Millions of Australian consumers were expected to withdraw from ATMs yesterday as part of Cash Out Day, an event designed to keep cash relevant in an increasingly digital world.

The movement has gained significant support across Australia and has even been credited with spur the passage of the nation’s recent cash mandate. As of the start of the year, major retailers and convenience stores are required to accept cash for most purchases under $500.

However, the Cash Out Day campaign is not resting on its laurels. Organizers hope to double the average daily volume of ATM withdrawals in a single day, sending a clear message to financial institutions that cash is still critical for many segments of the population.

For example, data from the Reserve Bank of Australia (RBA) found that about half of Australians use cash at least once per week, with older and lower-income consumers among the most frequent users. The RBA also warned that reduced access to cash could have negative consequences for roughly a third of the nation’s population.

The Cash Uptick

While the efficiency of digital payments and the widespread adoption of smartphones have led many experts to predict the decline of cash, the RBA found that around 15% of last year’s transactions were conducted using cash—a 2% increase from two years earlier.

Australia is not alone in maintaining a strong preference for cash. Countries such as Switzerland have long been cash strongholds. According to the Swiss National Bank, that trend remains intact: mobile payments declined by approximately 1% last year, while cash and debit card usage held steady.

Both Sides of the Debate

There has, however, been pushback against cash mandates in other regions. For instance, an alliance of merchants and wholesalers in the European Union has opposed a proposed law requiring businesses to accept cash. The crux of their argument is that handling cash securely imposes significant time and cost burdens on retailers.

It is worth noting that these merchants oppose a mandate—not consumers’ continued access to cash. Meanwhile, Cash Out Day organizers emphasize that they support digital payments, provided cash remains a viable alternative.

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As transformative payment types like digital assets and real-time payments have emerged, many have treated their eventual dominance as a foregone conclusion.

While these methods have gained rapid traction in some regions, payments inertia has proven difficult to overcome in others. In the U.S., a deeply entrenched financial services infrastructure has fostered a card-driven ecosystem where alternative rails have struggled to gain meaningful share.

In Switzerland, cash has long held a unique cultural and functional appeal. A key driver is the nation’s strong preference for financial privacy—perhaps not surprising for the country synonymous with the Swiss bank account.

This preference has not wavered even as new payment options have come to market. In fact, data from the Swiss National Bank (SNB) found that mobile payment apps like Apple Pay and Switzerland’s own Twint accounted for 17% of transactions last year, down one percentage point year-over-year.

Circulating High Values

Cash remains a defining feature of Swiss commerce. The country issues the world’s third-highest denomination banknote—the 1,000 Swiss franc note, worth approximately $1,250—and it extends even to large purchases, including automobiles.

That said, cash is no longer the leading payment method. According to the SNB, debit cards were used in 37% of transactions last year, while cash accounted for roughly 30%. Both figures were largely unchanged year-over-year.

For the Love of Cash

Despite Swiss consumers’ preference for privacy, there has been little catalyst to drive a shift from debit and cash toward digital alternatives. Even with the launch of the Swiss Interbank Clearing Instant Payments (SIC IP) system—and exploration of interoperability with the neighboring European Union’s TARGET Instant Payment Settlement service—adoption has been limited.

One possible impetus for change could come from merchants. While much attention has been paid to card interchange fees, cash handling also carries meaningful costs, including security, storage, and transportation.

This is why many EU merchants recently banded together to urge lawmakers not to mandate cash acceptance. They argued such requirements would force businesses to maintain costly cash-handling infrastructure.

However, the prevalence of cash in Switzerland suggests physical currency will continue to be a core part of the retail environment. Many respondents in the SNB survey said they feel a greater sense of control when paying with cash and value the tangible nature of the experience.

Further reinforcing this outlook, the SNB recently held a competition to design its next series of banknotes, slated to launch in 2030—a sign that Switzerland’s affinity for cash is unlikely to fade anytime soon.

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Two U.S. Senators have introduced the Payment Choice Act, the latest attempt to ensure that consumers can use cash at physical retail stores. While several states and cities have passed similar laws, previous efforts to enact cash acceptance legislation at the federal level have stalled.

Under the proposal, businesses that accept in-person payments at a physical location would be required to accept cash for transactions up to $500. Additionally, retailers would be prohibited from charging cash-paying customers a higher price.

