The Future of Cash & Cash Handling in Retail: Why Reliable Cash Still Matters in the US in 2025 & Beyond.

The Enduring Importance of Cash in the US Retail Market

Despite the rapid growth of digital payment methods like credit cards, mobile wallets, and contactless payments, cash remains a cornerstone of the US retail market.

According to a 2024 report by the Federal Reserve, cash is still used in approximately

1 in 6

transactions

This makes it the third most popular payment method behind debit and credit cards.

This figure changes dramatically when you consider transactions under $10; cash equates to nearly half

(49%)

of all transactions

There is a tendency to catastrophize and assume that progress is intrinsically linked to a move away from cash in modernized economies. However, many of the world’s largest economies, including Germany, Japan, Spain & Thailand, still have cash usage of over 35% (as of 2024) and all but Germany have cash as their primary form of payment. 1 In fact, the digital-first bank, Revolut, is becoming increasingly involved in Spain’s cash usage, playing a crucial part in increasing the number of convenient ATMs in the country. They’ve even implemented biometric technologies to streamline the withdrawal process. 2 Meanwhile, closer to home in the US, 18% of Gen Zers carry it because they frequent cash-only businesses —
this is more than any other generation. 3

Consumer Behavior: Why Cash Still Matters

For many Americans, cash still holds a unique appeal. Cash offers a sense of privacy and security that digital payments cannot match. Unlike electronic transactions, cash leaves no digital footprint, making it the preferred choice for those concerned about data breaches or identity theft. Additionally, cash is widely used by budget-conscious consumers who find it easier to track their spending when using physical currency. In a recent survey,

Demographics also play a key role in cash usage. It’s true that younger generations have been more receptive to digital payment methods, but older adults and low-income households continue to rely heavily on cash. According to a 2022 survey by the Pew Research Center, 41% of adults earning less than $30,000 annually prefer cash for everyday purchases.

Not to mention that cash remains a vital payment method for the unbanked population, representing a staggering 5.6 million US households (FDIC, 2023). When including those underbanked as well, it represents about 19 million US households. For these individuals, cash is not just a convenience—it’s a necessity.

Applying a socioeconomic lens to the question of cash handling in retail, it becomes obvious that there remain clear cases of cash usage across the country. Need continued access to quick, easy and safe cash management in retail. This social inclusivity that is afforded by cash is likely to play a part in how larger retailers refine their ESG strategies in 2025. 5   Businesses that are seen to actively exclude the marginalised through the loss of cash options, will likely face backlash.

Cash as a Backup Payment Method

In an increasingly digital world, cash is a critical backup payment method, especially during emergencies. For instance, when digital payment systems experience outages—such as the 2021 Visa network disruption that affected thousands of retailers—cash ensures that transactions continue uninterrupted. The Amex, Visa & Mastercard networks in the US seem to average a substantial outage every 2-3 years. 

Similarly, physical money becomes indispensable during natural disasters or cyberattacks, when electronic systems may be compromised. In fact, Department of Homeland Security recommends that every American keep cash on hand as part of their emergency financial preparedness.6 Ideally, this is spread across smaller denominations. Relying exclusively on large bills could cause issues with change; making a $5 purchase could cost… $20 as change may not be available in times of crisis.7 This reliability makes cash an essential component of any retailer’s payment strategy.

As already touched upon, cash also plays a vital role in under-served and rural communities, where access to banking services and digital infrastructure may be limited. Cash is often the most viable payment option in these areas, ensuring that retailers who accept cash are able to cater to a broader customer base… no matter what.

Regulatory and Economic Factors

There are also regulatory measures that reinforce the continued importance of cash in the US retail market. 6

As of 2024, 12 US states have now banned cashless businesses, including:

• Arizona
• Illinois
• Kentucky
• Montana
• Maine
• Missouri
• New York
• North Carolina
• South Carolina
• Ohio
• Oklahoma
• Tennessee.

Additionally, New York City implemented such a ban in 2020. They argue, in part, that cashless policies discriminate against unbanked, underbanked, and low-income consumers. These regulations ensure that cash remains a legally protected payment method, even as digital payments grow in popularity. As such, they reinforce the notion that cash will have a part to play in future commerce.

