Guest Column | May 9, 2016

20 Years Of Innovation: Cash Handling In The Retail Industry

Cash

By Joan C. Brancaccio, Bank of America Merrill Lynch and John Van Slingerland, G4S

Much of the discussion about the retail payments ecosystem has typically focused on mobile technology. A favorite pastime for the industry is predicting what platform will win the race for ubiquity in retail payments - will it be Samsung, Amazon, Apple, Android, or something else?

Separated from this swirl, and the loud buzz around digital payments, is the steadfast, continued use of retail cash transactions, which remains substantial overall, and in some industries, it’s actually growing. 

According to a research paper published by the Federal Reserve Bank of Richmond, “Payment Choice and the Future of Currency: Insights from Two Billion Retail Transactions (Revised October 2014)”,  the bank counted two billion transactions at a chain of discount stores from April 2010 through March 2013. Notably, cash was the most popular method of payment by a wide margin. They concluded that cash was so prevalent in “small-dollar transactions” due to its convenience and speed. The fact is, no matter how advanced smartphone computing becomes, currency is, and will likely remain for the foreseeable future, the most secure, flexible and efficient method for the smaller retail transactions.

As a result, it behooves the retail industry to not view innovation in retail payments and treasury operations as exclusive to digital options. And in reality, the security and financial services sectors have been pretty active when it comes to providing innovative solutions for retailers over the years.