The following is a transcript of the podcast episode
Ryan McEndarfer Editor-in-cheif of PaymentsJournal.com
Welcome to the PaymentsJournal podcast. I’m your host Ryan Mac and on today’s episode, we are going to talking about the evolution of payments with Donny Hoye, Vice President, Treasury Management Consultant at Capital One. Donny, welcome to the podcast.
Donny Hoye, Vice President, Treasury Management Consultant at Capital One
Thank you. Excited to be here.
Ryan McEndarfer Editor-in-cheif of PaymentsJournal.com
Now Donny, let’s get started. Can you give us a walk-through of how payments have evolved? Maybe not going so far back as the barter system, but a bit of an overview would be great.
Donny Hoye, Vice President, Treasury Management Consultant at Capital One
I highly recommend people looking into payment evolution in general from the first checks being issued by the Knights Templar during the Crusades, but I know that’s not why we’re here today. So, if you look at recent trends — conversions from cash to card use and other third-party apps, it’s been a pretty intense 20 years or so. I’m on the older cusp of being a Millennial, so I can remember back on road trips with my parents using credit cards at gas stations for the first time, to seeing McDonald’s when I was 14 or 15 start accepting credit cards, which was the first real quick service business to do, and everything in between up to now, it’s got us to where we are today.
Ryan McEndarfer Editor-in-cheif of PaymentsJournal.com
I’m in the same boat. I can remember my parents relied heavily on cash. It was always that Friday was payday and you’re going to run down to your local financial institution to cash your check and make sure you have cash for the remainder of the week. It certainly is interesting to see how it’s evolved. In my personal life, I rarely carry cash on me. My personal habits have evolved to using credit as a delayed debit. Focusing on the cash part there, you see a lot of news stories coming up where it’s the war on cash, and it sounds like an old-time radio headline. I’m curious to get your take on the positives and the negatives commonly associated with businesses handling cash.
Donny Hoye, Vice President, Treasury Management Consultant at Capital One
Positives are that cash for now at least has a marginally lower processing cost. You get costs from vault services; the banks will charge cost at the point of deposit. So the costs aren’t completely absent, and they’re inching higher if you look at trends in fee structures, but right now I would say that there is some potential cost savings from the pure dollar to credit card dollar perspective. It doesn’t rely on technology. So from a business continuity planning perspective – during a storm, during a blackout, anything like that, you can still barter goods and services using cash. It can be good for businesses that rely on divvying up combined income. Think of restaurants, a great example. You have a server out there collecting all the bills, but behind the server is the food runner, the bartender, all the people that contribute to the client experience that deserve some of the tips. That’s much easier to do on cash in its current state than cards. And lack of complexity for fees, even with the bank’s charging, if they charge 10 cents for every $100, for the vaults charging $50 a week, it is a simpler fee structure to understand. Those are the positives. In regard to the negatives for cash, certainly it costs time. Making change is not as easy as swiping a card, especially if there’s some complex requests as to how they want that change made at the end. So it’s going to keep your line up a little bit more. Again, if you’re in a high-volume business, it just slows the process down.