The bill’s sponsors, Senators Kevin Cramer (R-N.D.) and John Fetterman (D-Pa.), noted that approximately 4.5% of U.S. households lack access to banking services, making cash transactions necessary for these individuals. The Senators also argued that the dollar is the nation’s legal tender and that any business operating in the U.S. should be willing to accept it.  

“Forcing the use of credit and debit cards or imposing premium prices on goods and services paid for with cash limits consumer choice,” Cramer said in a statement. “Americans should have the option of using cards or cash, but they should be the ones who make that choice.”

Consequences for Retailers

Cramer introduced an earlier version of the Payment Choice Act in 2023, but it failed to gain traction. Industry experts warn that eliminating cash could have serious consequences for small merchants, who have consistently opposed such measures.

“Merchants complain about the cost of accepting card payments, but the merchant also gets a lot of benefits from card payments, including not having to handle and control cash, reduced risk of armed robbery and theft by the staff, no night drops to make at the bank, etc.,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “The full benefit of these savings are realized when the merchant eliminates cash and the all the associated supporting functions.

“If the merchant still accepts cash, even in small amounts, the big savings from not needing any cash functions are greatly diluted,” he said. “This is what is driving many merchants to add surcharges to credit card purchases, because as a business they can’t eliminate the cost of cash and yet still have to pay fees for card purchases.”

Similar State Measures

The idea gained popularity during the COVID-19 pandemic, when public health measures and scattered coin shortages made it more difficult for some consumers to make cash purchases. Colorado and Washington, D.C., passed cash-acceptance laws, following earlier measures from New Jersey and New York City.

However, similar proposals in states like Idaho, Mississippi, and North Dakota did not pass. Many Republicans sided with business groups arguing on behalf of retailers, saying they should be free to choose how to serve their customers.

Even in states that have enacted such legislation, enforcement has proved difficult. When Colorado Governor Jared Polis signed the state’s bill into law in 2021, he warned that the measure would be largely unenforceable. An investigative reporter in Denver later failed to find any instances of Colorado businesses being fined for violating the law.

In New York City, a high-end chain of ice cream shops openly ignored the city’s cash requirement—going so far as to post signs stating that credit cards were the only accepted form of payment. Their bold defiance eventually put them on the city’s radar, and they ultimately agreed to accept cash after paying a fine.

These laws also include exceptions for transactions that are typically conducted by card. In Colorado, hotel and car rental security deposits are exempt from the cash requirement. Detroit carved out an exception for sporting venues like Comerica Park and Little Caesars Arena, both of which provide machines that convert cash into prepaid cards that can be used within the venues.

The current version of the Payment Choice Act contains similar exceptions, allowing retailers to offer cash-to-card conversion as long as no fee is charged. Retailers also aren’t required to accept bills of $50 or larger.

Pushed by the ATM Lobby

The movement to require businesses to accept cash has been fueled in part by Cash Matters, a nonprofit supported by the ATM industry. Founded in 2017, Cash Matters advocates for the continued use and relevance of cash as an essential part of the payment landscape. According to the group, cash is used in 12% of all point-of-sale transactions in the U.S.

“The big push on this type of legislation comes from ATM operators who profit from the convenience fee that we pay to withdraw cash at a non-bank ATM,” said Apgar. “As cash usage continues to decline and is replaced by digital wallets, these guys are trying to stay relevant and keep cash alive as a payment option.”

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Despite recent instant payments initiatives, the Swiss National Bank reported that cash is still the most widely accepted payment method among businesses in the country.

Roughly 98% of the 770 companies surveyed by the central bank said they accepted physical payment, primarily citing customer demand. Many businesses also believe cash is more stable and less expensive than many other payment options.

The Swiss National Bank’s survey included businesses from a variety of industries, including retailers, transportation companies, service providers, and entertainment venues. According to Reuters, the survey found that the overwhelming sentiment among business owners was they “continue to view cash as important.”

Standing Apart

While many of its EU neighbors have readily adopted emerging payment methods, Switzerland has stood apart. One challenge is the country’s shrinking bank network, which has decreased by 21% over the last decade. According to Reuters, UBS plans to close 85 additional branches next year, after its recent acquisition of Credit Suisse.

There have been concerns that the lack of access to the financial system could marginalize portions of the population if the country moves away from cash. It’s not uncommon for Swiss customers to make large transactions, including purchasing automobiles, using physical bills. Notably, the country offers some of the highest-value notes in the world—the 1,000 Swiss franc note ($1,166).

