Bill Budde is the VP of Product Marketing for Hyosung. In this role, he helps banks and credit unions make decisions about branch transformation technology and unlock the value of those investments. Prior to joining Hyosung, Bill worked at JPMorgan Chase in both the Retail Banking and Merchant Processing business units, developing and implementing many self-service capabilities.
Baseball’s truncated regular season just wrapped up, and with it, so did many fantasy baseball leagues. I got the end-of-season email from my league’s commissioner earlier this week that showed how much I owed for my standard out-of-the-money finish. Now, I’ve been in the same league with the same group of people for 25 years; what started as a group of co-workers sitting together in the office cafeteria to draft our teams has turned into a virtual, across-the-country link that keeps us connected long after our lives have taken us in our individual directions. From my home in Ohio, I pulled out my phone to settle up with my friend in Florida, and with the push of a button I had transferred my annual contribution to the winner’s earnings.
As banks continue to develop new digital capabilities to meet their customers’ demands, methods of online payment have proliferated. While this growth has been steady over the last few years, the effects of the pandemic have seemed to greatly accelerate this trend over the past six months. It is not hard to find a story about how transaction volume in payment apps or mobile wallets has exploded, typically with allusions to the death of cash and the coming cashless society.
It is clearly true that digital capabilities of many types, including digital payment applications, are very popular methods among banking customers right now, but that does not necessarily mean that cash has gone the way of the dodo bird. The Federal Reserve’s latest annual Diary of Consumer Payment Choice notes revealed that customers use cash for 26% of all payments, which was consistent with 2018. While this latest survey was completed prior to the COVID-19 pandemic, the Fed released a supplemental study this fall that showed 59% of their consumer panel used cash to make an in-person payment May 2020, which was actually up slightly from 57% in the full 2019 report. Further, the amount of U.S. currency in circulation has risen every year since 2000, both in terms of overall value of currency and total volume of notes.
There are many reasons why cash remains a vital part of our payments landscape, as it has many inherent advantages as a method of payment. Its ease of use and universal acceptance continue to make it a preferred payment method for small transactions in all demographics – again, per the Fed, 47% of payments under $10 are cash. Its anonymity is an important element of the freedoms we hold dear, and its no cost usage for both buyer and seller increase buying power. It is still the safest and easiest method of creating and sticking to a budget. Perhaps its most important attribute, however, is its accessibility.
Innovation has been fast and furious in the digital payment space, which is great for customers and merchants alike. New conveniences, new capabilities, and new interaction models all bring benefits to users. Unfortunately, the population that can experience those benefits is generally limited to customers and businesses that already have established banking relationships. There is still a significant unbanked and underbanked population in this country (estimated by the Fed at over 20% of US households), and that population is generally left out of the advances in payment innovation while also relying heavily on cash.
The success of new payment options does not have to be a zero-sum game. As our population continues to grow, the number of people who require goods and services also grows, which continues to expand the number of payments necessary to procure those goods and services. Focusing on new payment methods succeeding at the expense of old methods is sub-optimal, and only drives complexity in the marketplace while driving deeper wedges between constituencies. Innovation that bridges the digital and the physical, that contemplates a landscape where payments can flow optimally and interchangeably in a cohesive environment, will create a foundation for a payments ecosystem that maximizes efficiency and customer convenience while also creating true inclusivity for all.
For more information, see our infographic on the characteristics of cash.
Contact your Hyosung sales rep or your local Authorized Hyosung Dealer to see how Hyosung technology can help you meet your cash handling needs.