Mark Twain once said, “The rumors of my death have been greatly exaggerated.” The same can be said for cash and coins in the United States.
It’s estimated there was $54.6 billion worth of cash in circulation in 2023, and still, predictions about the demise of physical currency continue. Only 43% of Americans say they are comfortable without cash on hand, with most Americans still preferring to carry at least some cash. From privacy concerns to legal loopholes, many Americans seem to know, cash is king. Cash offers security and ease of use that other methods lack.
Because it is fungible, or interchangeable, cash can provide a level of privacy that isn’t present with most digital transactions. Many consumers prefer cash for its practical use and security. When cash is spent, it doesn’t leave any trails or strings linking back to an account or leave an opening for fraud and scams. Using cash often comes with a discount at many small businesses, which offer a reward for using cash rather than fee-carrying credit or debit cards. Even peer-to-peer fund transfer applications have fees associated with use, further supporting cash as the go-to above other options.
Privacy and Security
As modern technology parses consumer data and tracks an increasing number of details about purchases, there is a growing number of individuals who champion the anonymity of cash. Cash is fungible, with no memory for who it was used by or what it was used to purchase. Customers who are skeptical of the encroachment of technology and AI tools that tailor ads and track payment history prefer cash for transactions, allowing them to “stay off the radar” for transactions they’d prefer to keep private.
Security is another compelling reason that consumers still use cash. The Federal Trade Commission reported that consumers lost more than $10 billion to fraud in 2023, a 14% increase over reported losses in 2022. With already high rates of consumer fraud and identity theft on the rise each year, keeping transactions cash only is a simple way to avoid the theft of credit and debit card numbers or other banking details. Cash can simplify things by reducing the risk of a wider spreading problem. When someone steals a $20 bill, that $20 is stolen, but when someone steals banking info, they could have unfettered access to the entire amount kept in the account.
Consumers don’t need to be doing anything risky to prefer cash for their transactions. Security breaches at major companies have wearied many consumers who’ve grown tired of letters and emails informing them about the latest breach and which of their data was stolen or accessed. Additionally, many consumers are concerned that major banks could fail or collapse, leaving them unable to access funds that aren’t kept as cash. News reports featuring Silicon Valley Bank, First Republic Bank, and Signature Bank, which all collapsed in 2023, have given credence to these fears.
Laws Favor Cash
In states where recreational marijuana is legal, cash can be the only option. While individual states have written laws that protect banking institutions from prosecution for handling cash deposited from the marijuana industry, federal law still makes digital transactions from marijuana sales illegal. Learn more about Shields cash management solutions for cannabis dispensaries.
The United States cannabis industry is expected to reach staggering profits in 2024. Legal in just 24 states, the cash-only industry anticipates reaching almost $40 billion in profits by the end of this year. Banks with policies and efficient systems like those provided by Shields Cash-In-Transit can cater to cash customers and have a clear advantage when serving customers with high cash volumes.
In an industry quickly gaining popularity, with 70% of American adults agreeing recreational cannabis should be legalized, business is booming. With increased legalization, the negative connotations of marijuana sales and use are decreasing. It is reported that 1 in 3 women over age 21 now consume cannabis regularly. Furthermore, an estimated 440,000 full-time equivalent jobs are supported by the legal cannabis industry. This represents a huge number of potential customers, from individuals running a dispensary to the cash customers who frequent dispensaries and use ATMs to facilitate their purchases.
Cash Use by Income
The demographics shine a light on the importance of cash, and more specifically, potential customers who prefer cash for many transactions. According to this Gallup Poll, households with income below $40,000 are the most likely group to use cash, with 12% reporting that they use cash for all of their transactions and 42% using cash more than half the time. These customers tend to be underserved by banks.
Consumers with annual incomes between $50K and $100K make cashless payments more than 85% of the time. While households making below $50K annually only go cashless for 68% of purchases, preferring cash almost 1/3rd of the time. Many of these Americans live in banking deserts, with limited access to a brick-and-mortar banking institution. ATMs placed in these banking desert areas, fully serviced by Shields, can reach customers beyond a bank’s branch network in a cost-effective manner.
Coins
Cash and coins aren’t going anywhere anytime soon. For years, banking institutions and various representatives across the United States have attempted to do away with our smallest form of cash, the penny. The United States hasn’t withdrawn a low-value coin in over 150 years, eliminating the hay-penny, or half-cent coin, in 1857. A penny at the time had more buying power than a modern quarter, at just 32 cents in today’s dollars.
It’s estimated that roughly $15 billion worth of coins make up swear jars, piggy banks, and loose change in the United States. Many banks are shying away from coins because they are heavy and difficult to manage. Shields offers petty cash and coin processing with transport services that take the hassle out of coin and petty cash management. Banks that help their customers deposit coins increase their overall deposit rates and rank higher in customer service ratings.
Coins hold a special place in the hearts of Americans. Whether it is fishing for the last quarter at the bottom of a purse to feed into a candy dispenser or finding dollar coins under a pillow in exchange for teeth, many Americans have traditions around coins. It could be the reason that so many attempts to discontinue the penny have failed.
Whether it is for privacy, practicality, security, or nostalgia, for many Americans, cash is their go-to for purchases made in person. With the prevalence of purchase tracking and prolific ad tailoring tools, it’s no wonder that hard cash is preferred. With federal regulations falling behind modern ideas about marijuana use and legalization, for some consumers, cash is the only answer. Support customers with cash-in-transit solutions that provide maximum security and ensure that funds are handled with caution and care from point to point.
Banks can increase their operational efficiency by letting Shields Cash-In-Transit services manage cash counting, delivery management, and ATM replenishment. Our state-of-the-art cash counting and storage equipment reduces ATM downtimes and interruptions through integrated cash monitoring and replenishment services. Lastly, save money by outsourcing armored transport and cash management to reduce in-house costs.
Contact Shields for more information on cash management, coin wrapping, and cash-in-transit services. For more valuable industry insights, subscribe to our blog.
