3 myths about accepting cash at self service

A convenience store in Pennsylvania recently added a self-checkout system near the front of their store. Brand new, with a big, bright sign announcing its presence, the equipment was ready to help customers quickly complete their transactions and get on their way. But during the morning rush, no one was using it and the cashiers were noticing a growing line of customers waiting for them to ring them up for a single cup of coffee.

What went wrong? Most of these transactions were being made with cash, and the new self-checkout system didn't accept it. Even while the convenience of self-checkout systems has proved to be popular among consumers, the store's investment seemed to be going to waste.

Self-checkout is becoming increasingly popular as retailers experience the benefits of how it removes the need for additional labor, improves customer experience and reduces their operating costs. But with the proliferation of cashless payment technology like mobile wallets, some retailers are considering shifting systems to entirely cashless or not adding cash acceptance to their self-checkout systems. Here's the issue with that: providing strictly cashless options at self-checkout only solves half the problem.

Recent reports indicate that consumers use cash for over a third of all transactions valued at less than $25. For transactions less than $10, that proportion increases to around half of all payments. Cash is either the most used or second most used payment instrument across a wide array of spending categories. With cash-users representing a significant portion of customers, limiting payment options at self-checkout will impact a retailer's ability to ensure that these customers return and bring in revenue to their store.

Even with the increasing popularity of self-checkout as a whole, there are still myths that have permeated the industry surrounding cash usage at self-checkout. Taking a closer look at these common beliefs is important in understanding the relevance of cash in the market and why retailers should consider adding more options for cash payments.

Myth 1: Accepting cash at self checkout isn't worth the cost

While it's true that there are upfront costs, these are heavily outweighed by the potential for long-term profits when you accept cash at self-checkout. Data from the Federal Reserve shows that of all payment methods — cash, credit, check, debit, electronic and other — cash remains the most frequently used payment method, accounting for 31% of all consumer transactions.

Not accepting cash at self-checkout effectively turns away this large portion of customers, leaving them to abandon their carts to avoid long lines and even find other stores where they can easily use their preferred method of payment. In such a competitive landscape like the retail industry, stores are constantly competing to offer the level of convenience that consumers are accustomed to. Being able to deliver the experience that customers want in self-checkout makes any store all the more competitive, while having a direct impact on their revenue goals.

Only providing card payment at self-checkout leaves stores susceptible to another significant cost: credit card merchant fees. When consumers are limited to paying with card at self-checkout, these fees will inevitably add up over time, affecting a store's bottom line. Using a cash automation solution heavily reduces this expenditure and nets a positive ROI over time.

Another major cost to consider is the additional labor hours that are required to manually handle cash. When employers automate cash acceptance, employees are freed up to do other tasks around the store. This can help deliver a better customer experience and optimize daily operations, saving employers from paying for any unnecessary labor hours and allowing them to allocate funds to areas that drive growth in the business.

Myth 2: The demographic that uses self-checkout doesn't use cash

Cash is more popular than ever with Gen Z.

Many retailers believe that younger demographics don't carry cash anymore, but that's far from the case. According to a 2023 Credit Karma survey, "Nearly 70% of Gen Zers use cash more than they did 12 months ago. That share was higher than any other group, including Gen X, which was 47%, and Boomers at 37%."

In order to cater to the younger demographics that heavily prefer self-checkout over cashiers, retailers must provide them with the flexibility of multiple payment options. Having said that, older adults are frequent self-checkout users too, with 35% of adults from 35-54 preferring self-checkout over cashiers. Accepting cash at self-checkout enables stores to become a destination for customers of all ages seeking quick and easy cash payment options — what this means is more revenue to drive repeat customers.

Myth 3: Accepting cash at self-checkout increases security risks

While there's an inherent risk that comes with accepting cash (theft, fraud, etc.), diverting cash transactions to self-checkout and away from cashiers reduces these risks. When cash is being handled manually, there is an increased risk of both external and internal theft along with shrinkage caused by the mishandling of cash.

In 2022, 74% of retailers reported a rise in employee theft, leading to significant shrink rates. Utilizing a cash automation solution empowers retailers to reduce theft by limiting the amount of cash being handled by employees.

Counterfeits and fraud are also a significant concern in the retail space, with 69% of retailers in 2022 reporting increased in-store fraud. When it comes to preventing the incidental acceptance of fraudulent notes, using a cash automation solution that detects counterfeit notes is paramount.

The benefits of self-checkout are clear and well publicized. They enable retailers to reduce wait times and therefore maximize revenue, while also reducing labor needs and therefore operating costs. But this can only be achieved when they are integrated with the payment preferences of your customers. Without it, they are in danger of being under utilized and not fulfilling the ROI that was originally desired.

Robert Blythin is strategic director of retail marketing at Crane Payment Innovations, provider of the Paypod cash automation solution.