Payments

How is commercial cash demand changing?

How is commercial cash usage evolving?

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November 1, 2024 by Bradley Cooper — Editor, ATM Marketplace & Food Truck Operator

Cash usage is top of mind for the ATM industry and the payment industry more broadly. Customer demands surrounding payment options are changing and along with it the needs of commercial organizations, but how are they changing specifically?

Cathy Isom, SVP, senior product manager, First Citizens Bank and Stacy Diamond, executive director, global treasury management, Wells Fargo addressed how commercial customer demands around cash is changing during a panel at Cash in the USA on Oct. 22 in Nashville, Tennessee. Lee Williamson, managing director of CMS Analytics, moderated the panel.

When asked how cash usage is changing, Diamond said that overall, "there's no question that as a payment type, it [cash] is less used than in previous years."

However, she emphasized that "it is still quite prevalent," and the trends of who use cash and why they use it has remained steady. As a different panel by the Federal Reserve demonstrated, cash usage has hit a floor and has kept steady since 2020.

Isom said, in her banks case, due to acquisitions of other banks, demand for cash has increased. This includes commercial customers involved in the hemp market who rely heavily on cash.

"Retailers in particular see that cash is not going away and they need to get better at handling it," Diamond said.

Even in the case of big businesses, like McDonald's they see a need for cash. Diamond said that McDonald's found that they lost revenue by not enabling cash payments on their self-ordering kiosks. Customers would come in and see that cash wasn't accepted and they would leave rather than ordering from the register up front.

However, retailers often struggle with armored transportation for cash, due to inconsistent service. In addition, they don't want to send employees with large amounts of cash to the branch.

As a result, many commercial partners are adopting cash vaults for security and fraud prevention. Diamond said banks are also adopting commercial friendly ATMs that can accept larger cash deposits.

This is part of a larger bank strategy of reducing the amount of corporate and commercial cash going through the branch. Although Diamond emphasized that you still need to accommodate customers who want to use the branches for cash deposits.

One major challenge with commercial cash usage is tracking deposits. Businesses want to know how quickly from the time they deposit the cash to when it will be available in their accounts for use.

Isom said, " We are working to roll out a cash visibility app for our customers to track deposits from the time they leave the customer to the time they get credit at the bank."

Diamond said Wells Fargo uses third parties for the reconciliation process and for forecasting. However, she did point out that it can be a major challenge to get investment in cash services.

In another session at Cash in the USA, Matt Snow, head of cash and ATM operations, Regions Bank said that many organizations, even financial institutions will argue that cash is a dying medium — so why should they invest in it? This is a major issue in both banks and businesses to get investment into cash automation.

However, the need for cash automation is important, both to save costs and improve efficiencies.

Isom shared a story on how her child went into a store to purchase an aquarium with cash and the employee didn't know how to count the cash. She said this is a prime example of why businesses need some form of cash automation technology to handle the cash coming in.

These could include tools such as smart safes, which Diamond said are much better at tracking incoming cash, especially since newer smart safes are smaller and are more economic for smaller cash quantities.

Snow said in a different session that ultimately cash will be around for the foreseeable future so it's important to implement automation tools now and learn from other countries in Asia and Europe that are "15 years ahead" in terms of cash automation to implement these technologies and strategies efficiently.

About Bradley Cooper

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Bradley Cooper is the editor of ATM Marketplace and Food Truck Operator. He was previously the editor of Digital Signage Today. His background is in information technology, advertising, and writing.

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