Friday, March 5, 2021
Future of Cash
Friday, March 5, 2021
This is the title of a new Cash Essentials paper. The paper considers the role cash plays in economic and social life, the challenges it faces and how innovation is improving the efficiency of the cash cycle. The paper includes the line, ‘the capacity for cash to change will be integral to its continuing success’, and it goes on to explore what the future holds.
CashTech, the application of technology to paying in cash, needs to fill the gap created by a decline in traditional cash infrastructure, fewer bank branches, ATMs and cash centres.
At its best, CashTech can build on the attributes of cash which digital alternatives cannot match, in particular its ability to be inclusive (universal), that it is trusted, particularly in a crisis, is remarkably secure and that it is anonymous. The list could, of course, have gone on to include its resilience and how it completes a payment simply and immediately, fulfilling the role of final settlement of a debt in a way we all understand.
Innovation is being driven by public demand.
Amazon PayCode and Amazon Cash are just two initiatives to allow people to buy online but pay in cash. Walmart has introduced cash on delivery. Uber now allows payment in cash.
As ever, the market follows the profit trail.
Behind consumer choice lies some structural challenges, such as fewer places to access and deposit cash, the efforts of digital payment companies to focus on ‘convenience, security and ease of use’ (ahead of universality, trust, security, privacy and resilience), widespread legislation introducing cash payment limits, and declining cash volumes driving up per unit costs and contributing to access to cash challenges.
These challenges, of course, also offer opportunities for CashTech solutions, not just cashback but also the use of technology to connect those with cash to those who want it.
The paper gives details of solutions created in response to the pandemic. Examples include the introduction of mobile ATMs in Tamil Nadu in India delivering cash along with essential food distribution, the South African Post Office creating ‘cashless ATMs’ to allow people to exchange cash for vouchers and tools to access the online world, the UK creating single use cash vouchers to allow people to get their neighbours to shop for them, Kuwait enabling door to door cash services etc.
Outside of the pandemic, the European Payment Council has been looking to increase local recycling and allow cashback. Prosegur has introduced electric and hybrid cash in transit vehicles in Spain and Germany. Whether government or private, the last year has seen significant innovative activity.
The paper gives detail of a range of CashTech innovators, focusing on four in depth. The innovation addresses the challenges of access to cash, increasing acceptance of cash and improving efficiency in the cash cycle.
Sonect and SoCash, albeit in Europe and Singapore, are giving consumers the opportunity to access cash through retailers. The paper considers Sonect’s offer in detail, which uses an app to direct people to shops with cash and enables them to withdraw it based on a barcode. According to Sonect, this solution is to ATMs what Uber is to transport and AirBnb is to the hotel and travel industry – ie. using technology to match availability of services or resources (in this case cash) with those who need it.
Viafintech, known as Barzahlen in Germany, has a slightly different approach. It aims to increase the acceptance of cash by connecting retailers who want to use cash with businesses, again using an app as the platform. Their solution does not require personal or financial information from the end customer. Viafintech has developed a portfolio of products ranging from bank account deposit and withdrawal, to payment for bills and online purchases in cash.
Although the paper concentrates on viafintech, it also discusses similar offerings from Cashly in the Netherlands, PayNearMe in the US and PipIt in Ireland.
Finally, cash efficiency. Shrap is a UK startup that is looking to offer a digital alternative to coins. As with the other solutions, an app is involved. The retailer has a digital float, rather than a cash till with coins in it, with change loaded either onto customers’ phone or a card, which can then be used to make subsequent payments at participating outlets.
The paper also talks about VizPay in the US, which allows merchants to offer a discount to those who pay in cash, and Cashway in France which allows customers to deposit cash at a registered deposit point and credit their bank account. Other solutions include bill payment in cash and online cash payments.
The paper does not mention that there are, of course, other ‘pain points’ associated with cash that still need addressing, for example how to compete with the loyalty points that come with cards, the need to balance tills at the end of the day and eliminate associated ‘losses’ and the lack of cash transaction data that allow the definition of crime associated with cash to justify its demise.
But this paper shows that this industry is innovating at a breath-taking pace. It introduces the reader to a wide range of approaches and companies across the world working to meld the physical and the digital, and it only touches the surface of what is being done. To that we could add contactless ATMs, smart tills, smart safes, self-service equipment in shops and banks, attended or not, and other automation.
We also write often about joint ventures to run cash infrastructure and the use of tools such as big data and artificial intelligence in optimise cash management.
And at a governmental level, there is activity to ensure minimum levels of ATM and branch access for the public, along with changes in legislation to allow the use of cashback and to clarify the definition of legal tender.
Amongst governments, central banks and in society, there is increasing awareness of the ‘cost’ of digital payments – the dominance of a small number of commercial entities, high and opaque payment related fees, growing and high levels of crime, the loss of data privacy and the implications of all this for those who are not ready for a digital world. Given that ‘necessity is the mother of invention’, we should expect plenty more across all of these areas with CashTech leading the way.