cash, cash industry, Daily News, Payments News, Polymer notes -

Cost of cash to increase for retailers by 50%

Retailers are facing cost implications over the next three-to-five years as a series of developments in the cash industry, including the implementation of polymer notes in the UK, impacts business operations.

Though consumer cash transactions are in decline, the cost of cash will begin to increase for retailers, driven by rising interest rates, the living wage and changes to sterling, such as polymer banknotes and the new GBP 1 coin.

Polymer notes enter circulation in UK

Cost of cash to increase for retailers by 50%

“Retailers are being hit with a double-whammy: falling consumer usage of cash and rising costs of accepting, holding and transporting it,” says Brendan Doyle, CEO of CMSpi. “As the cash volumes retailers receive begin to decline, so too will the efficiency of the processes they currently have in place. The Bank of England has indicated that interest rates of 2.5% to 3% will likely become the ‘new normal’, so with cash taking on average 4.5 days to get from a retailer’s till to their bank, the cost of holding cash – in tills, safes and in transit – increases significantly.”

“Retailers may think the alternative would be to have more collections and get cash into the bank quicker, however increasing the frequency of cash collection services only increases costs further,” explains Doyle. “Add to this increased employee costs due to the living wage and we calculate this will result in the cost of cash going up from around 0.20% to 0.30% (of transaction value) for most major retailers.”

Certainly, these extra costs will only add to the headache retailers are about to face to ensure they become “polymer banknote ready”.

With the cash landscape becoming increasingly challenging, retailers will need to think carefully about their cash strategies and consider how their payments operations are – and will be – managed to mitigate rising costs.

“The future will see a greater emphasis on efficiency and technology-based solutions,” adds Doyle. “Meaning that for most major retailers the accepting, processing and depositing of cash takings will look very different than it does today.”

The post Cost of cash to increase for retailers by 50% appeared first on Payments Cards & Mobile.