Despite the drive to increase the use of electronic payments, cash handling remains a major challenge for US merchants. Charles Davis spoke to Fifth Third Bank about their Remote Currency Manager, a secure payments receivables solution enabling merchants to deposit and manage cash in their stores
Fifth Third Bank has discovered a profitable way to offer merchants the ability to deposit cash before it ever leaves the store.
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Fifth Thirds smart safes offer merchants deposit credit for cash in real time by linking the merchant to the banks network and monitoring how much money has been deposited, reducing risk while maximising access to capital.
Geared toward restaurants and specialty retail stores, Fifth Third Banks Remote Currency Manager (RCM) is an automated smart safe located in a clients establishment. Remote Currency Manager provides Fifth Third clients with daily provisional credit, delivering faster access to funds even while the cash is still in the safe.
It also helps reduce the risk of fraud and theft, and can facilitate the bank reconciliation process by virtually eliminating adjustments and also improves working capital.
RCM is designed to track deposit information as customers feed currency directly into the note reader. The safe verifies the currency, checks for counterfeits, and automatically tracks the cash deposits for fast, easy balancing and reconcilement.
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By GlobalDataDeposit activity is transmitted from the smart safe to Fifth Third for credit to the customers account, providing daily use of funds. Based on the customers business needs, cash is securely retrieved from the smart safe and delivered to the cash vault.
The safes contain a bill acceptor that can recognise the notes denominations, and are linked electronically to a banks systems. Merchants receive deposit credit when the money is inserted into the safe, though a courier may not deliver the currency to a branch until several days later.
Internal innovation
Jeff Ficke, senior-vice president and treasury management director for Fifth Third Bank, and David Statzer, vice-president of commercial treasury management, told EPI that the smart safe was a startup idea within the banks payments division.
The idea came up through the payments business organically, Ficke said. It really was like a start-up company within the bank itself, and it came directly from the conversations the payments people were having with merchants.
Fifth Third recently installed its 3,000th Remote Currency Manager safe, and now has nearly 100 different clients using the safes including the Atlanta-based fast food chains of Wendys and Arbys, and Buffets, an Eagan, Minnesota, restaurant operator.
Statzer said that the smart safes help clients gain faster access to their revenue, which appeals to some merchants, while others appreciate the reduction of store closing paperwork and the elimination of nightly trips to the bank.
Its a matter of different retailers having different pain points, Statzer said. It really has three benefits to sell: access to cash, reduced risk, and streamlined administration. Each is important to a different segment of the market.
Fifth Third has positioned the safes as a component of an integrated receivables solution, which include solutions for electronic collection, paper payments, cash, health care payments and merchant processing and acquiring. The company promotes a triple play of payments services, including card processing, remote cheque capture and the smart safes.
Ficke said that target markets include consumer businesses that handle lots of cash: quick-service restaurants, convenience stores, specialty retailers including automotive after-market and apparel, insurance agencies and government offices like motor vehicle departments.
A dedicated sales team works to promote RCM, Ficke said, working with corporate clients to study merchants business practices and identify ways that the smart safe can help them.
Any business that is handling cash at a high volume is a potential client, Ficke said.
The merchant can save on courier services because it needs cash pickup only once or twice a week rather than daily, and the safe reduces the risk of robbery or other cash loss.
Statzer said the smart safes fit nicely into Fifth Thirds overall retail payments strategy.
We have worked extremely hard to build a holistic approach to the receivables management business, he said. Cash is still growing at 4 percent annually, and taking market share from credit cards right now, so you have to be able to handle cash, cheques and cards in todays retail marketplace.
Upswing in competition
Fifth Third faces competition from JPMorgan Chase & Co, which has begun rolling out a smart safe product, and from Sterling Financial Corp, a Spokane, Washington-based bank with 150 to 200 smart-safe customers, mostly retailers and grocery stores, and some casinos.
Several other banks, including Bank of America and Wells Fargo, have launched or plan to launch remote deposit capture products in the next year, joining Fifth Third, JPMorgan Chase, Huntington, PNC, Regions Financial and SunTrust.
Also, the security company Garda has a smart safe product, CashLink, offered through its cash logistics group, it can be connected to both a banks system and to a retailers POS system for improved financial management.
Gardas smart safe technology reads the denomination deposited, tracks deposits by user and reconciles the locations books at the end of the day. Garda collects the data daily and transmits it to customers headquarters for sales auditing and banking reconcilement. Gardas trained messengers then pick up the cash and take it to the bank for deposit. Fifth Third has teamed with Garda for its cash-control services, in an alliance sure to make the rest of the industry stand up and take note.
It is clearly a growing market. Consultancy Celent estimates there are about 25,000 smart safes in the US, but just over half of them are part of close-loop systems that offer provisional credit from participating banks. That number is expected to grow by 6,000 to 12,000 safes per year.
A retailer with 50 locations is juggling cash and payments, mid-day reconciliation, deposits, and we can give them a snapshot of the cash in the virtual safe at every moment throughout the day, and the balances are updated continually, Statzer said.
