Cash use is on the way out and it’s time to upgrade everything to credit card and digital payments. At least, that’s what all the hype from the credit and debit card networks would have you believe. After all, the sooner cash is dead, the more money they can make off the top of every retail sale.
But no matter how many consumers are surveyed saying they don’t use cash or prefer non-cash payments, most of them still pay for things with cash. Payments made with cash in the US have risen to 20% over the past two years, according to the recent 2022 findings from the Federal Reserve. Similarly, the share of person-to-person (P2P) and in-person payments made in cash has increased to 82%.
But it’s not older Americans alone driving the current increase in cash use. A survey from Credit Karma recently discovered that 45% of Generation Z prefer to use cash for everyday purposes. The trend has spawned popular videos on TikTok and made headlines as younger consumers site cash use as “making them feel more in control”.
The ATM is an important component across generations to improve the cash experience for consumers. And these versatile machines continue to play an important role in helping retailers continue to meet the needs of their customers while making a profit. Here are three reasons retailers still need ATMs in 2023.
ATMs are attractive to younger consumers
Nearly half (43%) of consumers 18 to 29 admit they are purchasing food from convenience stores more frequently than in the past. A 2022 study found 62% visit a convenience store weekly. The majority (90%) site the shopping experience – because it is quick and easy.
ATMs play further into that expectation of convenience for Gen Z. Because the location and immediate need for cash access is a big part of how this generation approaches banking as well. Both Millennials and Gen Z have nearly complete penetration for mobile banking application use, according to a recent study by Chase Bank.
Young adults use the ATM over 7 times per month.
And their self-service mindset leads them more often than not to the ATM. The average consumer visits a teller machine to get cash just over four times per month. Young adults 18 to 34, on the other hand, stop at the ATM more than seven times per month. Even better, they usually use the same ATM over and over again, incorporating it into their regular weekly habits.
The added footfall is more than just bodies in the store, too. ATM users spend more in-store. On average, customers who also use the teller machine spend 20-25% more on convenience store products.
ATMs still lead to more revenue
While an onsite ATM helps bring in steady footfall from users wanting cash, profits are the real motivator behind taking up any floor space that could be product instead. And, despite the ongoing “death of cash” agenda, surcharge fees are still a lucrative way to add to the bottom line.
Currently, the average fee at a non-bank ATM sits around $3.50 a transaction with a typical ATM performing around 300 transactions per month. That kind of revenue adds up quickly, as average performance brings in over $1,000 in monthly surcharge fees.
Surcharge fees are less of a concern for consumers as banks start reimbursing fees.
But what about all those people who complain about “paying for their own money”? Most of the blame for “exorbitant” banking fees has fallen on the banks, and they are answering the call. According to Bankrate.com, a growing group of banks and credit unions are turning to “surcharge rebates”. Rather than let their customers complain about having to pay ATM fees, these institutions are reimbursing surcharges every month. Big names like Navy Federal, Ally, TD Bank, and Alliant Credit Union are just a few of the banks and credit unions eliminating concerns about surcharges.
Modern ATMs pull in additional revenue streams
Today’s more advanced retail ATMs can take revenue generation to the next level with add-on services like consumer deposits, money transfer services, and Bitcoin. But rather than taking up additional floorspace or monopolizing cashier time, everything is handled by one machine.
Consumer deposits are yet one more way to take customer convenience to the next level. Young adults, especially, prefer self-service cash deposits. On average they visit ATMs nearly five times per month to put cash into their bank accounts. Offering deposits at their favorite convenience store is just another reason for them to visit, perform transactions, and spend their money.
Bitcoin, deposits, and money transfers are just a few of the ways today's ATMs can help retailers earn more money.
Money transfer and Bitcoin are two additional ways add-on applications can pull in revenues and foot traffic. In 2021, 7% of households in the US performed a non-bank money transfer and there were over 15 million wire transfers performed in November 2022 alone. But, rather than sending those wire transfer customers through the register line, the ATM can walk them through the process and add to monthly machine revenues.
Despite the downturn in Bitcoin and cryptocurrency returns, US consumers maintain 97% confidence and experts predict high future returns. In October of 2022, cryptocurrency owners in the US hit 36 million. So, it’s hardly surprising that the average Bitcoin ATM is still averaging around 130 transactions per month. Adding Bitcoin to the ATM eliminates the need for an additional machine to take up floor space while still taking advantage of significant earnings potential.
Like cash, ATMs are hardly on the way out. Modern machines continue to offer the self-service cash access convenience store customers crave – plus a few extras. In 2023 retail ATMs continue to attract young consumers and pull in surcharge and in-store revenues. But retailers looking to free up employee time and floor space while generating even more profits should be excited to begin their search and see the options being delivered this year.
