Consulting

Changing consumer behaviors & adoption of cashless

Cash will have completely disappeared in five years’ time. It’s happening far more quickly than most people expected or central bankers feel comfortable with.”-

Paul Amery

Founding Editor of the New Money Review

On November 17, Wizeline VP of Marketing and Partnerships, Caroline Buck, and top executives from Adyen, fintech as a service company Arcus, and performance-based financing platform for e-commerce FairPlay discussed their predictions for the future of fintech.

If you don’t have time to watch the entire webinar, this blog post will feature some of the memorable conversations from our panelists. Please note that some of the quotes below have been edited slightly for clarity.

 

We’re moving toward a more cashless society – but is it equitable?

The pandemic has forced everyone to evaluate all in-person interactions. We are now (hopefully) limiting any unnecessary exposure to groups of people or touching surfaces. We have become more vigilant about washing our hands after using an ATM, pumping gas, or buying groceries. 

There isn’t evidence that COVID-19 is being transmitted via paper cash or coins. Still, many retailers have stopped taking cash payments out of an abundance of caution. But what happens to those consumers who are only able to pay with cash?

Digital payments have many benefits for consumers – and using a contactless payment method like Apple Pay or PayPal provides a traceable, more secure option than credit or debit cards. However, the U.S. has a staggering 14 million adults that are considered “unbanked.” The Federal Deposit Insurance Corporation (FDIC) last conducted a survey on unbanked individuals and households in 2017 and found that 17% of Black and 14% of Hispanic households were unbanked. Eliminating a cash payment option has raised questions of equality and access.

In San Francisco, the city government has gone as far as saying that retail establishments must offer a cash payment option. 

 

Sara Bray of Adyen leads us into the conversation around some trends seen in discussions with customers and partners in the digital payments space this year.

“Adyen saw an acceleration of digital transformation with merchants. Timelines got moved up, which was surprising as they expected businesses to delay projects following the economic downturn. Instead, they saw projects getting bumped up as companies recognized the importance of modernizing their e-commerce offering to continue with business as normal as possible during the pandemic.” 

 

Inigo Rumayor of Arcus adds that Arcus is working to support more businesses and financial institutions to launch fintech products. Some of those are customers’ ability to buy airtime, pay bills, or eventually do a caching of their cash at a point of sale. 

“Many banks, especially in Mexico, were forced to close their branches, so that meant a lot of customers were forced to do everything they were used to doing at the branches physically on their digital apps. The expectations for the customers were high, so a lot of banks started to prioritize enabling the customers to perform their day to day activities.”

 

Andrew Devlin of Fairplay highlights the push by governments to reduce tax evasion and money laundering and how this move is causing more businesses to go digital since the government can monitor money movement better, citing India as an example, since they’ve eliminated the highest denomination for banknotes that they had.

“We’ve seen a lot of governments trying to offer QR codes for payment processing following the China model. I don’t know how many have started gaining traction, but there is an opportunity that will probably grow more in the future.” 

 

Some pros and cons of cashless

Sarah Bray highlights some benefits of cashless like the ease of recognition and reconciliation of funds, less shrinkage for businesses, more protection from money laundering, and the advent of nice by-products like the ability to identify shopper trends and create sophisticated loyalty programs.

She also mentioned some cons, like the lack of access for the unbanked and underbanked population and concerns around privacy and data security.

“At the end, it boils down to how much customers are willing to give up in terms of privacy and security, in return for convenience and cost.”

 

What are some of the infrastructure challenges for cashless?

“We need to teach the underbanked and unbanked population how to use some of the tools we have, and one of the things we’re doing to further this is to create a bridge for customers who have cash so they can deposit at their favorite point of sale.” – Inigo Rumayor. 

 

Andrew Delvin shares some insights on the growing entrepreneurial space, saying:

“E-commerce has become a lot more popular, and it’s a lot easier to launch an e-commerce business now. Fairplay tries to offer a simple way of accessing credit to small e-commerce business owners and additional support like consulting, dashboards, and other e-commerce centric solutions to help them operate better.”

 

The panelists also share some advice for mid-sized businesses trying to be agile and scale fast:

“It’s important to future-proof your business by investing in solutions (payment processors) etc. that can support your growth at any level.” – Sara Bray.

“Start with your current customer base. Improve various aspects of your operations by going digital, e.g., customer service, etc., before trying to service a new clientele.” – Andrew Delvin.

 

What trends do you hope to see in retail, five years from now?

“I hope curbside pickups for day-to-day things like shopping at Target, etc., become the norm” – Sara Bray.

 

We’re going to see a lot more customized finance for the consumer. For example, in Latin America, we see stores offering different payment options, and shoppers are picking stores not just because of the products offered but also the payment options. I think that’s going to become a huge differentiator for retailers. – Inigo Rumayor

 

“We’re going to see a growth in the backend of retail. We’ll see a lot of growth in small warehouses like the Cloud Kitchens that Travis Kalanick is doing inside the city, so warehouses that can help distribute goods closer to the customer for speedier deliveries.” – Andrew Delvin.


Leslie Medina

Posted by Leslie Medina on November 17, 2020