Economic factors further underscore cash’s relevance. In times of economic uncertainty, such as during the COVID-19 pandemic, 7 many consumers turn to cash as a way to manage their budgets more effectively. There is something intrinsically human and easier to mentally process about holding the amount of currency one has to limit themselves to.

Additionally, inflation and rising interest rates have led some consumers to view cash as a safer and more tangible store of value compared to volatile digital assets like cryptocurrencies.

Bottom Line

While it’s true that digital payments are undeniably rising, cash remains a vital part of the US retail ecosystem. We are firm believers that the rise of alternative payment methods is non-linear in trajectory and that cash has a long life left. We’re not alone; 57% of organizations do not foresee their organizations ever becoming completely cashless. 8

Its accessibility, privacy, and reliability make it indispensable for millions of consumers, particularly in underserved communities and during emergencies. These advantages will be recognized more and more by the population as electronic payment methods become victims of outages.

As we look ahead, retailers must recognize the enduring value of cash and invest in technologies that streamline cash handling, ensuring they can meet the needs of all customers while maintaining operational efficiency. By doing so, they can future-proof their businesses and stay competitive in an evolving retail landscape.

Challenges of Cash Handling in Retail

While cash remains a vital payment method in the US retail market, managing it effectively poses significant challenges for retailers. From operational inefficiencies to security risks, cash handling can be a costly and complex process. These challenges highlight the need for advanced technologies to streamline cash management in retail and ensure seamless operations.

Operational Inefficiencies

Manual cash handling is time-consuming and prone to errors. According to a 2022 report by the National Retail Federation (NRF), 68% of retailers cite cash handling as one of their top operational challenges. Employees spend hours each day counting cash, reconciling registers, and preparing bank deposits—tasks that could be better spent serving customers. Additionally, human errors in cash counting can lead to discrepancies, with the American Banking Association (ABA) estimating that cash handling errors cost US businesses $40 billion annually. With such a large sum at risk yearly, it is crucial that cash management solutions are adopted in retail.

Counterfeits

Counterfeit currency is nothing new. The cat-and-mouse battle between the counterfeiters and the security systems and protocols has gone on throughout human history. The US Secret Service seized over $20m in counterfeit bills last year. 9 Without robust verification systems, retailers risk accepting fake bills, leading to direct financial losses.

Customer Experience

Inefficient cash handling negatively impacts the customer experience. Long checkout lines caused by slow cash transactions frustrate shoppers, often to the point of abandoning their carts and shopping. As a result, retailers are losing billions a year from long queues10 and, ultimately, a lack of alternative solutions, such as self-service checkouts, to help the flow of customers.

Inaccurate change dispensing is another common issue, leading to customer dissatisfaction and potential loss of repeat business. Retailers who fail to address these challenges risk losing customers to competitors with faster, more efficient payment processes. Improving cash automation and modern self-service checkouts can act to ease this poor customer experience.

The Cost of Cash Handling

Beyond theft and errors, cash handling can incur significant operational costs. For businesses in the US with less than $10,000 in cash per month and don’t rely on a cash pick-up service, cash management can account for about 6% of the monthly cash intake. 10 11 In real terms, if your business earns up to $10,000 in cash per month, that typically costs you $500-600 per month for simple cash handling, not including any armored or CIT services. Improving your business’ cash handling approach could equate to the cost of extra help at the weekend or simply increased profits.

This number reduces as the monthly cash intake increases, to around 3% of the cash value. For small and medium-sized retailers, these costs can be particularly burdensome, eating into already tight profit margins. This is where cash automation and better cash recycling technology can start cutting into this percentage, as it allows businesses to allocate their labor, and as a result, the cost can drop.

The Need for Advanced Solutions

These challenges underscore the importance of adopting advanced cash handling technologies. Cash recyclers, for example, automate cash counting, sorting, and storage, reducing labor costs and minimizing errors.

Similarly, note verification systems like the NV4000 can detect counterfeit bills in real-time, enhancing security and reducing losses. By investing in these technologies, retailers can overcome the challenges of cash handling, improve operational efficiency, and deliver a better customer experience.

In a retail landscape where every dollar and every second counts, addressing these challenges is not just an option—it’s a necessity for staying competitive in 2025 and beyond.

