Cash plays a number of important roles in the financial system. It contributes to financial inclusion, for example, and provides maximum convenience and usability for consumers and the smallest businesses.
One of the lesser-discussed advantages of cash is its potential to help people budget and manage their money. Fiscal responsibility is something that businesses should be encouraging in our post-financial crisis world, so should banks be making a special effort to highlight the benefits of cash for spending awareness?
This is a point that has been emphasized by the ATM Industry Association (ATMIA), as part of its Withdraw Cash Wednesday campaign.
‘Good for consumers, business and the economy’
Withdraw Cash Wednesday is due to take place on the Wednesday before the Thanksgiving holiday in the US (November 22nd) and on each subsequent Wednesday during the holiday shopping season. The idea is to encourage people to use ATMs and withdraw cash to make purchases at this busy time of the year, rather than relying on credit.
The campaign points out that this can help consumers to budget and save money on the interest they would pay on credit card purchases. With many merchants still in the process of migrating to EMV chip technology in the US, cash can also be a quicker payment option than cards, providing mutual benefits for shoppers and merchants during busy shopping periods.
Putting this focus on cash in context of the wider debate around payment methods, Tom Pierce, chief marketing officer at Cardtronics, pointed out that a cashless society is “a myth today and for the foreseeable future”. He added: “While consumer payment behaviors evolve along with technology, consumers continue choosing and using cash as part of a broader mix of payments options.”
Cardtronics and Allpoint Network recently signed up as sponsors of the Withdraw Cash Wednesday campaign, which was welcomed by Mike Lee, chief executive of ATMIA.
Mr Lee said: “This campaign is a leap forward in promoting the positive role of cash for consumers, businesses and for the healthy functioning of the US economy in 2017 and beyond. Our simple narrative is that cash is good.”
There is a tangibility and visibility that comes with physical currency which makes it extremely useful for people who want to maintain control over their spending.
Financial institutions that want to encourage financial responsibility can also look into some of the more technologically advanced options that could help their customers, such as dedicated apps.
Some banks around the world have taken the approach of using apps to let their customers see their various accounts and credit cards in one place. This provides an overview of the individual user’s funds and where they are spending their money.
Smartphone applications can also give users greater understanding and control of their spending with tools such as instant notifications and category tracking.
From old-fashioned cash to the latest apps, each component of our increasingly diverse consumer financial services sector has its own unique benefits. Financial institutions should therefore strive to offer the choice and freedom required for customers to find the combination of banking channels, payment methods and technologies that best suits their needs.