As we trudge our way through the second year of the Covid-19 pandemic, we can start to see the light at the end of the tunnel. Countries with advanced vaccination programmes are lifting the restrictions and it is starting to feel different.
Unprecedented - We had no idea what lay ahead of us before the pandemic, and it could be argued that we have just as much uncertainty about the future. Even the most optimistic of us are bracing ourselves for the hidden challenges that are yet to reveal themselves. And there will be many. How will people react and interact with each other as we beat Sars 2 Covid-19? Will we once again see the Pre-Pandemic normal? Will we see overcrowded shopping malls, packed bars and nightclubs, the return of ‘la bise’ (the traditional kissing of the cheek in France) when people greet each other?
Or will we see the symbols of the pandemic continuing? The independent courier drivers, the Deliveroo riders, contactless payments. What will normal mean?
We all have our view, and we will spend our newly recovered freedoms discussing them with family and friends in homes, restaurants, and bars. I had this very conversation with a friend of mine as we say on the terrace of a local café just last week. He asked me how things were for me at work. I said that I felt lucky that I worked for Glory, to which he replied, “but Glory is a Cash Technology company, how can it be lucky to work in an industry focused on cash which is clearly dying”, as he tapped his card to pay for the coffees. I began to explain my view of a cash crisis that is waiting to reveal itself to businesses in the coming 12-18 months, and I am not talking about Cash Flow. I am talking about the “Cash Reservoir”.
Debit and Credit cards have been around for decades. Other new payment methods have also been emerging well before 2020 and many of these have blossomed during the pandemic. But it is an indisputable fact that cash volumes have increased to levels never before seen. Why is that, and where is all this cash?
Well, the fact is that the world still needs cash and still wants cash, and the reasons are well documented.
Whilst during the pandemic there was a social push toward contactless / digital payments, Governments are now re-enforcing or changing policies to ensure financial inclusion and payment choice. In addition to this, Governments are desperate to generate consumer confidence with the obvious pent-up demand of people with disposable incomed to spend. Many people were able to save as there was little opportunity to spend. Every economy needs those people to spend.
And this brings me back to my title, the potential energy of the cash reservoir. Anyone who studied science at school will remember potential energy.
Potential energy is the energy by virtue of an object's position relative to other objects. Potential energy is often associated with restoring forces such as a spring or the force of gravity.
If we have more cash produced than ever before much of which as the ECB highlights, is currently being used as a store of value, and we have governments ensuring that the dam of payment choice remains open, then we can see the potential outcome. There will be the continuing use, and even a resurgence, of cash.
- When will cash hit the streets?
- What will happen when the cash hits the streets?
- What do the experts say and will they really get it right?
Well, these are questions that we probably cannot answer just yet. Frantic economic modelling is taking place, but as George E.P. Box (British Statistician) famously said “All models are wrong, but some are useful”. Economic models are never 100% accurate, so if we cannot answer the questions definitively now, then we had better be aware of the different scenarios and prepare for them.
How will your business manage a resurgence of cash?
Glory is the world’s leading cash technology company and is the ideal partner to help understand and manage the cash handling challenges of your business. Whatever the future may hold, ensuring your cash processes are as efficient, and the costs associated with the cash in your business are the lowest they can be can have a significant impact on your profitability.
Let’s start the conversation to see how we can help you.
