In today's fast-paced retail environment, managing cash flow efficiently is crucial for businesses of all sizes. Smart safes and cash recycler systems have become increasingly popular among retailers, particularly convenience stores, for their ability to streamline cash handling processes. One of the most attractive features of these systems is the next-day credit option, which improves cash flow management by allowing deposited cash to be credited to the store's bank account the following day, even though the physical money remains inside the safe.
At first glance, this seems like an ideal solution for retailers looking to improve their cash flow and potentially earn interest on their account balances. However, there's a catch that many businesses may not be aware of: next-day credit is essentially a loan, and it comes with its own set of costs.
No, no. The bank pays me for my cash.
If you believe your bank is paying you for your cash deposits, it’s time to reassess the situation. The landscape of retail cash management has changed dramatically, and what was true just a few years ago may no longer apply.
Five short years ago, back in 2019, deposit levels were relatively low, and banks were actively seeking cash. This meant that retailers could often benefit from favorable terms when depositing their cash, essentially making money by supplying their bank with funds. But COVID took a sledgehammer to all of that.
Banks don't NEED your retail cash anymore.
During the height of the pandemic, the economic craziness had businesses hoarding their cash reserves. This trend has continued even in the post-COVID era, with U.S. businesses still maintaining high levels of cash reserves. As of 2024, business savings have reached an astounding $6.9 trillion, with cash holdings representing $1 out of every $5 of total business assets.
The result? Banks don’t NEED your business’s retail cash anymore. They don’t want your deposits. They arguably have too much cash sitting around in their vaults and high interest rates make it difficult for them to loan it back out.
Instead of paying you for your money, they are trying to find ways to benefit from their cash overload while discouraging retailers from giving them more - by charging you for your own money.
How am I being charged for my money?
How banks and smart safe businesses charge retailers for their cash deposits can be subtle and complex. Here are just a few of the most common methods:
- Bank fees: The most obvious charges come in the form of bank fees. Many banks now impose additional costs for depositing cash over a certain amount in a single transaction. These fees are often justified as covering the costs of staffing and storage of the funds.
- Security fees: These charges are typically associated with next-day credit for cash deposits. Convenience stores and other retailers handling lower amounts of monthly cash might encounter this as a base monthly fee. The fee structure is usually built on a sliding scale, with contracts often including added charges for exceeding the monthly maximum.
- Provisional credit fees: For retailers with higher cash intake, next-day credit for cash deposits often incurs provisional credit fees. These fees are tied to the federal interest rate and are compounded daily until the cash is physically processed into the bank vault. In 2024, retailers typically spend between 8.5% and 12.5% in provisional credit on their next-day smart safe deposits. That’s around $200 per month for retailers depositing just $20,000 per week!
Most retailers keep at least a week's worth of cash deposits sitting in a back office safe or smart safe awaiting armored car pickup. That's a lot of cash creating a lot of temptation for crime.
Regular cash recyclers help alleviate some of that problem by repurposing a portion of those funds back into register tills. But, at the end of the day, the money ends up right back in the recycler – plus some.
With BANK IN A BOX, cash deposits are recorded, reported, and deposited via ACH next day. Meanwhile, the physical cash is recycled back out of the store in the hands of customers using the system’s consumer-facing financial kiosk and ATM services. So, there is less cash in the store and an even lower risk of temptation for criminal activity.
You can save money by cycling out cash.
Given these charges, retailers must find ways to optimize their cash management and minimize fees. One effective strategy is to cycle out cash through on-site ATMs and financial kiosks.
As many retailers know, consumer ATM and financial kiosk money is digitally settled into the business's bank account within a few days of being dispensed to customers. So, stores that have traditionally used their $20 bills to fund their in-store machines are already seeing some of the benefits of recycling their funds.
Retailers not already using this process could switch to a “merchant-funded” ATM model to take advantage of fee-free deposits. The process will lower bank deposit fees, reduce security or provisional credit fees, and limit the amount of cash in-store. However, implementation varies depending on the type of system your stores use.
- With smart safes, this would mean manually splitting out ATMs to be deposited into the ATM. The remaining cash would then be deposited into the smart safe.
- Cash recyclers, on the other hand, allow store operations to deposit all cash profits before dispensing the money needed to fund the ATM. All cash is then recorded into the main system before the split.
But most in-store ATMs handle only $20 bills. And whether you are manually depositing cash, using a smart safe, or operating a store cash recycler, any money left is going to be subject to bank fees, security fees, or provisional credit.
A NEW way to ditch the cycle.
BANK IN A BOX by Cash Depot is an innovative solution that provides retailers with an easy way to reduce or eliminate security and next-day credit fees.
The system operates all of the standard cash recycling functions such as accepting store cash deposits, providing register funds and store cash as needed, and generating complete real-time reports.
But it also acts as the store’s consumer-facing ATM and financial kiosk system – recycling and dispensing all six of the most common bills ($1, $5, $10, $20, $50, $100). By dispensing more than $20s, the system takes advantage of additional funding and consumer behaviors to improve ATM transactions and cycle out even more of the store’s cash.
Just like manual cash handling, smart safes, and cash recyclers, anything dispensed out of the ATM is deposited fee-free into the retail bank account – except faster. BANK IN A BOX processes your store’s deposits and ATM transactions in real-time. So, bank settlement happens at the same time as the next-day credit of any remaining store funds.
Stop paying for your store's money.
The retail cash landscape has evolved dramatically in recent years, and businesses must adapt their cash management strategies accordingly. While smart safes and cash recyclers offer numerous benefits, retailers must be aware of the hidden costs associated with next-day credit services.
By understanding the fee structures, implementing cash cycling strategies, and considering innovative solutions like BANK IN A BOX, convenience stores and other retail businesses can optimize their cash flow, reduce fees, and ultimately improve their bottom line.
As the retail industry continues to evolve, staying informed about cash management best practices and leveraging technology to your advantage will be key to maintaining a competitive edge in the market. Don't let your own money cost you – take control of your cash management strategy today.
Interested to know how much money BANK IN A BOX could save you? Check out our savings estimator here!
TLDR: Banks used to pay for money but today excess cash reserves mean they don't need yours. So, they charge you to take it off your hands. Fortunately, there are ways to reduce or eliminate those costs - like BANK IN A BOX!
