Reshaping the future of retail cash management

By Micki Seager, Director of Product Marketing, Fiserv

Despite the growth of electronic payments, cash is still the most widely used method of payment among consumers, creating a unique set of challenges for retailers. 

Merchants must manually collect, count and reconcile cash numerous times, and an employee or armored transportation service must deliver it to a bank — creating costs and exposing the merchant to unwanted risks and liability.

A survey by Tower Group Inc. found that employees at one fast food restaurant chain can spend 27 hours or more per week counting, verifying, reconciling and preparing cash deposits. 

In addition to physical manhours, a recent Celent study found that 23 percent of cash handling expenses are related to transportation. A courier's price tag is based on several factors, including distance to the vault. One large retailer reported transportation expenses of more than $500,000 per month.

Cash theft is the second largest area of loss for retailers — totaling more than bad checks, credit card fraud, refund fraud and Internet fraud combined — and has increased 20 percent from the prior year. Shrinkage cost the overall U.S. retail economy $48.9 billion in 2016, as reported by the National Retail Federation.

According to a 2018 IHL Group study, up to 71 percent of cash-related costs are the result of front-of-store activities such as replenishing change at tills and closing out drawers at the end of a shift. Stores run better and lines move faster when management is visible.

The burdens of cash management divert the manager's attention with tasks such as counting out and balancing cash drawers for every shift and, at the end of the day, preparing and making deposits.

Clearly, retailers can benefit by streamlining cash handling processes, reducing transportation requirements, gaining faster access to deposits and improving security controls. Remote cash capture technology and automated cash handling can help retailers improve cash management with processes that are easy to track, manage and implement across multiple locations. 

When introduced, RCC solutions initially helped large retail organizations through secure, currency-accepting hardware devices or "smart safes," coupled with cash tracking and reporting software. As banks began offering provisional credit for validated currency residing in smart safes at business sites, demand intensified.

However, prohibitive upfront costs and integration challenges meant that only a few dozen large banks and the largest armored couriers initially offered RCC. Retailers, meanwhile, were locked in to long-term contracts with little flexibility had little control over hardware, software and vendor selection, and suffered from decentralized data challenges.

Democratizing RCC

Recent changes in RCC technology have accelerated smart safe adoption through hardware and vendor-agnostic solutions that allow retailers and banks to choose their smart safe devices and service vendors based on the needs of each location, regardless of geographical footprint.

This integrated data model across multiple vendor relationships provides greater flexibility and choice for retailers. It also opens the door for regional banks, community banks and credit unions to compete head-on with larger institutions in a burgeoning industry.

Financial institutions can now offer merchants a single banking relationship, regardless of store locations. Smart safes enable provisional credit by the RCC provider for validated cash deposits, so physical transportation of cash is no longer as time sensitive. 

Automated cash management solutions help retailers analyze their cash position, providing finance and operations teams with clear visibility into cash activity across all stores.

This level of intelligence permits each store to make important decisions concerning staffing, security protocols and procedures, float fund management, banking relationships and frequency of cash-in-transit pickups.

Smart safe technology automates cash counting and deposits and provides complete transparency to all transactions. With a dependable audit trail, employee accountability increases.

Any resulting shortages are readily discovered and pinpointed using a software system with configurable alerts and customizable reporting. Modern RCC devices also provide counterfeit detection, automatically identifying fraudulent currency.

RCC technology and smart safe solutions provide cleaner cash handling, streamlined store operations and reduced loss, leading to increased profits. Individual stores can choose a courier based on location, banking relationships and quality of service, to help reduce errors and give managers more time to keep the store running smoothly. 

Multiple benefits for retailers

The importance of the new, more flexible RCC solutions cannot be understated. Previously a technology that solved cash supply chain management problems for a select few, RCC has truly come of age, providing a cost efficient, one-size-fits-all solution that does not tie retailers and banks to a particular manufacturer, armored courier or cash processor.

Through an agnostic approach, these new offerings deliver cost savings, security benefits and greater cash management control to businesses.