You’ve probably heard the news – the world is headed towards a cashless society. Or that’s what the payment networks (Visa/MasterCard, etc.), some governments and the mainstream media would like you to believe.
The truth is while cash usage took a dip in the early days of the pandemic, it has made a remarkable rebound as COVID lockdowns have eased with currency on a pace not seen since World War II. Today there is more cash in circulation than ever before - not just in the US but across the globe.
But do US consumers want a cashless society? The answer is a resounding “No.” The vast majority of Americans are opposed to a “cashless society.” In fact, only 7% of consumers think that businesses should be cashless.
And retailers know it too. For example, retail giant Amazon recently decided that going cashless could be costly. They now accept cash at their "cashierless" Amazon Go stores.
In this article we’ll take a look at the pros and cons of the US going cashless, how cash is used each year, who would benefit and who would be left behind if America went cashless, and how your business can benefit from the rebound in cash.
Americans Love Cash
According to the Health of Cash Study produced by Javelin Strategy & Research, Americans use a lot of cash:
83% of US consumers have used cash for a purchase or pay a bill each month.
73% of Americans report they have withdrawn cash at an ATM, branch or get cash back at a store each month.
More than half of Americans (56%) cite protection from data hacks as their top reason for paying in cash.
$447 billion in cash is used to buy goods and services each year.
Cash transfers accounted for $440 billion in 2020.
$268 billion is cash is used for by individuals to send payments to another person.
Who Benefits from a Cashless Society
For the payment card networks (Visa, MasterCard, Discover, etc.) profit is the major motivator when it comes to promoting a cashless society. Each time a consumer pays by card or uses their phone to make a purchase, the payment giant processing that payment earns a profit in the form of a 3-4% fee charged to merchants.
But the networks aren’t the only entities that benefits if more people stop carrying cash. The US Treasury benefits by being able to collect additional taxes. Under the 2021 American Rescue Plan, the $1.9 trillion COVID stimulus package, a new rule requires cash apps like Venmo, Zelle and PayPal to monitor and track users that receive over $600 in a calendar year, and in turn pay taxes on that money. While the legislators “promised” to not affect personal transactions like gifts or money sent by a friend, gig workers, freelancers and people with side jobs, like the guy who cuts your lawn, will be sent an IRS 1099-K form.
The Case Against a Cashless Society
While going cashless may be convenient for merchants, there are some drawbacks. On the plus side cashless transactions are fast, eliminate time counting cash and going to the bank, and there is no risk of shrinkage due to human error.
But do the negatives outweigh the positive benefits?
Not everyone has access to electronic payments. An estimated 22% of US adults (63 million Americans) including vulnerable populations such as low-income earners, retirees, some immigrants and people with disabilities have little or no access to electronic payments, according to a 2019 report by the Federal Reserve.
Card payments are expensive. Merchants pay 3-4% of each transaction on card processing fees. While that may not sound like much it can quickly cut into profit margins. If the retailer has a low profit margin on say a $5 item, paying a fee may mean the retailer has to raise prices which will end up costing the customer more.
Electronic payments don’t work in an emergency. What happens in times of crisis? On the top of the list of items FEMA recommends for emergencies like hurricanes, blizzards, periods of unrest and war is a week to two weeks of cold hard cash. Cashless transactions rely on internet and electricity to be processed. Cash can be used no matter if the business has electricity or internet service.
Consumers like choice. According to a recent study, 93% of consumers don’t think retailers should go cashless, and 85% of U.S. consumers say they would not shop in a business where they couldn’t use their preferred payment choice.
How Your Business Can Benefit from the Rebound in Cash
The statistics are clear. Americans want to live in a society that offers a cash payment option.
Whether you own a gas station, a kwik-stop-shop or convenience store, bar, restaurant or a nail salon… if you exclude the cash payment option, you run the risk of turning away customers - especially low-income earners who simply don’t have access to electronic payments.
So, how can your business benefit from the resurgence of cash since the worst of the lockdowns have eased? Adding an ATM to your business is an easy way to ensure you can provide easy cash access for every customer and in the process, you’ll earn revenue on every ATM transaction.
There are other benefits as well:
Boost Sales: 40% of ATM users spend half their cash withdrawal in the business where the machine is located.
Increase Traffic: 32% of customers visit a business simply to use the ATM.
Lower Operating Costs: Having an ATM on-site helps to reduce card processing fees.
If you are looking for a way to increase traffic, lower costs and provide customers with the cash services they want… contact us to find out if your business qualifies for a free ATM.