As our economies become increasingly digital, is cash necessarily doomed ? Cash is perfectly suited for face-to-face transactions, where it possesses unique attributes : it offers immediate transfer of value ; it does not require a device or access to a network : it is secure and cost-efficient. But what happens when consumers shop online ?
Surely cash is not the solution ?
Actually, it appears that cash is an option and a rather good one. Here are three reasons why.
Cash on delivery
Cash on delivery is a payment solution whereas goods ordered online are either delivered to the buyer's place or collected by the buyer at an agreed delivery point and paid for in cash. According to a survey carried out by The Nielsen Company, in 2015, 36% of online shoppers used cash on delivery to make purchases within six months of the survey. Cash on delivery is an even more popular choice in India (83%) and many other markets, including Nigeria (76%), the Philippines (73%), Russia (70%), United Arab Emirates (68%), Saudi Arabia (59%), Colombia (57%), Poland (57%) and Thailand (56%). The figure is lowest in North America, at only 11%, however that is enough for Walmart to accept cash for online orders.
Shoppers can select this payment option on the e-tailer’s website. They receive a voucher or reference number. With the voucher of reference number they can pay for the item at a kiosk, at a convenience store or a bank branch. The kiosk informs the merchant that the payment was settled, credits his account and notifies the merchant to ship the item. In Germany Barzahlen is a leading provider and offers a network of 10,000 partner stores where customers can settle their e-commerce transactions but also pay utility bills and make basic banking transactions such as cash withdrawals and deposits. In the US, PayNearMe allows consumers to pay bills with cash by visiting local retail partners like Family Dollar or 7-Eleven. Philippine Airlines offer a kiosk solution to pay for airfares at accredited payment centres, which include merchants and banks.
Uber initially based its business model exclusively on digital transactions. The company gradually saw the benefits of accepting cash payments as they expanded into Asia and Africa. In order to win greater market shares, Uber eventually decided to take cash in Manchester, a first in Europe. Rival online transportation networks such as Ola (India) and Grab (Southeast Asia) have long been accepting cash. In San Francisco, the most uber digital city on the planet, home to Square, Apple Pay, Visa and PayPal, the Bay Area bike share scheme is now enabling cash payments for low-income residents.