The Costs of Cash

The results of the Swiss National Bank’s survey come shortly after the central bank announced that it made significant strides in establishing an instant payments network among 60 financial institutions in Switzerland. The bank aims to have every bank in the country on board within the next two years.

These efforts have been amplified by some Swiss regulators encouraging alternatives to cash payments. There are also indications that some Swiss public transportation companies could soon limit cash acceptance.

However, many Swiss businesses have pushed back, citing the costs associated with accepting cash, including bank and cash transport fees, as outweighing the benefits. Despite these efforts, the Swiss National Bank’s survey shows that most businesses and consumers in the country remain largely unaffected by the shift away from cash.

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Wisconsin and Vermont have become the latest states to propose laws requiring retailers to accept cash as payment. Wisconsin’s bill, introduced late in 2023, would prevent establishments from refusing cash for any in-person transaction of less than $2,000. The Vermont bill has no such limits. It states simply: “A seller or lessor who offers goods or services to consumers shall not refuse to accept cash as a method of payment.”

Arizona, Colorado, Massachusetts, Michigan, New Jersey, New York, Mississippi, and the District of Columbia already have payment laws allowing people to use cash at all physical points of sale. Several cities, including Philadelphia and San Francisco, have similar laws.

The Federal Reserve has made it clear that there is no requirement for businesses to accept cash. “There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services,” the Fed’s website says. “Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.”

In Wisconsin, sports venues such as Lambeau Field and the state fair have moved to a card-only policy. But The Cap Times reported that Brunch, a breakfast chain in Milwaukee, recently shifted back from its card-only policy after customers complained.

At times, this movement appears to be a solution in search of a problem. According to a report in Seven Days, an independent Vermont media outlet, even the lawmakers proposing the new rule didn’t know if there were retailers who refused to take cash. “While several members of the committee said on Tuesday that they had heard anecdotes about cash-only requirements, including at food trucks,” the article reads, “none of the cosponsors could name a business they were certain has a card-only policy.”

Fueling the Movement

Card-only retailing has been gaining steam for years but became much more popular during the pandemic. Some laws requiring businesses to accept cash predate COVID-19, though. New Jersey, for example, banned cashless retail outlets in 2019.

The resulting movement to retain cash has been fueled in part by Cash Matters, a nonprofit group supported by the ATM industry. Cash Matters was formed in 2017 to “support the existence and relevance of cash as an integral part of the payment landscape now and in future.” According to Cash Matters, cash is used in 12% of all point-of-sale transactions in the U.S.

Laws requiring retailers to accept cash are also under consideration in Georgia and Miami, among other areas. States such as Mississippi and North Dakota have already considered and rejected such bills.

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Although cash use has experienced a decline in recent years, cost-of-living pressures have forced many UK residents to turn to cash to better manage their budgets. And for the first time in ten years, this legal tender as a payment method experienced an uptick in the UK.

According to a UK Finance report cited by the BBC, the number of payments made with cash increased by 7% last year. Making up 14% of total payments, physical money came out as the second most popular form of payment.

In an interview with the BBC, Adrian Buckle, Head of Research at UK Finance noted that while many payment methods—including contactless payments—have emerged over the years, the allure of cash is still very much prominent among consumers. And that’s evident today, as cost-of-living pressures continue to impact many households and budgeting money is ever more prominent.

Cash Isn’t Going Anywhere

With payments becoming more digitized, the use of physical currency has fallen in recent years. However, the decline does not necessarily equate to its demise. In fact, many consumers worldwide still rely on bank notes to make purchases.

In France, for example, cash is still king. We covered a recent survey, which found that cash made up 36.5% of total transaction volume in 2022. Meanwhile Sweden—a leading proponent for a cashless society—had to abort its efforts to ensure that its residents had easy access to physical money.

Similarly, Australia recently held protests against what they believe to be the intrusion of digital payments. Citizens have been vocal about it, requesting that banks and governments maintain the availability and access to physical cash for those that still rely on it.

Here in the U.S., some legislation has been drafted to protect the use of cash, arguing that by doing so would foster financial inclusivity as well as eliminate discrimination against those who still prefer to use cash.

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Florida representative Dr. Joel Rudman has proposed a new bill that would ensure most businesses in the state accept cash payments—or face hefty fines.

