Tuesday, 20 December 2016 17:03

Cashing in or Cashing Out?

How far will ‘cashless’ go in retail?

What’s universal, convenient, anonymous, transferable and fast — and possibly becoming obsolete?

Cash, of course.

As other payment methods have proliferated, starting with credit cards and then debit cards, gift cards, prepaid cards and now mobile payment and digital wallets, good old-fashioned cash is increasingly getting a bad rap.

It’s far from a universal opinion, but some retailers want a cashless future, despite the virtues the dollar bill still holds. Perry Kramer, vice president and practice lead at consultant Boston Retail Partners, contends that as many as 80 percent of retailers today are already largely cashless — not necessarily by conscious decision, but through the proliferation of payment cards.

Retailers like the ease of reconciling electronic transactions and — while many retailers would disagree — Kramer claims the convenience is worth it despite skyrocketing swipe fees charged by banks for processing transactions.

“Retailers don’t really want to be banks. It’s not their sweet spot,” he says. “It is much less expensive to process credit and debit than it is cash, because cash has a lot of labor involved.”

One retail payments expert who disagrees is National Retail Federation Senior Vice President and General Counsel Mallory Duncan.

While he questions the 80 percent figure, Duncan concedes that plastic transactions “are probably the majority” in today’s retail world, boosted in part by the popularity of debit cards among Millennials. But cash still gives the retailer 100 cents on the dollar while banks take a cut of 2-3 percent on each credit card transaction — a fee that adds up to more than $50 billion a year industry wide and has been the subject of both litigation and legislation.

Credit and debit card “swipe” fees far outstrip the cost of handling cash, he says.

“Cash has long been the favorite and lowest-cost form of payment for most retailers,” Duncan says. “From a cost standpoint for most retailers of any size, cash is still king.”

Swipe fees are so high today that it would be “devastating to the merchant’s bottom line” to try to absorb them, Duncan says, leaving retailers with no choice but to build them into merchandise prices. Accepting cash — and hoping that customers use it as often as possible — helps mitigate the cost of swipe fees, he says.

The notion of a cashless society has been gathering steam globally. In Nordic nations like Sweden, Denmark, Norway and Finland, it is being pursued as governmental policy. Domestically, the Federal Reserve has forecast that cashless transactions will reach $617 billion in 2016, up from about $60 billion in 2010. In September, consultant Capgemini put the annual growth of digital payments at about 10 percent, or 426 billion transactions in 2015.

Such forecasts are piquing interest on numerous fronts, from financial advisers and retailers to policymakers and social-media prognosticators. Vancouver, B.C.-based clothing chain Kit and Ace has stopped accepting cash at its stores, and touts the move in its marketing. (read more)

Published in Retail News

Basic Tip:Make bank deposit drops daily and always have a secondary associate accompany the manager when completing the bank deposit drop.

Advanced Tip:Create and use a Bank Deposit log for tracking all deposits created and documenting when they have been dropped off at the bank or picked up by an armored car service.