Commentary

Cashless expansion can’t leave cash-only customers behind; kiosks have a role to play

Kiosk providers must recognize they cannot take the current expansion of self-service technology for granted if the technology fails to serve the needs of all constituents. Fortunately, the technology exists to serve the underbanked.

Image courtesy of iStock

March 13, 2019 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

For the past two years, Kiosk Marketplace has highlighted the importance of mobile commerce to self-service technology's record expansion in its Kiosk Market Census Report. Readers cited integration with mobile order-and-pay as one of the most promising kiosk technologies for two straight years, driven by the expansion of e-commerce and the need to integrate online with physical retail.

Largely ignored in all the excitement, however, has been the needs of the underbanked, the people who continue to rely on cash for their daily needs. The problem has been in the making for years as retailers have encouraged the use of cashless payment and as many banks have pared their ATMs in response to the growth of mobile banking.

The problem of the underbanked has come to a head as governments have begun to recognize that cashless-only venues are locking many people out of the financial system. The city of Philadelphia recently enacted a law to require stores to take cash. A similar bill has been introduced in New York City, where a retail trade union official told Mobile Payments Today, a Kiosk Marketplace sister publication, that cashless stores present a disproportionate challenge to communities of color and low-to-moderate income residents.

The ATM Industry Association, meanwhile, plans to discuss a possible ban on cashless retail when it meets with lawmakers in Washington, D.C. in April. The association plans to focus on the importance of cash and financial inclusion throughout the year.

The underbanked

The underbanked are real people, and their problem is real. According to a Federal Deposit Insurance Corp. report released in October, approximately 48.9 million U.S. adults in 24.2 million households were considered underbanked in 2017, accounting for 18.7 percent of all U.S. households. The term "underbanked" refers to families with FDIC-insured accounts that also use financial services outside of traditional banks.

Nor is the problem confined to the U.S.

A recent U.K. report, Access to Cash Review, said mobile payments are threatening the financial stability of millions of U.K. residents, particularly low-income families and people in rural areas as residents have access to fewer and fewer ATMs.

Kiosks have a role to play

Kiosks are in a unique position to address the problem since they can both accept and dispense cash. Kiosk developers must recognize that while cashless and mobile payment have become more important, they cannot ignore the cash customer. Lawmakers will demand change as they become aware of the problems of the underbanked.

Kiosk providers should ask prospective customers if they have considered the need for cash, and be able to provide it if needed. Otherwise, the location will need a separate payment device to accept cash.

Companies and organizations are increasingly deploying kiosks as a way to pay for services, and they are finding cash acceptance to be critical.

In Alabama, self-serve kiosks have helped cash-paying customers automate their utility bill payments for Alabama Power Company, which has 89 offices statewide. Approximately 67 percent of the utility's kiosk payments are made with cash, the balance made up of checks.

The city of Chicago, which has allowed residents to pay for various city services at self-serve kiosks since 2007, has found that cash acceptance is important due to the large number of people who are underbanked. About 65 percent of utility payments made at a kiosk or at an office are made with cash. Last year, the city announced plans to add 50 more of these kiosks for a total of 70 where residents can pay parking tickets, vehicle impoundment fees, water and sewer bills, business taxes and other bills.

Nor are the underbanked the only people still using cash. According to a 2018 survey of U.S, U.K. and Australian adults commissioned by Transaction Network Services, a provider of managed payment services for retailers, 70 percent of consumers want unattended terminals to accept both card and cash payments.

There is no doubt that cashless payment plays an important role in many self-service kiosks, such as self-order kiosks at restaurants. But kiosk providers must recognize they cannot take the current expansion of self-service technology for granted if the technology fails to serve the needs of all constituents. Fortunately, the technology exists to make this happen.