According to CBS News, it was Rudman’s personal experience that propelled him to take action. While attending a concert in June, it was impossible to find a business that accepted cash, and the encounter—coupled with concerns about the traceability of electronic transactions—led him to file the bill.

If it goes through, businesses who won’t accept cash at the point-of-sale may be subjected to a fine, which “would start at $2,500 for a first offense, increase to $5,000 for a second, and peak at $10,000 for any additional violations,” CBS reported.

A More Contactless Future

The cashless trend has been intensifying, with many businesses worldwide seeking to reduce their reliance on physical currency. But while this change in behavior to contactless payments has taken center stage over the past few years, cash is still very prevalent.

As we previously covered, Detroit’s City Council voted to prevent businesses from not refusing to accept cash, following in the footsteps of other cities, including New York and Philadelphia who took similar stances. And in July, consumers in Australia protested against digital payments and boycotted the use of debit cards and other transactions for a single week that month, in an effort to bring more awareness of their right to use cash.  

Promoting Inclusion by Enabling Cash Transactions

Businesses are able to reach a wider consumer base and ultimately generate more sales by offering all forms of payment methods. While digital payments are still growing prominence, they aren’t the final word, according to Elisa Tavilla, Director of Debit at Javelin Strategy & Research.

“Digital payments have become more prevalent, especially since the pandemic when people avoided using cash for hygienic reasons,” Tavilla said. “Although cards and other digital payments provide benefits, like convenience, efficiency, and security, cash is still essential for some consumer segments, in particular the unbanked. So it’s important that businesses offer cash as a payment option, to ensure financial inclusion.”

Tavilla added that this doesn’t necessarily mean that cash has to be accepted directly at checkout.

“I attended a concert at the Xfinity Center in Massachusetts last summer where vendors didn’t accept cash either,” Tavilla said. “But there were reverse ATM machines all around the venue to accommodate cash-preferred customers.”

Adopting such methods are a happy medium as they can promote inclusion, while making it easier for merchants to process transactions.

The post A New Proposed Bill Aims to Drive Cash Acceptance in Florida appeared first on PaymentsJournal.

France continues to embrace cash as tender. According to a recent article, a survey conducted in France revealed that cash made up 36.6% of total transaction volume in 2022-—despite ongoing efforts to boost banking penetration, enhance the payment card acceptance infrastructure, and place a cap on cash transactions.  

Last year, payment card usage in France averaged 199 transactions per card, according to the survey. That’s higher than other leading payment markets, including the U.S., Canada, Italy, and Spain.  

The country’s efforts to promote the use of credit cards has helped, and this includes the availability of a multi-functional card, which contains both debit and credit card features—one of the most popular combinations. That, coupled with the country’s advancements into the digital payments space, has spurred credit card usage. Indeed, card usage in the region accounted for 37.4% of total transaction value in 2022.  

Consumers Still Rely on Cash 

Payment innovations are prompting many countries to go cashless, however, we haven’t reached that point yet. Sweden, one of the world’s strongest supporters of a cashless society, had to backpedal its efforts in order to ensure its citizens still had access to cash when they needed it. Australians also recently led protests against the perceived intrusion of digital payments dominating society.  

In the U.S., Detroit’s City Council voted to prevent businesses from not accepting cash for payments, and other major cities have followed suit, including New York and Philadelphia.  

The case made for the aforementioned events reveals that there are still large portions of populations worldwide that remain unbanked. Financial inclusivity must still remain top-of-mind for governments and financial institutions alike.  

“In many cash economies, there is a persistent issue between governments who want to ensure sellers are on the tax rolls and merchants who often enjoy unreported cash,” said Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research. “Javelin has seen this issue in several markets beyond France, such as China, India, and Mexico.”   

“Central banks tend to endorse the use of cards to provide a fuller picture of inclusion, and IRS equivalents in many jurisdictions insist on that the document accompanying payment cards be the solution,” he said. “You can expect friction to continue, but moving away from cash makes sense in the long term, not only for security, but for transparency.” 

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Consumers in Australia are protesting against the encroaching dominance of digital payments, vowing to rely solely on cash for an entire week, according to 7 News Australia. From July 3 to July 10, consumers in the region are boycotting debit cards and other electronic transactions, demanding the preservation of their right to use physical currency. This movement has gained significant traction on social media, with thousands of people expressing support for the cause.

