While we don’t know the full scope of the UK’s departure from the European Union, the landscape will certainly change over the coming months and the impact of Brexit on British consumers is already apparent. Unilever and Tesco have already had a high profile price war, and retail experts have predicted that there will be a price hike in January. Brexit has also had a dramatic effect on currency in recent months, with a sharp fall in the pound’s value.
And that’s not the only thing concerning consumers when it comes to spending. A recent survey by Financial Fraud Action (FFA UK) revealed that 90 percent of UK businesses reported a security breach in 2015, while there were more than one million incidents of financial fraud in the first half of this year.
It is easy to see why many households feel a sense of uncertainty. In times of trouble or insecurity, people tend to revert to the familiar, sticking to what they know and trust. And in payment terms, that means cash.
Cash is a constant companion
While the use of credit and debit cards is continuously rising, cash still has a strong place in the hearts of UK consumers. Over 21,000 cash payments are made every minute in Britain, according to Payments UK data, and it remains the single most popular payment method, even though its overall share is being very slowly eroded.
For consumers, there are many reasons to use cash over card or other electronic payments. First of all, it is the only currency format familiar to all shoppers, regardless of their age, involvement with the banking system, or technological awareness. Secondly, the physical act of exchanging money can feel secure – for a number of reasons. Taking out cash for the week or month can help households to budget, for example, the physical handing over of cash allows some consumers to better visualise their remaining budget and keep track of what they have spent. Another reason for feeling more secure using cash is that it’s guaranteed to be accepted as it’s not subject to credit check, network connection or card reader technology – it’s simply going to work.
With the value of the pound dropping, households that are planning an overseas holiday in the next few months may even be stockpiling foreign currency, to avoid an even worse exchange rate if they choose to use their card overseas further down the line.
Making cash pay for retailers and consumers
However, while cash is a constant companion for consumers in a world of change, its continued usage is not always welcome news for retailers. Compared to card payments, processing cash can seem more complex, unwieldy and less secure – but this simply isn’t the case. As cash is here to stay, retailers need to find ways to optimise their cash management, in order to reduce the cost and stress of managing physical money, and increase their speed to profit.
The key is to move money from the customer to their own bank account as quickly, efficiently and securely as possible.
As there are multiple steps in this process – the customer tenders cash at the point of sale, it needs to be verified by the cashier, it is then moved to back office at strategic points in the day for collating and accounting, before it is collected and deposited at the bank – there are opportunities for inaccuracies and inefficiencies – and even shrinkage – to creep in, which negatively impact cash’s profitability as a payment method. If retailers can reduce these issues, it helps to make cash pay for their business.
Counting on cash
To improve cash management – or to optimise the Retail Cash Chain – retailers need to find better ways to automate, authenticate, secure, and accelerate the processing of cash payments.
One way that leading technology companies are enabling this is to transform cash into an electronic payment as quickly as possible by offering solutions that enable provisional or same day credit. By automating key verification checks, retailers can assure their banking partner on the authenticity of cash and the value of that cash stored within their business at any given time, which can then be credited to their account on the same day. This can be done when cash reaches the back office, or even at the point of sale.
By operating in this manner, retailers can benefit from improved liquidity and access to working capital, which they can then use much more quickly. They also profit simply from having more money in the bank.
This is just one example of the way that technology is enabling more effective management of the Retail Cash Chain. If retailers can start viewing physical money as an opportunity in this way, then they can make cash drive their business forward and even encourage consumers to pay with notes and coins. This way, everybody is happy, and there is a lot more certainty – even in these uncertain times.
