Why are customers and retailers reclaiming cash; by James Harris, Commercial Director of Volumatic, pictured.
This year has seen a two per cent rise in the use of cash to pay for retail purchases*. So why the sudden increase in cash usage and what are retailers doing to make the best of it?
According to the Volumatic Kount UK Retail Fraud Survey 2013, the UK’s most detailed report into loss prevention, which samples 100 leading UK retailers, the increase has been most noticeable in the hospitality and leisure sector, where 55pc of all transactions were paid for in cash – an increase from 38pc in 2011. However, it appears that the number of retail cash transactions is increasing across all sectors, with the British Retail Consortium recording an increase of one billion cash transactions and the number of notes and coins in circulation continuing to rise.
What factors are responsible for this rise in cash usage? It may not be a coincidence that card fraud is on the increase. Since the Survey reveals that 74pc of all fraudulent transactions were related to credit and debit cards, cash could be assuming the role of a more secure payment option, minimising your exposure to risk of fraud. This won’t be lost on customers with limited budgets, wary of overspending or sustaining a loss.
For retailers, cash remains the most cost effective and fastest methods of payment. The cost of processing cash in 2012 was £81m, at an average 1.5p per transaction, according to the BRC. Meanwhile debit card transactions cost 9.4p, and those made using a credit card cost a staggering 38p each.
As well as the cost element, processing cash is also much faster, by around nine seconds per average transaction. This doesn’t sound like much, but compared to credit and debit card transactions, a cash-only till can process 28pc more transactions than a card equivalent – critical at peak times.
What’s more, processing cash is becoming progressively more cost efficient, with new solutions now available that make the reporting, crediting, counting and holding of retail cash safe and streamlined. Growing concerns about hacking and cyber-crime add to many people’s reluctance to share their card details online. Airlines such as India’s Jet Airways may have started a trend in providing a facility for customers to pay for tickets with ‘cash on delivery’. They have reported an increase in custom, particularly among those not comfortable with paying online.
In the US, Wal-Mart launched its ‘cash on delivery service’ last year. It allows customers to buy online and pay with cash, a valuable service when you consider that as many as one in four US households rely on cash as a means of payment.
With the return to cash an emerging strategy among some retailers, you may wish to consider how you can use cash to win custom, cut your own costs and even offer customers a better deal.
*Now 38 per cent of total transactions; Volumatic Kount UK Retail Fraud Survey 2013.
