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What cash costs businesses

Postato da N26 • Background Info IT • maggio 12, 2016

Whether in the context of politics or business, cash seems to be on the way out. You’d be hard-pressed to find many forecasters who see a growing financial future for paper bills or copper coins. One clear signal: the European Central Bank will be discontinuing the 500 Euro note.

 

It’s not personal

It’s not that we have a “thing” against cash. We’d probably even be friends, if cash didn’t make having a relationship so difficult. It’s expensive to process and it enables sketchy activities. We just don’t see a long-term future with it for the economy in general or for modern banking in particular. Sorry, cash.

But why does cash cost so much money?

Macroeconomic costs:

Cash has to be designed, printed, quality-controlled, transported, and stored in secure locations. Those ‘hidden’ costs add up to more than 10 Billion Euros annually that drag down the German economy alone. Not to mention that cash is the financial instrument of choice for tax-avoidance commerce or illegal activity. (how many times in your life have you really had a legitimate use for a 500 Euro bill?)

 

Individual costs:

It’s not just the macro economy or business service providers that pay the price for cash; individuals pay as well. Every year astronomical sums of cash are lost or stolen. These days, cash often earns essentially no interest, meaning it’s a non-productive investment vehicle. And finally, think of all the time spent/ lost productivity from standing in lines at ATMs or waiting for slow cash transactions at a retailer.

 

Hidden costs:

It’s estimated that the hidden cost of cash has soared to more than 150 Euros annually per German citizen. Much of this is initially borne by banks- for security, ATM maintenance, etc- but then often comes back to bite consumers. This is why most banks charge for conventional checking accounts, impose minimum deposit requirements, or both.

 

The NUMBER26 app gives you the power to use your card in ways that are much better than cash:

  1. Spending control: some people are concerned about “losing control” of spending by using a credit card. By the truth is that using cash is probably the least trackable way to spend money. The statistics in the NUMBER26 app show you detailed breakdowns of exactly where you’ve used your card, so you stay in the know.
  2. Purchase confirmation: every feel uncertainty about whether the correct amount will be booked after a card purchase? With NUMBER26 you’ll receive an instant push notification after every card usage, so you can always be sure.
  3. Small amounts: if you find it cumbersome to make bank transfers for small amounts (say, 3,50 to your friend for a beer),our MoneyBeam feature can help. With MoneyBeam you can instantly transfer funds to friends. It’s even faster than grabbing money out of your wallet- really.

 

So, what are some suggestions for a glorious world that’s free from cash?

  1. Consider using your card even for smaller amounts. On average, Germans tend to reach for a card only once purchases reach 60€ or so (which is already getting quite sizeable, in our opinion). But really, there’s no good reason for that. Studies show that there is a macroeconomic benefit to pay by card at amounts 1/10 of that, or more like 6€. And in many countries in the world, that would be completely normal.
  2. Visit the ATM less often. Every ATM transaction pumps expensive cash back into circulation to start the long cycle again.
  3. And ok…self-serving as this may be…please share your enthusiasm for NUMBER26 with friends and family. With our fast account sign-up, you’ll be able to share MoneyBeams with them before you know it.

Let’s change banking together!

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