In today's retail environment, where technology and consumer preferences are continually evolving, effective cash management is more critical than ever.

While digital payments are growing in popularity, cash transactions remain a substantial part of the retail ecosystem. 

Cash is the third most-used payment method for in-person purchases in 2023, according to the Diary of Consumer Payment Choice. Despite the growing trend toward digital payments, a fully cashless society is still far from reality, and retailers must be prepared to handle cash efficiently.

This article clears up 3 most common myths about retail cash handling that lead to significant financial losses and wasted resources at both the local and enterprise scale.

Myth #1: Cash shrinkage is just a part of doing business.

Many retailers have traditionally managed cash with sporadic bank deposits, sometimes only 2 to 3 times a week, due to the logistical challenges of frequent bank trips and managing numerous locations.

This scenario is a nightmare for loss prevention professionals and cash audit managers.

According to the NRF’s Retail Security Survey, the average shrink rate increased to 1.6% in FY 2022, representing $112.1 billion in losses. Internal (employee) theft alone accounts for 29% of this shrinkage.

Retailers are often left with few options besides expensive armored pickups or working around inconvenient bank branch access. However, innovative retailers are now exploring new solutions to mitigate these losses, particularly in the area of cash deposits.

Myth #2: Cash is going away, so it’s not really an issue.

Contrary to popular belief, cash is not disappearing. 

The 2024 Findings from the Diary of Consumer Payment Choice reveal that cash accounted for 16% of payments in 2023, making it the third most-used payment instrument. This stability is especially evident in certain merchant categories like grocery and convenience stores, sit-down restaurants and bars, fast food outlets, and coffee shops .

The challenge lies in the outdated infrastructure of banks and armored carriers, which have not evolved to meet the needs of today’s retailers. Instead, these institutions have often closed branches or increased rates, adding costs for retailers who still rely on cash.  

A truly cashless society is a distant vision but, in early experiments, has proven to contribute to other issues. 

According to Fortune Europe, going cashless has turned Sweden from one of the safest countries into a high-crime nation where in a decade, fraud has almost doubled from under 9,000 instances to 23,000 in 2023. 

Instead of waiting for a reality that may never truly materialize, retailers should look to challenge current processes outside of what they are doing today to improve efficiencies, stabilize cash management costs, and bring cash handling into the digital age. 

Myth #3: Our Current Process is Fine and Changing it is Too Hard

Many retailers believe that their current cash management process, although flawed, is not overly time-consuming and that transitioning to a new system would be burdensome.

However, this perspective fails to account for the hidden costs and inefficiencies of the status quo. 

A typical branch deposit can take 30 to 40 minutes, considering the travel, waiting in line, and the actual transaction. This time-consuming process not only incurs labor costs but also detracts from employees’ primary focus: serving customers.

With high retail staff turnover, rising hourly rates, and not having the luxury of having extra associates available during a shift, the deposit process will continue to add stress to your teams and customers. 

When to Know It’s Time to Update Your Strategy

Retailers should consider updating their cash management strategy when they notice:

1. An increase in cash shrinkage and loss

2. Rising costs associated with their current cash handling methods

3. Mismanaged employee time, thus impacting customer satisfaction

Clip’s customers report saving up to 60% on monthly cash management costs. Find out how much you can save by contacting our sales team.