consumer payments are for small-value transactions, cash is the preferred method for low-value purchases. The survey found the average cash transaction was about $22 and that cash is most often used on payments less than $25. The value of payment appears to influence whether a customer chooses to use cash, debit, credit or other form of payment.

Payments made with cash

However, these facts are not new to retailers and merchants. The heavy and frequent use of cash leaves them with the expensive and time consuming burden of manually managing their funds.

Effect on Cash Management

The strong demand and use for cash is forcing merchants, banks, and armored carriers to explore new methods to automate their operations.

Cash handling is a manual and labor intensive process. Retailers are forced to devote critical staff time to counting and balancing cash drawers along with physically delivering and depositing funds at the bank. Not only are these tasks pulling employees away from business operations and serving customers, the tasks also expose employees and the store to danger.

Manually managing cash increases the risk of shrinkage, internal theft, and human error. Fortunately, the cash management industry has introduced smart safe technology and solutions to alleviate many of these challenges.

Smart Safe Solution

Ultimately businesses are looking to streamline and make the transaction process for customers to be as easy and efficient as possible. With the development of smart safes, retailers can automate their cash handling. The technology not only benefits businesses by saving time and money but also gives customers a better quality of service.

Smart safes relatively small design and footprint allows for optimal placement at the point of sale―enabling employees to immediately insert cash into the safe which will validate or reject counterfeit bills. Depositing money right after the transaction reduces the exposure in the business, and by limiting the number of people counting and handling the cash will significantly reduce the risk of internal theft and shrinkage.

Additionally, the safes enable merchants to consolidate several days of deposits to reduce the amounts of trips to the bank. While the funds are secured in the safe, the deposit data is wirelessly communicated to the merchant’s bank—providing access to real-time reporting and in some cases facilitate access to daily credit.

Retailers that use smart safes eliminate the need for employees to make dangerous trips to the bank to make deposits or get change. By streamlining their operations, they also experience reduced labor costs as the time employees spent manually managing or delivering cash can now be reallocated back into running the business or assisting customers. Implementing a smart safe not only improves the security of employees and profits, but also provides greater visibility into cash balances.

The need and use for cash is not going away anytime soon. The Federal Reserve reported there was approximately $1.59 trillion in circulation as of November 2017. So while cash continues to play a key role in consumers spending, retailers fortunately have options to enhance their cash handling while increasing the security of their employees, their store, and their bottom line.

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Explore how Dunbar’s Cash Manager smart safe can relieve the challenges of manual cash handling