The Role of Technology in Modern Cash Handling for Retail

With cash still playing a large part in the US retail experience, retailers are leveraging advanced technologies to address the challenges of cash handling and improve the retail experience.

Innovations in the field of cash recyclers and note verification systems are transforming how businesses manage cash, offering solutions that improve efficiency, enhance security, and elevate the customer experience. These technologies are not just optional upgrades, they are essential tools for retailers looking to stay competitive. They can mitigate both lost revenue from consumers abandoning their shopping as well as minimise the labor hours required to handle the cash.

Cash Recyclers: The Game-Changer for Retailers

Cash recyclers are revolutionizing cash management by automating tasks that were once manual and time-consuming. These devices count, sort, and store cash (both notes and coins), eliminating the need for employees to spend hours reconciling registers or preparing bank deposits. With the increase in self-service solutions becoming increasingly common across the retail landscape, these technologies can (and should) be incorporated directly into those machines, saving your team even more time.

According to RBR, the retail cash automation devices market is expected to grow by 1.3 million new devices worldwide between 2022 & 2027. 12 This is driven by the demand for faster and more efficient cash handling solutions.

For retailers, the benefits are clear. Automated cash recyclers reduce labor costs by saving staff anywhere from 30 to 120 minutes per day, 13 while also minimizing errors in cash counting. Additionally, these devices improve cash flow management by providing real-time visibility into cash levels, enabling retailers to optimize their cash holdings and reduce the need for frequent bank runs. By streamlining operations, cash recyclers free up staff to focus on delivering exceptional customer service.

Note Verification Technologies: Combating Counterfeits

Modern verification systems, such as Innovative Technology’s NV4000, use cutting-edge sensors and AI algorithms to analyze security features like watermarks, holograms, and microprinting, achieving accuracy rates of over 99.9%.

By integrating note verification technologies into their cash handling processes, retailers can protect themselves from financial losses while maintaining customer trust. When extrapolated over the span of a national retail chain, minimising the acceptance of counterfeit bills becomes a big problem but one that can be resolved with modern bill verification platforms.

Self-Service Checkouts and Smart Cash Handling

The rise of self-service checkouts has further increased the need for reliable cash handling technologies. According to a PYMNTS Intelligence report, 84% of US consumers prefer self-checkout options, with 66% choosing them over staffed equivalents where possible. 14 This leans more towards Gen Z and Millennial consumers, but nearly half of all Baby Boomers also favor self-service solutions for their speed and convenience. However, these systems rely heavily on advanced cash recyclers and note verification technologies to function effectively. For instance, cash recyclers enable self-service kiosks to accept and dispense cash accurately, while note verification systems ensure that counterfeit bills are rejected immediately.

Without the latest cash automation technology powering these self-service kiosks, retailers are likely to see issues with their shopping trips. Poor acceptance of bills, a lack of change in the machine, delays while attendants resolve the situation. In turn, this could lead retailers to see longer queues and lost revenue for the business from abandoned shopping carts.

For the Original Equipment Manufacturers (OEMs) – the ones  that build these self-service solutions, this trend represents a significant opportunity. By developing cash handling machines that integrate seamlessly with self-service checkouts, OEMs can help retailers meet consumer demand for faster, more efficient payment options. This not only enhances the customer experience but also positions retailers as leaders in innovation.

The Competitive Edge

Retailers who invest in advanced cash handling technologies gain a clear competitive advantage. As a result, this puts pressure on OEMs to listen to the market and partner with the right providers of advanced cash automation products to satisfy their requirements. These solutions reduce operational costs, improve security, and enhance the customer experience—all the while ensuring that cash remains a viable payment option. As the retail landscape continues to evolve, businesses that embrace these technologies will be better equipped to thrive in 2025 and beyond.

By leveraging innovations like cash recyclers and note verification systems, retailers can transform cash handling from a challenge into an opportunity, ensuring they remain agile and customer-focused in an increasingly digital world.

The Future of Cash Handling in Retail

As the retail industry evolves, so too does the way businesses handle cash. While digital payments continue to grow, cash remains a resilient and essential payment method, particularly in the US market.

