Friday, July 20, 2018View Showroom
When Bank of America launched the first widely successful credit card in the late 1950s, rumors of the death of cash began swirling; to some, the credit card marked the first steps towards a cashless society. 60 years later, cash is still in circulation despite growing competing from credit cards and other payment forms. This begs the questions: What is the state of cash? and What does this mean for my ATM?
In November of 2016, the Federal Reserve Bank of San Francisco released a report on preferred payment methods. The results of the report indicate that:
With more consumers carrying credit and debit cards, the competition to be the first pulled from a wallet is increasing. The study shows that the top three preferred methods of payment are cash (32%), debit (27%), and credit (21%). Cash, down from 40% usage in 2012, is still the dominant form of payment.
There are a couple factors attributed to the decline in cash usage: Consumers are making more online purchases, and new payment forms like Apple Pay, Venmo, and PayPal are growing. Online retailers like Amazon and eBay don’t operate off an exchange of physical cash, contributing to the rise of card payments and PayPal. Meanwhile, payments via Apply Pay are increasing, albeit at a significantly slower pace than all other forms, clocking in at 11% of all reported transactions.
Consumers used cash in 60% of transactions totaling $10 and under. For transactions between $10 and $25, consumers preferred cash in 42% of transactions. Consumers reported this is more out of convenience than merchant preference. This means that minimum purchase requirements don’t necessarily dictate whether a consumer will swipe their card or not.
Cash was the preferred payment instrument when it came to food purchases, auto related purchases, and entertainment. In those categories, cash transactions totaled 39%, debit cards in an average of 26% of transactions. Credit cards were reportedly used in an average of 21% of transactions.
The category in which cash dominates, however, is person-to-person payments, accounting for 75% of recorded transactions. This means that people prefer to use cash for transfers, gift giving, and reimbursements, choosing this method over PayPal and Venmo (4%), even checks (13%).
The results of the study conducted by the Federal Reserve Bank of San Francisco show that cash holdings remain steady. Therefore, cash remains a strong, viable, and necessary form of payment.
One thing ATM owners and operators want to make sure of is that their investment is a sound one: that cash doesn’t go extinct, rendering their machines useless. NationalLink has over 20 years of experience as a provider of ATMs and ATM processing, so we understand concerns over the future of cash. More importantly, we understand the need to innovate and accommodate new technologies.
The findings above should quell any worries; cash has a strong foothold amongst the American consumer. Because people are reluctant to charge small value transactions, having cash available accommodates your customers. However, the report also shows the rise of more conscious, connected consumer.
This new consumer is growing accustomed to expecting more, while also conducting transactions at a quicker pace. Features on smart phones have allowed people to leave their wallet at home. Meanwhile, sophisticated connectivity allows consumers to monitor every aspect of their finances.
NationalLink offers a variety of Value-Added Services that combine technology and connectivity to help improve your customer experience. These services include Dual Balance, Dynamic Currency Conversion, and Cardfree Cash.
Cash has proven to be the preferred method of payment year after year, even as other payments methods pop up and try to contend for the top spot. Giving consumers access to the cash they need, while also providing them with additional services, will certainly help you retain your customer base while attracting new ones. NationalLink provides the tools you need to help you maintain your competitive edge in an ever changing marketplace.