Contrary to popular belief, using cash isn’t simply a habit of past generations. While cash may seem antiquated with the continuing rise of technology, the reality is that people are still choosing cash as a primary form of payment. There are so many options available to consumers from debit and credit to smartphone payment apps; so why does cash remain so popular?
Here we are outlining why cash is the payment method of choice for the millennials who appear to have adopted technology into every other facet of their lives. The retail industry must, in turn, keep up with the consumer demands and process cash effectively.
Why Is Cash Still So Popular?
According to a study out of the Federal Reserve Bank of San Francisco, millennials between the ages of 18 and 24 used cash for 38% of all transactions in 2015. Among the general populous in the United States, cash has a use rate of 32%, still extremely high for a payment method that many consider to be on the way out.
With these extremely high use rates, it begs the question of why cash is still such a popular payment method. Perhaps the main reason is that cash is used by everybody, regardless of personal income. Cash is the preferred payment method for low-income families in the United States and maintains high levels of use as income levels increase. In essence, there are no members of the population who are not using cash. By sheer numbers alone, cash remains king.
What Are People Using Cash For?
People use cash for a variety of items. Most commonly, cash is used for goods and services such as parking, travel, entertainment, and dining. On a person-to-person basis, cash also remains popular. In small, independent businesses, many customers use cash. Cash also remains the payment method of choice for financial services and charitable donations.
Cash transactions traditionally appear to be more popular on smaller purchases; however there has been a recent rise in cash usage for purchases of $50 or more. For many individuals it seems as though using cash is a security precaution. Many consumers report that security is one of the main reasons why they use cash.
However, the most popular reason that consumers use cash is that it comes with no extra cost to the customer. Less popular reasons for cash use are that it is accepted in most retail establishments and that it is simply more convenient. The results of studies by the Bank of Canada suggests that consumers use cash with care and consider their payment method before making a purchase.
How Does This Affect the Retail Industry?
The retail industry must keep up with the demands of processing cash. Cash can be expensive for many retailers to process due to the hidden costs of labour and manual cash handling mistakes.
While cash remains popular, it is in the best interests of retailers to respond to those needs by updating their cash management processes. One of the best ways to do so is by investing in automated cash management technology. Automated cash management technology allows a business to improve the efficiency of its daily operations and increase security. Automation can be tailored to the specific needs of your business; you can choose to automate as much or as little of your cash management process as you desire.
With high volumes of cash in use, it makes sense for businesses to process cash payments and complete their cash management processes as efficiently and securely as possible. It benefits the customers and your business alike to adopt technology into your cash management!