by David Johnson/Director of Business Development, G4S Retail Solutions
Retail and finance experts are fond of proclaiming that cash usage in retail and restaurants is “dying” or even “dead,” and many point to the growth of credit and debit cards, the emergence of mobile payments and an increase in conversations around restaurants, grocers and other retailers refusing to accept cash.
Yet the facts prove cash is not only alive, but in many retail environments, especially the high-volume grocery category, it’s actually doing quite well. Good old-fashioned hard currency is far from gone—cash usage has actually remained relatively steady in the U.S. since 2003, ranging between 14.3 percent and 15.5 percent of the gross domestic product, and remains the most used payment method in the U.S.
At the same time, while news about mobile payments such as Apple Pay and Google Pay has dominated many headlines for the past few years, digital wallets remain a small part of overall payment use. Merchants have been slow to adopt digital wallet payments (only 36 percent do, according to a study commissioned by JP Morgan Chase), while shoppers have as well—in the same study, only 16 percent of consumers said they have used them.
The bottom line? Cash isn’t going anywhere. And there are plenty of significant costs, hidden and obvious, behind handling paper and coin currency, which must be stored, guarded, accounted for and safely transported. And it can be costly to transport—large retailers may require several armored carloads per day. U.S. retail businesses lose a whopping $40 billion annually because of cash theft. And even if cash usage declines, it will become even more expensive to process as a percentage of total payments.
Automation lowers cash handling costs
The answer to the myriad cash handling challenges, experts believe, is automation. According to new research from IHL Group, retailers can recapture 100 to more than 500 labor hours a month per store by automating some of their cash handling processes. According to the study, “Cash Multipliers: How Reducing Cash Handling Can Enable Retail Sales and Profit Growth,” costs include tasks related to drawer starts, rebuilds and closings, transporting cash to banks, and bank fees. The report suggests merchants consider automated solutions that, the study found, can reduce retailers’ cash-related expenses between 15 and 80 percent.
Having steadily increased in popularity, with top retailers firmly on board, cash recycler solutions include a “smart safe” device that allows retailers to deposit coins as well as notes and make withdrawals for change It also recycles the smaller bills and coins, thereby reducing the need for change orders. The cash recycling solutions digitally deposit funds at the bank—immediately earning interest for the retailer even while the currency is physically still in the store and being used for change. And it manages cash inventory levels to the optimal level by using software that enables the retailers to predict how much cash is needed on a given day, which both reduces excess and prevents shortages.
Retailers can ‘cash in’ for growth
According to a 2017 study by the ATM Industry Association, Retail Cash Management, there is significant room for growth when it comes to cash recycling and other automated cash handling solutions. The study concluded by saying: “…With the expansion of cash management to the fully automated recycler products, the retail market is poised for an explosive growth in products, solutions, services, and support in automated cash management.”
That means retailers can “cash in” by drastically reducing or eliminating the manual steps usually required for cash processing—which increases efficiency, transparency and control over cash handling and working capital. Today’s forward-thinking retailers looking to succeed in a highly-competitive marketplace should research these groundbreaking currency management tools. With cash remaining front and center for retail, those that don’t may soon be left behind.
G4S Retail Solutions provides retail cash automation services in North America. The company’s proprietary cash management software is designed to help retailers optimize and automate efficiencies across the entire cash cycle. Prior to G4S, David Johnson worked for the Deluxe Corp., a supplier of products and services to small businesses and financial institutions, where he led an account team that worked with North American re-seller partners. Johnson graduated from Providence College with degree in marketing and lives in the Boston area with his family.