As society becomes more digitally interconnected, cash transactions have been steadily declining, with many businesses favoring the convenience and efficiency of digital payments. Consumers in Australia aren’t just questioning the dominance of digital platforms and advocating for a more balanced approach to technology integration, but they’re also concerned for the loss of privacy and control over their financial lives.

The fintech industry, which has spearheaded the drive toward cashless transactions, should take note of this pushback—particularly as concerns around data privacy, cybersecurity, and financial surveillance continue to increase.

Australia is not the only country to protest against a cashless society. In Sweden—often considered one of the most cashless countries in the world—some groups, including pensioners and rural residents, have voiced their concerns about the difficulties and risks of accessing and using digital payments. They have demanded that the government and the banks ensure the availability and acceptance of cash as long as there is demand for it.

While the United States has not witnessed large-scale protests against a cashless society, there have been localized instances of resistance. In certain cities, lawmakers and consumer advocates have introduced legislation to protect the acceptance of cash, arguing that it is essential for promoting financial inclusivity and preventing discrimination against individuals who rely on cash.

The post Australians Are Against a Cashless Society, but What’s at Stake? appeared first on PaymentsJournal.

Detroit City Council voted this week to stop businesses from not accepting cash at the point-of-sale, the Detroit New reports. The new law is expected to go into effect later this fall.   

Businesses who disregard the rule will be subjected to a fine.

According to council member Whitfield Calloway, the push for this law came us a result after a cash purchase wasn’t able to be made at a store that only accepts credit and debit cards. “This will help more than 100,000 unbanked Detroiters,” she said. “This ordinance is one step in helping the unbanked become full members of the local economy and no Detroiter will be left behind.”

Through this ban, Detroit joins a growing list of cities—including New York, New Jersey and Philadelphia—who have also made strides to ban cashless businesses.  

Cash is Still King

While we’ve covered the acceleration of digital payments, particularly as many countries worldwide are attempting to go cashless, accessibility to cash is growing. And it’s not going away.

Indeed, cash is still the No. 1 payment method in many parts of the world—largely because there are many consumers who don’t have a bank account or access to credit cards. Many businesses are also keen on just accepting cash as it helps them bypass potential fees and taxes they can be paying if they accepted digital payments.

An Endless Stream of Options

Bans on cashless business don’t mean the end of digital payments. In fact, this gives consumers more options in terms of how they’d like to pay for goods and services.

Offering cash, in addition to digital and contactless payment methods, also sets up businesses for success. Purely cashless businesses can miss out on a lot of opportunity if they’re not able to accommodate consumers, particularly the unbanked. By offering all forms of payment methods at the point-of-sale, businesses are able to reach a wider consumer base, and ultimately generate more sales.

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A recent University of Notre Dame study found that some consumers would rather pay via cash and not credit—even though they’re able to earn rewards from the latter—because they don’t want a record of certain purchases that they may feel guilty about later.

According to the research, the justifiability of a purchase plays a pivotal role in determining whether consumers opt for cash or card. When faced with a difficult-to-justify purchase—such as an overpriced bottle of water at the airport, cigarettes, or candy—consumers prefer to use less-trackable payment methods like cash. By eliminating the paper or electronic trail associated with these guilt-inducing transactions, consumers can “forget” about them. Conversely, when a purchase is easy to justify, consumers have no qualms about using trackable methods like credit cards, which leave a paper or electronic trail.

The research team analyzed real transaction data from more than 118,000 purchases and conducted six experiments involving more than 5,000 individuals, manipulating the justifiability of imagined purchases to gauge their impact on consumers’ intentions to use cash versus credit or debit cards.

In one example, the experimenters created a simulated purchase scenario, in which they asked 200 people to imagine buying a 30-minute session of Reiki for $15. Half of respondents were told that buying it was a reasonable decision because they were feeling anxious and depressed, their doctor recommended it, and they were buying it from a hospital. The other half were told that buying it was not a reasonable decision because they weren’t feeling anxious or depressed, it was an impulsive decision, and they were buying it from a holistic healer.

The researchers then asked them to reflect on why the purchase was personally justifiable or not justifiable for them, and then rate how likely they were to use a credit card or cash to make the purchase. They found that when purchasing Reiki was difficult to justify, participants were more likely to choose cash over a credit card. The reverse was true when purchasing Reiki was easy to justify.

These results support the idea that the perceived justifiability of a purchase influences the choice of payment method and fits with the real-life data purchase data they examined. When people feel guilty or unsure about a purchase, they prefer using cash because it leaves no trace and allows them to forget about the purchase. On the other hand, when a purchase is easier to justify, people are comfortable using a credit card.

