There is a lot of uncertainty in our personal and professional lives due to the COVID-19 pandemic, but one thing still rings true: The practice of using cash to handle transactions isn’t going anywhere. While social distancing changed spending patterns and how we go about doing business, consumers still are relying on paper currency to handle payments, nearly as much as they were before the pandemic swept the globe.
In this article, we will explain why that is still the case and why your business needs to make sure its cash management processes and ecosystem are set up for the economic bounce-back.
The reasons cash has been a preferred payment method have changed over the decades, ranging from reliability and ease of transaction to today’s desire to support consumer security and privacy.
According to a Boston Federal Reserve study in 2016, 90 percent of U.S. consumers had some amount of cash on them, with the average amount being $61. Furthermore, in 2018 a San Francisco Reserve report showed that 34 percent of young adults aged 18-24 chose cash as their primary payment method.
Currency provides stability in contrast to fluctuating gold and cryptocurrency prices. Combined with the fear of identity theft that comes with credit card use, it is no wonder there will always be a big role for cash to play in our economy.
While internationally, U.S. dollars have continued to be the currency of choice to handle a wide range of transactions, investors and consumers in the U.S. have continued to rely on the currency from the earliest days of the pandemic. In fact, Bank of America announced in March 2020 that investors put over $136 billion into cash investments while gold prices and even cryptocurrency values dropped, reflecting that businesses will pay a premium to obtain cash. Across the United States, there has also been a wide-spread coin shortage due to a dramatic deceleration of coin circulation due to the COVID pandemic, which has played into rumors that the U.S. is becoming a “cashless society”; however, since mid-June as businesses reopen, the U.S. Mint has been operating at full capacity to produce almost $1.6 billion in coins and will likely continue that pace for the rest of 2020.
In other words, the idea that the use of cash will phase out of the economy has been around for decades, but consumer behavior has shown the opposite again in 2020. Bloomberg News even reported that banks ran out of enough cash to handle customer requests in several parts of the country.
Many of the reasons that made cash the king before COVID-19 will likely keep cash a method of choice for consumers, with stability, privacy, and relative liquidity chief among them. So far, the data supports this projection.
A Payments Journal study conducted during the depths of the U.S. COVID-19 lockdowns in April 2020 reported that consumer views toward cash were identical to the previous year. In addition, many believe cash is as important as ever. For example, one survey found that 54 percent of consumers rank cash as the “ideal payment method” for transactions under $10. Combined with the fact that the Federal Reserve estimates that 22 percent of the population is either underbanked or unbanked, cash is key for these consumers.
With these strong projections, businesses must continue to shape their operations around the consumer preference for cash. At the same time, cash management technologies have evolved to offer businesses and consumers more features that drive efficiencies, automation, and security.
Modern cash recyclers, for instance, allow businesses to quickly count cash, check for counterfeit money, make change, and keep precise logs of cash. Businesses can even integrate these industry-leading devices into a larger cash management ecosystem to monitor trends, track deposits, and conduct audits on a daily basis or even in real time. For consumers, they can use mobile technology to enable ATM transactions or use self-checkout safely and easily.
In a time of uncertainty, offering consumers the ability to easily conduct transactions while maintaining the security of your operations will always be a business priority. Whether you are beginning to see how cash is changing your business, or if you need a better way to conduct cash management at your business, the experienced team at Burroughs has the knowledge and services to deliver the right solutions for you.
To take the first step and contact the team at Burroughs to learn more.