The first known form of currency--the Mesopotamian shekel--emerged nearly 5,000 years ago and cash has been used to purchase goods and services ever since. Until recently, it was a safe bet that cash would be around for the foreseeable future...that may not be the case anymore.
As new technologies emerge that automate and simplify the payment process, the future of cash is growing uncertain. Why deal with currency and coins when you can simply tap and go with a smartphone, wave and pay with a debit or credit card, or send an online peer-to-peer payment in real-time via Venmo or Zelle?
Global crises, such as the pandemic, have hastened this trend. In fact, just a few years ago, retailers were hesitant to adopt such payment technology. Why invest in new equipment and infrastructure that might not appeal to consumers or even survive as even newer technology emerges? Ironically, though, the combination of current events and tech-hungry young consumers has rapidly made the prospect of a cashless society all too real.
Need evidence? Street vendors now use contactless card readers to sell clothing and books. Girl Scout troops now accept Venmo payments for their cookies. And even PayPal is climbing onboard by allowing bitcoin as a form of payment. The signs are everywhere--and for the first time in human history, the future of cash payment is in doubt.
Going--but not gone
Cash might be going, but it is certainly not gone. In fact, according to Fundera, 88% of U.S. consumers sometimes use cash to make a purchase. Cash continues to be the most frequently used payment method. It represents 30% of all transactions and 55% of transactions under $10.
Still, the use of cash is slowly declining as other options emerge. Credit unions face a dilemma in this era of contactless payments and Peer-to-Peer (P2P) real-time transactions. How do you continue to support customers with a range of payment options that meet their diverse needs in a rapidly changing world?
The first step is to support the use of cash while also implementing the technology needed to support other approaches. These include account-to-account transfers between credit union members, card programs that give customers real-time mobile access to their card information, and external account transfers that enable members to link their online banking account with outside financial institutions.
Another key is to understand that today’s tech-savvy consumers are very demanding. They seek simple, straightforward technology solutions that make their lives easier. At the same time, they want security so they know that their personal information is safe.
Finally, keep in mind that despite the increasing use of technology, a cashless society is not imminent. In fact, there’s been a backlash against the idea, and cities like New York have banned cashless stores altogether. Why? Because they view cashless payment options as discriminatory towards shoppers who don’t have credit or debit cards. That includes a stunning 7.1 million American households according to a Federal Deposit Insurance Corp (FDIC) survey conducted in 2019.
How credit unions can prepare for the future
Cash payments are here to stay--for now. Whether they’ll still be around in another 5,000 or even 50 years is a different question. Meanwhile, credit unions who adapt and change so they can support a wide range of payment options are the ones that will thrive.
A credit union that strives to maintain the best of traditional cash-based services while adding options that appeal to digital natives needs the right credit union core platform partner. The key is to meet member needs with a seamless, secure, efficient digital banking platform. FLEX credit union core software technology can help you do it. In addition, FLEX writes software that can be geared toward the wants and needs of your credit union. For a user-friendly digital banking platform with award-worthy features and services for members, take a look at our Digital Account Services eGuide. You can learn more about how FLEX can help improve the digital services you offer to your members.
