Will The Pandemic Spell The Real Death Of Cash?

Depending on where you look, cash may still be king.

It’s no secret that the pandemic has been forcing consumers to embrace all things digital. That includes paying for everything from clothes to restaurant deliveries through online and card-not-present transactions.

But in an interview with PYMNTS, Scott Anderson, director of software product management and go-to-market, banking at Diebold Nixdorf, said that predictions of cash’s imminent demise are premature.

“What we've discovered is that cash is actually holding a stable, ongoing position in the payment ecosystem," he said, despite ebbs and flows seen through the first six months of the year.

Go back to the beginning of the pandemic, said Anderson, and demand for cash actually spiked, as no one was really sure what commerce might look like as the coronavirus and ensuing lockdowns took root. Speculation ran rampant as to how financial services firms and banks would cope.

As a result, Anderson said, “a lot of people thought it was wise to go to the ATM and put a run on cash and have it on hand, just in case.”

Fast-forward a few months, said Anderson, and there has been a noticeable drop in volumes across ATM fleets. But drill down a bit, and cash usage has varied from country to country and region to region, depending on what phase of the pandemic (and lockdown) these countries are in.

“On a global basis, we're now starting to see ATM usage trends rebounding to support the need for cash, including in hard-hit places like Europe,” he noted.

Anderson added that proprietary data show that Diebold Nixdorf is seeing, in aggregate terms, upwards of 5 percent growth in the weekly trailing average number of ATM transactions per device across markets such as the U.S., Asia Pacific and Brazil, compared to pre-COVID volumes.

But, he noted: “Post-COVID – and amid this ‘new normal’ – we're going to continuously see the need to automate and digitize the way we support cash for the billions of people who are still relying on it. I don't foresee any indication that the public is going to abandon that sort of trusted payment mechanism.”

As lockdowns and restrictions have eased, Anderson said people are transacting in cash across many of the same conduits that were seen before – spanning home care services, lawn cutters and even national grocery chains. In some locations, checkout lanes are still devoted to cash payments.

“These are indicators that B2B, and even P2P, cash transactions are going to continue,” he predicted.

That’s especially true on the merchant side of commerce, said Anderson, where 75 percent of merchants surveyed by Diebold Nixdorf said they would use self-serve technology for cash deposits and withdrawals, where deposit activity was enabled through ATMs.

Therein lies a value proposition for the banks, he said, where automating those transactions and facilitating B2B cash automation processes can be advantageous. Anderson noted that via Diebold Nixdorf’s offerings, automated digital interfaces between mobile and online channels can enable, for example, deposits to be split across multiple accounts.

“The financial institutions (FIs) and the organizations we've been working with have been quick to acknowledge that now is a really good time to evaluate alternative operating models, especially around cash cycle management," said Anderson, adding that “it's about the context, it's about options.” He noted that Diebold Nixdorf has augmented its payment choices with an ever-broadening mix of payment vehicles, such as NFC payments with mobile wallets.

Looking At Financial Inclusion

Anderson maintained that cash remains a “perfect vehicle” from a financial inclusion perspective.

“It's still anonymous, it's still accepted widely – for the most part, everywhere – and everybody can have access to it,” he said.

FIs have a role to play in enabling that access by, in turn, offering access to touchless journeys at the branch and beyond, building new offerings around core technologies and leveraging advanced technologies, such as pre-staging ATMs with mobile microservices to speed up transactions between mobile devices and ATMs. In other cases, banks can modernize branch interactions through video technology.

Looking ahead, Anderson told PYMNTS, “We see and believe that cash will continue to be a predominant payment vehicle going forward.”