Understanding this connection can help businesses and financial institutions design payment systems that align with consumers’ motivations and preferences. For merchants, the study offers valuable insights into strategically offering specific payment methods. For instance, a doughnut shop might benefit from allowing customers to pay with cash, as patrons seeking to forget their indulgent treat may prefer the anonymity of cash transactions. Conversely, a salad shop might not observe the same advantage since health-conscious customers may have no qualms about leaving a paper or electronic trail for their virtuous purchases.

As the payments landscape continues to evolve, driven by advancements in fintech and technology, Bechler’s research sheds light on the nuanced psychology behind consumer payment choices. Cash and card, deeply ingrained in our payment habits, remain dominant, but the reasons behind their usage are more complex than one might assume.

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A study commissioned by Credit Karma and conducted by the Harris Poll found that crippling inflation has impacted consumers both in the U.S. and the U.K., driving them to use more cash to better manage their finances.  

The survey’s findings highlighted that cash usage is particularly high among Gen Z, with 69% of this demographic group using more cash than they did a year ago. To put that in perspective, 47% of Gen X respondents said they’re using cash more than they did 12 months ago, while fewer baby boomers (37%) are as well. Furthermore, 23% of Gen Z revealed that the majority of their purchases, including groceries, clothing, and nonessentials such as coffee, are made using cash. That’s because this group is embracing cash and keeping themselves accountable when it comes to budgeting their money. They’ve found that doing so also leads to them spending less, and overall, gives them the feeling of having more control over their spending (19%).  

According to Credit Karma, it’s not just all about budgeting though.  Roughly 20% of Gen Z are using cash more since it doesn’t have a digital trace for the transaction, and it gives the feeling of free money. Credit Karma believes that this rationale can lead to excessive spending, making it more difficult for young people to save and plan for the future.  

Cash Stuffing to Help Curb Excessive Spending 

Another trend making waves among Gen Z—particularly on popular social media platforms such as TikTok—is the concept of cash stuffing. It comprises setting aside physical cash to spend on a variety of spending categories at the beginning of each month, to be used throughout the month. Once the funds have been spent, all spending is halted until the following month when the cycle begins once again.  

Of the Gen Z respondents that use cash stuffing, some have reported that they use this method to save, while others use it to budget.  

Courtney Alev, Consumer Financial Advocate at Credit Karma said: 

“Cash can be a great tool for budgeting and saving money, especially if you’re someone who tends to overspend when swiping using debit or credit.  However, whether using the cash stuffing method or simply pulling out a set dollar amount each paycheck to ensure you’re not overspending, make sure you’re still doing the work to build your credit.”  

“That can be as simple as setting up monthly subscriptions on one credit card and paying it off at the end of each month or using one card to pay for gas expenses. It’s important to build credit so that you’re able to gain access to better priced financial products, like auto loans and mortgages, down the line.”    

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Japan, long a bastion of cash, is seeing a pronounced shift toward cashless payment options, a Nikkei report indicates.

Citing data from the Bank of Japan, the Japan Consumer Credit Association, and the Payments Japan Association, Nikkei reported that cashless purchases hit 111 trillion yen ($838 billion U.S.) in 2022. That’s a 17% increase, breaking the 100-trillion-yen barrier for the first time.

Even with the gains, Japan’s cashless payments totaled only 36% of consumption in the country, a share well below that of most Western markets and starkly different from neighboring South Korea, where nearly eight out of 10 people indicated a preference for cashless payments a few years ago (a number that has surely risen along with a general worldwide movement toward non-cash payments).

Behind the Numbers

Some of the cashless highlights, per the Nikkei report:

• Credit card usage, the most popular non-cash option in Japan, went to 93.7 trillion yen, a 16% increase.
• QR code payments reached 7.9 trillion yen, a 50% rise.
• E-money payments were at 6 trillion yen, up 2%. It was the first time QR platforms exceeded e-money usage in the country.
• Debit card payments were at 3.2 trillion yen, a 19% increase.

As has been seen worldwide, the COVID-19 pandemic spurred much of the shift toward cashless payment options. But even as society has opened up again and in-person shopping has returned, cashless behavior has persisted. Japan has provided incentives to those who sign up for My Number personal identification cards, with the Myna points attached to the cards eligible for redemption on cashless payment services.

