Even Digital Natives Need Cash Sometimes

Cash? Isn’t cash, like, so nineties? Who needs crinkly bills when an iPhone lets you tap and go, or Venmo can settle bar tabs with friends? 

“Cash is not going away,” said Ed West, CEO of Cardtronics, the world’s largest ATM operator, during a recent earnings call. “Today, cash represents 26% of the transactions in the U.S. and, interestingly, cash use is highest among those 18-25 years old.”

Those poor millennials — just when they looked like poster children for digital savvy, it turns out they are still using cash.

Linking Digital & Greenbacks

Blame companies like Cardtronics, MoneyPass, and Visa Plus Alliance networks, which collectively operate 90,000 ATMs across the country to provide a link between digital and greenbacks.

Cardtronics operates Allpoint, which brings 52,000 surcharge-free ATMS to 60 million customers of 1,200 participating banks and credit unions that pay Cardtronics a fee — either per month or per transaction.

Cash took a hit from debit cards 10-15 years ago, according to the company, but it has plateaued since then. Mobile pay, or tap and pay, hasn’t impacted cash usage significantly since that’s just a change in form factor.

The company places its Allpoint ATMs in popular retail stores such as Walgreens, CVS, Target, and Speedway. 

Notably missing from the Allpoint ATM location list is 7-Eleven, which switched from Cardtronics to FCTI for the convenience store chain’s 7,800 ATMs in 2017. That was just a few years after after Tokyo-based Seven Bank, the parent of 7-Eleven, bought the FCTI ATM provider. The switch was announced in 2015 and concluded in 2017.

Cardtronics recently signed an agreement with Visa to place ATMs in the customer service areas of all Costco stores and allow any Visa cardholder to use them for free. 

For retailers, the ATMs generate foot traffic for their stores, and their interior location offers greater security than an ATM mounted on an outside wall.

Making Cash Accessible to Fintechs

The ATM networks also are actively targeting fintech firms, including money management firms, P2P, and wallet providers. All-digital banks, such as Varo, have signed up with Cardtronics so their users can get cash, while fellow San Francisco start-up Chime uses 38,000 ATMs from MoneyPass, which is owned by Fiserv.

“These digital disruptors are beginning to recognize that to truly drive engagement with their customers,” said West in his earnings call, “they need convenient cash access on a national scale.”  

The fee-free ATMs offer greater convenience than the most popular free alternative — getting cash while buying groceries. That usually requires a purchase, and the cash-back amount is generally limited to $60 or $100.

The ATMs allow larger withdrawals. Allpoint typically has a withdrawal cap around $400, and since they are fee-free, cash loyalists with deep pockets can simply make two withdrawals.