Imagine sitting down to dinner, only to see the following banner flash across the TV screen on the evening nightly news: "U.S. MINT TO PHASE OUT THE DOLLAR."
Seem plausible, if somewhat chilling? While there's no denying that cash is less common today than yesteryear, the death of cash – which 62 percent of Americans actually foresee occurring within their lifetime, according to a recent Gallup poll – isn't quite on the horizon. So it's fair to say that this particular Twilight Zone episode isn't ready for primetime… yet.
Perhaps no one knows the value – pun intended – of a dollar more than cash-intensive businesses. Coming in all sizes, these companies represent a substantial portion of America's entrepreneurial landscape and are highly attuned to Americans' use of paper currency. Financial institutions, specifically banks and credit unions, must appeal to the cash needs of these businesses and individual account holders. But this is often easier said than done.
What are cash-intensive businesses?
As their name implies, cash-intensive businesses are entities whose products or services are sold and purchased primarily with paper currency. From restaurants to retail outlets, convenience stores to parking garages, these companies' transactions are primarily cash-based.
But with so much talk about the variety of ways Americans can spend their hard-earned money, could these businesses be threatened by the extinction of cash? After all, according to a Pew Research Center survey done late last year, 29 percent of respondents said they don't pay for anything with paper currency in the average week.
"75% of Americans use cash as their primary spending vehicle."
Fortunately for these businesses, it seems as though this statistic is more representative of the exception than the rule. For instance, close to 75 percent of Americans – in a study conducted by Cardtronics – pointed to cash as their primary spending vehicle, even though they had multiple payment options to choose from, such as debit card, credit card, contactless payments and mobile wallets. Furthermore, nearly two-thirds went so far as to say that they can't help but feel nervous or unsettled if they don't have any cash on their person whatsoever.
A separate analysis came to similar conclusions. Conducted by Blackhawk Network, the study revealed cash remains the runaway leader in payment vehicles among U.S. consumers, with 87 percent using this method during the previous 12 months. Debit cards placed in a distant second (75 percent) and credit cards rounded out the top three at 69 percent.
Cash use is down, but not by any means out
Given these findings, what's fueling the death of cash discussion? It seems to derive from the modest decline in usage – the key word being modest. For instance, a separate Gallup poll found that approximately 17 percent of Americans made most of their purchases in cash five years ago. That share has since dropped to 14 percent, a slight dip.
Talk to cash-intensive business owners, however, and they'll likely tell you that cash use among their customers hasn't necessarily diminished, but the trend for transactions in which buyers opt for paper over plastic has shifted. For example, as Cardtronics found, more than 55 percent of consumers use cash to pay for goods and services when transactions cost between $20 and $30. Previously, when mobile payments were still in their relative infancy, a higher share of Americans used cash for pricier buys.
"Cash use has grown with some cash-intensive businesses."
What Americans are actually spending their greenbacks on, meanwhile, hasn't changed too much. In fact, many of their purchases are with cash-intensive businesses, and in some instances, cash use has grown. Sixty percent of respondents said they'd paid for fast food with cash in the previous six months, Cardtronics reported from its findings. That's up from 59 percent a year earlier. The same was true at convenience stores, with 60 percent paying with cash over the last six months compared to 59 percent in 2017.
Not only is cash still king with consumers, but more businesses are entering the cash-intensive fray with new state laws in place. Take cannabis dispensaries as an emerging example. As noted by the National Conference of State Legislatures, 30 states have legalized medical marijuana and 20 have decriminalized the possession of small amounts for personal usage. Due to federal regulations, the business of cannabis is all about cash.
Bottom line: Cash isn't going away – it's here to stay. Banks and credit unions can support all customer cash needs with one or multiple cash recyclers. BranchServ has you covered. The LTA-350 cash recycler from BranchServ helps enhance efficiency, cost management and convenience with self-audit capabilities in a compact design. No matter the layout of your FI, the LTA-350 will fit right in.
Contact us today and see how we can help you put your best branch forward!