According to PayPay, a Japanese company that develops electronic payment services, 200 billion yen in points had been charged through December. “There are quite a lot of people who started using cashless payments with the points,” a PayPay representative told Nikkei.

The Historic Clinging to Cash

A range of factors—economic and cultural—informs the longstanding preference for cash in Japanese society.

Memories of what happened in the late 1980s, when equity and real estate took a mighty tumble, persist even now.

Further, the past 25 years have been largely an era of low or negative inflation in the country, which provides a strong incentive to holders of cash, who have been able to expect their money to go farther tomorrow than it does today. The pandemic changed that, as it has worldwide. In January 2023, the country’s annual inflation rate hit a 41-year high of 4.3% (which fell to 3.3% a month later, though both figures remain well above the deflationary norms that preceded the pandemic).

Finally, financial literacy in Japan lags behind. A 2016 survey by the Central Council for Financial Services Information found that the percentage of correct answers given to common true-false literacy questions in Japan was 7% lower than in the United States and 7-9% lower than in Germany and the United Kingdom. That lower literacy rate would manifest, in part, in a dogged dedication to cash when other methods might carry benefits of usage.

Incentives to Move Beyond Cash

Daniel Keyes, Senior Analyst for Merchant Services at Javelin Strategy & Research, noted that, beyond the pandemic, consumers often find incentives to keep going with cashless payments once they try them.

“If consumers can earn rewards when using a card, that will incentivize them to continue to use that payment method,” he said. “And noncash payments are generally smoother than a cash payment, as consumers no longer need to take out the right amount of cash, wait for change, then put that change away.

“As consumers experience more convenient payment processes, they’re likely to stick with them in the future.”

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The recent shortage of dollar bills and coins in Zimbabwe has pushed businesses to print their own vouchers, also known as IOUs or “chits,” according to a recent WSJ article.

Zimbabwe has faced extreme mismanagement of its currency for the past two decades, and levels of inflation that make America’s inflation concerns look tiny in comparison.

Before the Zimbabwe dollar was abolished in 2009 and replaced with the U.S. dollar, monthly inflation peaked at 79.6 billion percent.

After the USD was adopted, there was monetary stability for a few years, until the central bank struggled to meet the demand for U.S. dollars. The Zimbabwe Central Bank reintroduced the Zimbabwe dollar in early 2019, setting $1 USD equal to $1 Zimbabwean dollar. Inflation on the Zimbabwe has resumed at an eye-watering pace—today, $1 USD is worth around 900 Zimbabwean dollars and inflation hit 230% in January.

As a result, most businesses again demand payments in U.S. dollars, while the Zimbabwe dollar remains the official currency. Zimbabwe banks import U.S. dollars from overseas, but not enough of them to meet demand. Furthermore, small change is typically too heavy to be worth it to fly in from overseas.

Restaurants and supermarkets have had to get creative, and some have started printing paper chits with serial numbers or kept books to record customers who are owed money. Smaller stores keep a book with the names of customers they owe money to, or scrawl amounts yet to be reimbursed on receipts. Despite the chits’ drawbacks, most Zimbabweans still prefer them to getting their change in local currency, as people don’t trust the government.

New payment technologies have the potential to address some of these challenges. Electronic payment systems such as mobile money and digital wallets can help address the issue of cash shortages. Mobile money has already gained significant traction in Zimbabwe, and the government has encouraged its use to address the country’s currency problems. For example, the app InnBucks allows people to receive change on their phones, into a digital wallet.

Alternatively, cryptocurrencies could be another way for Zimbabweans to store value. The issue is that while this may be a good solution for long-term savings, dollars are more useful in day-to-day transactions, at least as of now.

The post Cash Is Scarce in Zimbabwe, As Inflation Spirals appeared first on PaymentsJournal.

Most of the narrative within the fintech and crypto space revolves around the decline of cash. But is cash really declining? Countries that have attempted to go cashless, such as Sweden, have backtracked these efforts to ensure that consumers still have access to cash when the occasion calls for it.

“Cash is on the increase,” said Joe Myers, Executive Vice President of Global Banking at Diebold Nixdorf. “If you look at global cash in the economy since 2012, there’s a compound annual growth rate of about 7.5%. So cash is growing. That was one of the things that struck me as an ‘aha’ moment. Consumers need access to cash. And that has a direct correlation on how that all plays through in the ecosystem, including access to technology like ATMs.”

