Why cash will always count

Issue 2/3 2023 Security Services & Risk Management, Products & Solutions

We are all aware of the obvious benefits of cash in the payments landscape: anonymity or protection of personal data, independence, and financial control. But recently, when cyclone Gabrielle struck the northern regions of New Zealand, the need for ‘ready cash’ became very apparent. With interruptions to their power supply and telecoms, people were only able to use cash to purchase the essentials they needed until networks could be restored.

“What it is showing is the importance of physical cash still in society today,” said Karen Silk, Assistant Governor, Reserve Bank of New Zealand.

The Reserve Bank of New Zealand Governor, Adrian Orr, added, “Cash management operations are a critical component of financial stability.” He noted that banks driving for a cashless society risk leaving the economy vulnerable. “You are seeing and reading some horrific stories out there at the moment of isolated communities. When people lose the ability to transact, when they don’t have a means of exchange, then social cohesion is very quickly challenged.”

Another recent study conducted by Bank of America Global Research in ten countries across the globe (US, Brazil, China, France, Germany, India, Japan, Mexico, South Korea and the UK), indicates that Gen Z consumers prefer paying with cash. This, because they are largely risk averse and do not want to take on debit or incur the fees associated with loans or credit cards. When one considers that Gen Z accounts for 2.5 billion people born between 1996 and 2012 – the future generation – one realises that cash is here to stay.

In South Africa, cash accounts for more than 50% of all transactions. But as cash flow grows, so do the associated risks. More than 80% of small and medium-size businesses don’t succeed because they either lack or don’t understand the need for efficient cash management. In a recent online survey conducted by Deposita, 77% of respondents listed cash management as top priority for improvement.

The faster cash is settled into a business account, the quicker it can be used for stock purchases, for the reduction of overdraft balances, reducing debt interest, or creating credit interest on accounts. There are three key areas in virtually any business that can be improved with an end-to-end cash management solution:

Front-of-house

In pursuit of more efficiency, employees need to be free from the cumbersome manual cash handling processes, as well as the dangers and risks of cash handling. With Deposita’s Exchangor cash recycling machines, you can speed up checkouts, remove human error and secure and track your cash flow. Depending on the nature and size of your business, devices can be customised to provide either an assisted or full self-service option, freeing up cashier time to focus on customer experience.

Administration or back office

Cash holding at till level can be reduced by using a smart safe rather than relying on regular banking. This reduces the risk of loss and theft by eliminating touchpoints in a business’s cash handling processes.

Reconciliation is critical to effective cash management as it is used to balance business and bank records. However, a key challenge in any reconciliation process is data collection. Fortunately, this process can be automated with Deposita’s Protector range of deposit solutions. These devices eliminate the risk of pilfering or theft and deliver accurate financial reporting. At the same time, reducing and streamlining cash-in-transit collections.


Management

Deposita’s software-as-a-service Connector platform ensures your data is as secure as your money. Instead of you having to wade through individual chunks of information, you will have a helicopter view of your cash flow from a central platform. It provides a real-time view of all cash transactions conducted through your cash deposit machines, while also assisting you with cash forecasting and the planning of cash-in-transit collections.

There is no doubt that cash will be with us for a very long time and that we need to protect and manage this commodity well. It is also important to look at other growing areas within the cash landscape, including payment and banking self-service, cashless payment solutions, and inclusion.

Some points to consider and trends to look out for:

• A recent study conducted by PWC projects predicts that cashless transaction volumes will grow to nearly double the 2020 volumes by 2030.

• The introduction of merchant solutions and the accompanying move to increase the use of SoftPOS, eliminating the need for POS hardware and using mobile phone or similar applications for payments.

• Digital wallets, which, according to a report from FIS, could present half of all e-commerce transactions by 2024.

• In Africa, closed-loop systems such as e-money and mobile money solutions will continue to grow.

• We will see more large bulk cash recycling solutions facilitating self-service applications.

• Retail and wholesale client self-service solutions, including cash and merchant options, will continue to grow.


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