OurÂ friends at Cash Management Solutions recently published the 2015 Q1 Global Cash Report. It is a provocative review of the ongoing struggle faced by the competitor’s to cash. We are happy to report that they agree with our opinion that “Cash is Still King” and that currency in general is decades away from extinction. They even theorize that cash will outlive credit cards! Well said!!!
We are pleased to present and excerpt from the Global Cash Report – Q1 2015, authored by CEO Brendan Doyle and his team of cash management experts…
AN ALTERNATIVE VIEW:
CASH IS STILL KING
Mobile payments, e-wallets and related security are blitzing the headlines. What is the impact of these surging digital payment initiatives on the cash needs of the general public, back dropped against their desire to use cash in the wake of repeated card and data breaches? How damaged is the consumersâ€™ comfort with using digital payments? Does this heighten the need and opportunity for deployers to increase security behind the ATM platform and take advantage of the dent in consumer card confidence?
Cashâ€™s unique position
Boss: â€œWhen will cash go away?â€
Me: â€œWell, after the plastics have.â€ Weâ€™ll see if I am right someday.
Plastics and mobile devices swim in the same digital pool – they overlap one another for usage. Cards and mobile are lopsided twins in a digital realm that is becoming extremely homogeneous. On the other hand, cash is used for payments outside of the compromised fiber optic payments expressway. It remains the alternative for payments when technology breaks down, is unavailable or loses the trust of the consumer.
For decades weâ€™ve heard the same mantra of today: â€˜Cash is going away.â€™ â€˜Cash is obsolete.â€™
â€˜Digital is the future.â€™ Yet, ATMs continue to proliferate globally. The level of cash deposits at local ATMs alone has increased 29% since the explosion of deposit automation in 2009. Local January ATMÂ cash withdrawals have marginally fluctuated between $6.6 and $6.9 million for three years despite a reported â€˜decreaseâ€™ in ATM usage. Thatâ€™s millions changing hands in cash between consumers and to the merchants and banks for payments, savings, daily expenses or just dinner out. And we all thought they said cash was â€œgoing awayâ€.
Cash vs cards â€“ a local businessâ€™ unwavering outlook
In college I worked at Bobâ€™s Comic Shop. Bobâ€™s carried everything any loyal comic geek could ever want and was busy all week. Bobâ€™s had it, would find it or knew how to get it. As long as you paid in cash.
Honestly, Bob would accept, â€œchecks, rolled coins, gold bullion, or pre-ban ivory.â€ But no cards. NO cards. He wasnâ€™t in some backwoods, ramshackle shop. This was a nice store in a busy strip mall, at the center of suburban yuppyville. Plenty of money and lots of plastic.
Sales would walk out the door because they couldnâ€™t swipe to make their purchase. Bob refused to take cards. â€œIf they want it they will come back with cash.â€ Many times he just said, â€œThereâ€™s an ATM just up the sidewalk.â€ Bob was a businessman with lean margins, and he was not going to pay fees charged by the brands for accepting cards.
Iâ€™m 42 now, and Bobâ€™s is still open. A new generation is buying comics. The old manager is still chastising kids for misbehaving. Bob does not take debit cards nor is he rushing towards the surging digital payments. His economic reasoning still stands but there is a new twist. More customers show up ready to pay cash and fewer complain when he tells them, â€œno debit cards.â€ He looked into accepting cards in 2008, but when the bottom crashed, he saw resurgence in cash sales. When he relinquished to credit cards after 2011, the usage still paled to checks and cash. Heâ€™s been asked by online fans about Bitcoin, though he hasnâ€™t lost a sale because he wasnâ€™t accepting it. The number of online customers that still mail in cash, checks and money orders for payment is staggering.
An ATM opportunity?
This brings us back to the question, â€œdoes the current state of consumer distrust with digital and card payments offer an opportunity for ATM operators and cash renaissance?â€ I believe the answer is yes, if we improve the confidence level in the ATM channel security as a reliable means of purchasing power.
Deployers should thrust themselves ahead of the retail POS merchants by publicly embracing new security for validation at ATMs and in-transit. Deployers must leverage mobile for cash access, as well as P2P movement of cash between mobile wallets that bypasses the security porous payments pipeline that is being hacked at will. Done right, the operational engine of ATMs is, or can be, inherently more secure than the retail POS. This will be down to the more stringent federal, network and brand regulatory guidelines that ATMs have existed under since 2001. But everyone has to be on board. The FIs are being pushed there by regulation. Our ISO ATM brethren, need to embrace a streamlined and secure cash dispensing platform that will survive and evolve with technology. Too many deployers want a handout to offset the expense of EMV. Itâ€™s not coming; and by waiting for one they are only hastening their own demise. Bite the bullet now, spend the money to secure the channel â€“ albeit at a considerably lower overhead than the financial institutions that have been forced to keep pace all along.
Still the king
Cash is still king because the king can be spent anywhere and is accepted everywhere. Power or no power. At a theater or at the carnival. To purchase a candy bar or pay off a car loan. Over regulation, Durbin and payment system compromises have beaten down the traditional payment platform, and eroded the trust of the American consumer. But as long as I can find an ATM, as long as I have cash, I can get by. Even if the power is out, and all seems lost, I know that I did listen to my father when he said to always, â€œkeep some cash on you.â€
ATM deployers are in a unique position to make cash the victor, rather than the victim, of digital payments. Through ensuring the security of the ATM channel â€“ which digital payment vehicles have struggled with â€“ deployers can leverage the benefits of cash against alternative methods.