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Last week, we had one of those office moments where people needed to toss some cash in the kitty.  The GenXers pulled out wallets and twenties.  The Millennials looked at each other until one said, “Venmo, ok?”

This generational moment gave us something to chat about when the pizza arrived.  A millennial team member related that times when cash is needed at work can be stressful for him as he needs a few days warning to pick up cash.  He doesn’t carry it—ever.  Cards and apps do the job for everything he needs.  A Business Insider report shows he is not alone as 40% of millennials would prefer to never use cash.  The question on the table:  to cash or to card?

Shared experiences define a generation and my generation learned to carry money early.  As an example, I related a tale from my childhood about when I lost my “phone quarter” and called my mom collect to get a ride after attending a basketball game.  She memorably expressed her anger at the added expense to the phone bill.  There were nods around the table from my peers with grins that showed they were remembering their own collect call lectures from parents.  And there were lost stares from younger colleagues who have never placed a collect call or used a phone booth.  My generation graduated from the phone quarter to the emergency twenty hidden in our wallets.  Most of us still carry cash even if we use cards for the majority of our transactions.  As others nodded in agreement, we began to examine how banking has changed and how our behaviors and expectations have changed with the industry.

The Law

In a time when employees were paid by a paper paycheck, trips to the bank were a standard Saturday errand.  Lines were long both inside the bank and in the drive-thru lanes.  In 1996, a federal law (31 U.S. Code § 3332) required employers to make direct deposit the standard process for paying employees before 1999.  By the time even the youngest millennials started their very first jobs, direct deposit would be the standard.  Bank accounts came with a debit card allowing for withdrawals from ATM’s and use for direct purchases.

The Impact

Since debit cards were readily accepted alongside of credit cards, why did we still need cash?  Until 2003, the answer for me was McDonald’s.  Businesses pay a fee for every swipe of a card, so those with a lower average spend per customer were reluctant to take cards.  Why did they finally start?  Speed of transaction.  Card transactions take half the time speeding up those drive-thru window visits.  For a business depending on a high volume of small transactions, increasing the speed became worth the fee.  In today’s economy only a small percentage of small, independent businesses remain cash only.

The Bank

If we live in a world with very little need for cash, how does this effect banking?  It takes it online and mobile.  The Federal Reserve Board collects and publishes data on the use of mobile devices in banking each year.  According to this year’s report, 53% of smartphone users who have a bank account accessed it through mobile in the last twelve months.  With millennials in our office, online banking user experience brought passionate conversation and debate over who truly does offer the easiest and most efficient banking apps.  The ability to photo-deposit checks, transfer money between accounts, and see real-time transactions have become minimal standards.  Common complaints include constant notifications and updates.  When do the millennials go into the bank?  On the day they opened the account—and only because traditional banks have not found a way to eliminate that necessity yet.

The Frustration

After spending a few days researching this article, I took a day off work to attend college orientation with my youngest millennial.  Late in an afternoon filled with paperwork and parent sessions, I was desperate for some caffeine.  I found a vending machine and grabbed my wallet.  Only $1.50 for a coke.  Excellent.  A closer look at the machine revealed it was cash only—ones, fives, and change.  There I stood with a twenty in hand and no options.  Three vending machines later, same problem. I headed into the nearby bookstore to see if I could buy a drink.  The manager directed me to the vending machines, so I asked her for change.  “It takes cards,” was her reply.  She didn’t believe me when I said it didn’t and actually walked out to check before returning to the register to make change.  How much money is a college full of millennials losing with vending machines taking only cash?  Is your business frustrating potential customers by making it difficult for them to buy from you, too?

The Future

Looking back at business history can bring clarity for the future.  Baby boomers and genXers created a world where cash is no longer king.  However, the millennials who grew up in it are shaping a future where mobile technology sits firmly on the throne.  Apple Pay and Android Pay continue to gain market share providing the ability for users to pay with phones; however, 70% of millennials surveyed stated they would be likely to use a mobile payment service offered by their own bank.  Will banks make this a reality soon and will your business be ready and able to accept the payments?  Not focusing on the mobile side of your business can certainly leave you outpaced by the competition.