Cash is increasing in terms of value as a payment method despite new contactless and mobile payment methods, claims a new retail sector study by Retail Fraud Study. The study found that the value of cash transactions increased by 4% from last year rising to approximately GBP121 billion. This was most apparent in the hospitality and retail sector where 58% of all transactions were made by cash.
“In the past few years we have seen various new mobile and contactless payment methods come onto the market yet people continue to use cash. Despite the many new payment methods that have flooded the market recently it is interesting to see the value of cash has increased,” said James Harris, commercial director at Volumatic, a manufacturer of intelligent cash handling equipment. “£121 billion of sales represents a massive chunk of the economy and signals that perhaps these new methods of payments are not as popular as first expected.”
Cash is also proving popular among retailers as its more cost efficient than processing electronic payments. Bank charges on debit and credit card payments average GBP9.3p and GBP33p per transaction respectively. A cash payment is cheaper to process at around GBP2.3p per transaction.
“The move to contactless payment is being driven primarily by the banks that can benefit from charges of around 5p per contactless transaction which is considerably higher than the cost of cash. Consumers, who are using more cash than ever before, are clearly not pushing this drive to new payment methods,” Harris added.
“Retailers aren’t keen either as the inflated cost of electronic payments comes out of the retailers pockets, in turn this processing cost is passed on to the customer via increased prices so that retailers can maintain a healthy balance sheet. The fact of the matter is that cash presents a cost effective payment method for retailers and, if more cash was used instead of electronic payment methods, retailers could pass on savings to their customers.”
As cash is still a major competent in the market, cash handling systems remain an integral part of retailer’s loss prevention strategies. According to the study, 49% of retailers use secure cash storage devices at the PoS, 48% use cash counters and 69% use forgery detection devices. The cost of handling cash could fall further for retailers as products that remove the need for a cash office are being introduced to the market. As well as securing cash, these products also detect forgeries, count cash and update the retailer’s bank account straight away.