With all the talk about the “death of cash” it may surprise you to learn that more account holders use the ATM than any other banking channel.1 In fact, according to a study by J.D. Power, over half of consumers used an ATM or drive-thru to get cash in 2020.2 While the number of ATM transactions has declined over the past two years, the dollar amount of ATM withdrawals has grown, as has the frequency of cash deposits. This is because a significant portion of consumers still rely heavily on cash for day-to-day expenses. This is especially true for consumers in rural areas and those in lower income urban neighborhoods. It is also true of GenZ. GenZers prefer to use cash for in-person payments almost as much as they use P2P options like Venmo, and Cash App.3 Mobile payments and debit cards come second and third to physical currency as a preferred way to pay for this demographic group.4
In many cases, these vulnerable groups have seen the highest number of branch closures in their neighborhoods which frequently results in fewer ATMs and have been disproportionately affected by a lack of access to cash.
In support of consumers, there appears to be a grass-roots movement to protect cash as a payment instrument. Around the globe, various governments and industry groups are taking actions to preserve cash as payment instrument. The UK recently announced the new Financial Services and Markets Bill, which will ensure the continued availability of withdrawal and deposit facilities across the UK. Cash remains an important payment method for millions across the UK, particularly those in vulnerable groups, and the government’s action shows a commitment to preserving consumers access to it.5 The ATM Industry Association (ATMIA) is calling for universal cash deposit standards and processes. The European Central Bank (ECB) recently outlined its 2030 cash strategy to ensure that banknotes remain widely available and accepted as a competitive payment instrument that can be owned and used by all consumers in the European Union. In the U.S. there is currently no federal law that requires businesses to accept cash, but more than half of all states have passed legislation that outlaws the discrimination of cash buyers by preventing businesses from requiring credit payment.6 Just last month, the U.S. Congress passed the Payment Choice Act, intended to ensure continued acceptance of cash as a payment option for consumers throughout our nation. The bill requires all brick-and-mortar retail businesses to continue allowing consumers to pay with cash for purchases of goods and services up to $2,000. The bill still must pass in the U.S. Senate to become law.7
It’s good for the customer experience
These factors are important considerations for financial institutions as they work to implement services that meet the needs of these communities in the most efficient way possible. By adding cash recycling to a portion of a bank’s ATM fleet financial institutions can provide the needed services while realizing multiple benefits such as reducing ATM operating costs, facilitating multi-denomination capabilities, reducing customer wait times (by migrating transactions such as cash deposits from tellers to the ATM), and freeing up bank staff to perform other relationship building functions.
As branch closures expand, ATMs with cash recycling capabilities and 24/7 availability can play a vital role in providing continued services for small to medium merchant accounts who handle a large volume of cash payments. In the absence of a nearby open branch, an ATM with cash recycling capabilities can allow these valued accounts to make cash deposits when it is most convenient for the merchant regardless of branch hours. These businesses also appreciate that there’s no delay in crediting their accounts for deposits made at recycling ATMs. Making it easy and cost effective for merchants to deposit cash regularly can also serve to encourage merchants to continue to accept cash payments at their business.
It’s good for increasing efficiency and reducing CIT costs
When it comes to ATM fleet management and costs, CIT services are often the greatest expense that banks incur. Maximizing efficiency is crucial to optimize operating costs in today’s environment. By implementing cash recycling, the frequency of CIT visits can be significantly reduced resulting in a substantial savings for CIT fees. Additionally, automated cash recycling is less likely to induce loading errors that can occur with manual CIT cash loads, reducing downtime. With proper cash withdrawal/deposit analysis and planning, cash recycling can help to ensure plentiful cash levels at the ATM– reducing the incidence of out-of-service events while avoiding replenishing low volume locations too frequently and serve to improve overall customer satisfaction with the self-service channel.
It’s good for the environment
An added benefit of cash recycling ATMs is that it is a greener, more sustainable business practice. Recycling ATMs can increase financial inclusion by ensuring cash and other banking services are easily accessible in areas with few or no bank branches. And reducing the number of CIT visits and potentially reducing the number of service calls can mean lower carbon emissions directly related to ATM fleet operations. Overall, it’s a win-win-win for financial institutions, customers, and the environment.
Long Live Cash and the ATM!
We believe the rumors of the death of cash have been exaggerated. As branch closures continue to accelerate, ATMs can fill the financial services void these closures create, ensuring communities have access to cash as well as a host of other vital products and services, at a cost much lower than the cost of a traditional branch location.
7. National ATM Council Newsletter 16 June 2022