Norway, Sweden and Denmark are examples of countries moving towards becoming true cashless societies, in which retailers or petrol stations won’t be obliged to accept cash payments.
Yet cash still accounts for about 85% of global consumer transactions and in Africa, closer to 90%.
The experience of retail and wholesale merchants in South Africa tells a slightly different story to the Scandinavian countries above, indicating cash will need to remain a key component within our society for at least the medium term.
Standard Bank says while it is experiencing higher growth trends in point of sale transactions as opposed to cash, this is not a true reflection of whether retailers and wholesale customers are “de-cashing”.
“Cash, point of sale and digital collections are complementary capabilities and there is interplay between them based on the particular business needs,” says Kuben Chetty, head of transactional products and services at Standard Bank.
In the retail trade sector, for example, certain businesses do have strong digital or e-commerce businesses capabilities, where the majority of their collections are processed via point of sale devices.
“However in the same breath we may bank cash-and-carry type operations where cash is the dominant collections mechanism. Similarly, consumer preference also drives this behaviour and value of transactions and time to conclude transactions also plays a big part in the interplay between cash and electronic transacting,” says Chetty.
However, as the benefits of using digital channels catches on, solutions need to be harnessed to improve collection and payment efficiencies. The Pew Research Centre says smartphone ownership rates in emerging and developing nations are rising at an “extraordinary rate”, climbing from a median of 21% in 2013 to 37% in 2015.
It would therefore be foolhardy for businesses to ignore these trends, as digital payment mechanisms will begin to play an ever more important role in the loves of businesses, Chetty says.
“From a collection and payment innovation perspective, Standard Bank is constantly evolving our capabilities based on international trends and customer needs and in the past few years have launched various capabilities.”
Propositions in the collection and payment space by Standard Bank include:
* End-to-end cash solutions offering cash processing; collection and delivery; insurance and Autosafe devices which allow customers security for cash stored on their premises.
* Point of sale (PoS) devices.
* SnapScan – a digital payments product that facilitates card transactions when a customer scans the merchants QR code with the SnapScan app. This product has seen exponential growth, especially in businesses where POS devices are not economical.
* The WeChat Wallet – another innovation powered by Standard Bank that combines the SnapScan innovation above and our remittance solution, Instant Money. This allows users to send eCash peer-to-peer, purchase airtime or data, pay at a SnapScan merchant or make in-app purchases using either an existing eCash balance or card.
* Realtime clearing or urgent payments types allow a business to pay for stock or supplies with the benefit of the beneficiary receiving the funds immediately. Most businesses are sceptical of alternative payments methods or electronic payment confirmations and will not release goods without the funds reflecting in their bank account. Realtime clearing provides you with the option of benefiting from discounts and faster delivery of goods.
* Account verification services – There are often circumstances where businesses need to pay large amounts or need to collect from multiple debtors at the same time. In these cases, the ability to confirm that the beneficiary details are correct is critical to avoid the hassle or misfortune of the incorrect account details being provided. Account verification services allows you to validate fields to confirm details prior to performing the payment or debit order run allowing a business more control over transactions.
No matter whether a business uses cash or digital channels for collection or payments, the need for enhanced security and controls remains crucial.
Standard Bank’s electronic payment channels offer advanced security features to cater for the segregation of duties and flexibility that a business needs. For example, audit reports allow for detailed record keeping that tracks all transactions and approvals.
“Irrespective of whether your business is smaller or larger you can customise your profile set up to manage your business efficiently. For businesses that require a completely integrated payment or collections solution, there are hosted services to remove any time required for manual processing of transactions,” says Chetty.
Debit orders, meanwhile, offer a business the convenience of flexibly collecting funds from multiple debtors.
“The benefit of using the banks debit order solutions is that you are not required to hold funds in an account and you receive the cash flow benefit of directly debiting on the date or dates your business prefers thus acting as a critical cash flow management tool. Many businesses perceive debit orders to be risky, but the funds are received into the businesses bank account. Standard Bank can support businesses in getting a minimum compliance standard with the debit order mandate templates and standards based on industry requirements,” says Chetty.
An early debit order (authenticated or non-authenticated) collection solution can optimise collection outcomes, especially when there have been signs of bad payment behaviour.
“Some businesses deal with payers who don’t necessarily maintain their good payment behaviour. Non-authenticated early debit orders, or Naedo, offer a business the option of processing in the ‘early processing window’ to maximise the effectiveness of striking an account when funds are available. With an inbuilt tracking function, the system is able to track that funds are in a specific account over a specific period, which aims to assist in increasing collection rates” explains Chetty.
Without committing to a timeline, Chetty says cash transaction volumes (not value) will continue to decline as other payment or collection streams emerge
“However cash will remain prominent for the medium future and for Standard Bank and our customers it remains a key product offering embedded as part of the collection and payment value proposition,” he adds.