Are online cash payments the key to financial inclusion?
Mar 11, 2020
Access to eCommerce remains out of reach for 130 million Europeans. Increasingly, this means they’re unable to participate in the mainstream economy. Could enabling them to pay online using cash help close the gap?
Dark side of the eCommerce boom
Poundworld. House of Fraser. Bench. These are just three high-profile retail brands in the UK that have gone into administration in 2018. It’s no secret that brick and mortar stores are battling an unfavorable climate. Meanwhile, eCommerce seems to be thriving at their expense. Forrester reckons online sales growth in Europe is outstripping brick and mortar retail 10 to 1 and will account for €378 billion sales a year by 2021. What’s bad news for brick -and mortar retailers is often touted as a win for consumers. Indeed, it’s consumers themselves who are driving eCommerce growth. Buying online is often cheaper, quicker and more convenient. So it is no surprise that when we interviewed 5,056 people across the US, Canada, UK, Germany and Austria, 58% told us they prefer to shop online.
Whether your preferred online payment method is a credit card, debit card or mobile wallet, this often presupposes access to a bank account. And where does this leave the 40 million Europeans who don’t have one?
Financial inclusion in Europe: a state of the union
For many of the unbanked, lack of access to a bank account is often a vicious cycle. In the UK, for instance, with no ID card system in place, most banks require a recent utility bill, council tax bill or bank or credit card statement as proof of address. It is unlikely most newcomers to the country would have any of these documents. And, seeing as it may be difficult to obtain them without a bank account in the first place, this can place them in an insurmountable chicken-and-egg situation.
Bank accounts: only one piece of the puzzle
Over the past decade, the EU has made a huge push towards financial inclusion, including putting rules in place that give its citizens the right to a basic bank account. Measures such as these are undoubtedly important, especially in an age where we’re shopping online not just for luxuries, but also for essential everyday items, including groceries. Otherwise, the gap between the digital economy and those who can participate in it risks turning into a chasm. But are more bank accounts the only answer? According to a report by the UK Financial Inclusion Commission, probably not. The Commission’s findings paint a stark picture. 50% of the unbanked don’t want a bank account.
Moving forward: the role of cash in promoting financial inclusion
In the payments space, the death of cash is often considered a foregone conclusion. An event that will happen sooner, rather than later. But the truth is that cash is far from dead. In the UK alone, 2.7 million people rely almost entirely on cash. And, across the EU as a whole, 68% of transactions are still paid for using notes and coins. With this in mind, and given that the global eCommerce market set to grow to $4878 billion by 2021, cash has a crucial role to play in promoting financial inclusion. By providing a simple, safe and flexible way to pay with cash online, we can bridge the gap between unbanked and underbanked consumers and the online marketplace that’s an increasingly essential part of the mainstream economy.
Shop online, pay offline
“Paysafecash” is a new payment method for buying online. Users that have previously been financially excluded from eCommerce due to a lack of financial details are now able to participate in the fast-growing eCommerce economy using cash. And it is believed that cash payers will increase significantly relative to the total eCommerce volume in UK within the next years. Paysafecash has been specifically developed for the needs of online merchants operating within the eCommerce sector, such as e-travel, e-ticketing and e-retail. It stands out through its very secure and customer-friendly payment process.
The customer payment process is very easy
- Customer generates barcode
After selecting a product or service in an online store, the customer selects “Paysafecash” as the payment method at the checkout and is presented with a barcode. This code can then be loaded to their wallet, sent to a mobile phone, or be printed.
- Customer finds nearest payment point
Using the search function on the website (www.paysafecash.com) or in the Paysafecash app, the customer finds their nearest Paysafecash payment point.
- Barcode is scanned & paid
After the barcode is scanned by the sales person at the payment point, the customer pays the amount due in cash. The online business is then immediately informed and instructed to process the sale.