Looking ahead to the rest of the year and beyond, several trends are shaping the future of cash handling, driven by advancements in technology, changing consumer behavior, and the need for operational efficiency. Retailers who embrace these trends will be better positioned to thrive in an increasingly competitive landscape.

Trends Shaping the Industry

1. Integration of AI and IoT in Cash Handling: 

Artificial intelligence (AI) and the Internet of Things (IoT) are revolutionizing cash handling by enabling smarter, more connected systems. For example, AI-powered cash management systems can predict cash flow needs based on historical data, optimizing cash levels and reducing the risk of shortages or overages. IoT-enabled devices provide real-time monitoring and diagnostics, allowing retailers to identify and resolve issues before they lead to downtime. According to an EY report, 15   retailers adopting AI and IoT technologies could potentially reduce operational costs by around 20% while improving efficiency by the end of 2025.

2. Rise of Self-Service Checkouts: 

The demand for self-service checkouts and autonomous stores is growing, with the vast majority of US consumers already preferring self-checkout options for their speed and convenience. As previously discussed, these solutions will have to be reliable and not inconvenience the consumer base. So, ensuring minimal queues and the ability to handle cash quickly and securely is part and parcel of this rise. As a result, the future is likely to see further advancements in cash management technologies, such as cash recyclers and note verification systems, to seamlessly power these self service platforms.

3. Enhanced Security Features: 

The eternal cat-and-mouse between counterfeiters and security systems will continue. As a result, retailers will continue investing in advanced security features for cash handling. Technologies like multi-spectral imaging and machine learning are being integrated into note verification systems to detect counterfeit bills with greater accuracy.

4. Sustainability in Cash Handling: 

Sustainability is becoming a key focus for retailers, and cash handling is no exception. Modern cash recyclers are designed to reduce waste by extending the lifespan of banknotes through efficient sorting and recycling. Additionally, these devices minimize the need for cash-in-transit services, reducing carbon emissions associated with transportation.

The Role of OEMs in Driving Innovation

Original Equipment Manufacturers (OEMs) play a critical role in shaping the future of cash handling. By developing cutting-edge solutions that meet the evolving needs of retailers, OEMs can help businesses stay ahead of the competition. For example, OEMs are creating cash recyclers and note verification systems that integrate seamlessly with self-service kiosks and point-of-sale (POS) systems, providing a unified and efficient payment experience.

OEMs are also focusing on scalability and flexibility, ensuring that their solutions can adapt to the unique needs of different retailers. For instance, small businesses may require compact, cost-effective cash handling devices, while large retailers may need high-capacity systems capable of processing thousands of transactions daily.

Tactical Advantages

These solutions not only reduce operational costs and improve security but also enhance the customer experience by enabling faster, more efficient transactions. As the retail landscape continues to evolve, businesses that embrace these technologies will be better equipped to meet the demands of 2025 and beyond.

By leveraging innovations like AI-powered cash recyclers, IoT-enabled devices, and advanced note verification systems, retailers can transform cash handling from a challenge into an opportunity. This ensures they remain agile, customer-focused, and ready to thrive in an increasingly digital world.

Conclusion

As the retail landscape continues to evolve, cash remains  a vital part of retail payment solutions both in the US and across the globe. It offers reliability, accessibility, and privacy that digital payments cannot match.

However, the challenges of cash handling—operational inefficiencies, security risks, and rising costs—demand innovative solutions. Advanced cash automation technologies like cash recyclers and note verification systems are transforming how retailers manage cash, delivering significant benefits such as reduced labor costs, enhanced security, and improved customer experiences.

Looking ahead to the rest of the year and beyond, retailers who embrace these technologies will gain a competitive edge, ensuring they can meet the needs of all customers while maintaining operational resilience. From AI-powered cash recyclers to IoT-enabled devices, the future of cash handling is smarter, faster, and more secure. By investing in these solutions, retailers can future-proof their businesses, turning the challenges of cash handling into opportunities for growth.

In the rapidly changing retail world, cash remains a constant… but how we handle it is evolving. How retailers adapt to this evolution can ensure they remain customer-focused, and ready to thrive for years to come.

Are you a cash automation OEM looking to improve the throughput potential of your self-service checkouts while reinforcing their security and verification credentials? It might be time to speak to Innovative Technology’s cash handling team to find out more.