Diebold Nixdorf, a multinational company that specializes in self-service transaction systems such as automated teller machines (ATMs), has supported this need for cash for consumers. There is a need for more ATMs now more than ever as more bank branch networks are beginning to shrink.

Myers added, “Diebold Nixdorf sits in a very interesting place, connecting the physical to the digital and still allowing access to cash for those that need it. The ATM market is in good shape. We have tremendously strong products and global market share.”

“You can’t argue with cash, that’s for sure,” said Brian Riley, Director of Credit Advisory Service at Mercator Advisory Group. “The ATM has become more than a money machine. There are other functionalities to it. Even as electronic payments start growing, there’s definitely a use case for these machines to displace the operational expenses associated with the branch.

Although it is not a worrisome rate, banks are beginning to close more branches, something that should remain top of mind. As banks aim to reduce costs, the increased use of technology will be critical to continue to deliver a top customer experience.

“Functionality and technology are playing a bigger role,” said Myers. “The rate of decline is there for banks, at about 1% per annum. It’s not huge but certainly happening. The functionality that technology is putting forward so that people still have access to services is critical.”

Addressing Customer Pain Points

Every industry struggles to remain competitive and solvent, and the banking industry is no different. Myers has taken the time to get on the ground to hear firsthand what banks are struggling with.

 “The one thing that is common across all is there isn’t a CEO at any of these banks that isn’t looking to improve their efficiency ratio,” said Myers. “Improving their efficiency ratio means attracting new customers and generating new income and new fees from those customers. Number two is retaining those customers that they have and enabling cross-sell and upsell into those customers — again, driving additional revenue sources from those customers. Thirdly, reducing the cost at which they do it. Reducing the amount of staff in branch and relying more heavily on technology.”

Fintechs are winning over consumers with fast, secure, and affordable ways to get access to financial services. The winning edge these fintechs have is that they don’t have the operational costs of branches, allowing these companies to be nimbler with their solutions.

Consumers are also looking for a streamlined, seamless customer journey. “When we think about the journeys that are being created and how the app and the web, and the physical assets like the ATM, branch, and advisory services are all having to work very closely together to create a seamless experience,” said Myers, “that’s how banks are differentiating themselves from each other, and how they’re looking to win market share in what is a very competitive marketplace. That is what we are picking up from our markets and where we currently stand in terms of how we are positioned to help support them and create those journeys that best enable them to attract and retain new customers in a cost-effective way.”

“This kind of symbiotic relationship between ATMs and branches and payments, it creates an ecosystem where you know that the card must have wide acceptance,” said Riley. “The financial institution has their own branding that can be done with that. They can tie it into the branch, they can tie it into the card. There’s a whole continuous loop that I see.”

On another note, despite the push toward digital currency and transactions, banks need to remember that in parts of the world, cash is still king. “Sweden declared that they would be a cashless society 15 years ago,” said Myers. “They’ve had to reverse that and reposition [to] what is a cash-light society. There’s regulation that’s coming to place that every single member of the Swedish population has to be within 25 kilometers of an access point to cash. That’s a great proof point for the rest of the world to start to think about as they think about this migration to a cash-light society. It’s critical that availability to cash is maintained across the entire ecosystem to allow that resiliency, should disaster occur.”

Positioned to Deliver Solutions

There is no doubt that in order for banks to continually deliver a seamless customer journey, their current systems must be modernized. Legacy systems can be cumbersome to deal with when it comes to making quick changes or to develop on. It is also much more costly.

“At Diebold, we’ve created a set of micro services that we have deployed across a number of key banks that enable them to quickly make the changes required to comply with whatever regulatory changes take place,” said Myers. “To capture the data they need, store it, and create a customer journey to attract and retain more customers. This is all in a cost-effective way. We have a consulting team ready to talk to bankers to showcase what Diebold Nixdorf can do.”

Banks can be sure that a partnership with Diebold Nixdorf can put them on the right path to delivering a top-notch customer experience.

 “We have service techs across the world ensuring that those systems are up and running as close to 100% of the time as possible, “said Myers. “With our software, we are making sure that we are validating transactions along with security. With marketing, banks can present offers via technology as opposed to in-person. We’re moving customers into a more personalized area, where bankers can advise and create additional value for their customers, leading to additional fee income as banks are able to sell more complex solutions.

“When I think of Diebold Nixdorf, I think of ATMs, but an ATM is a commodity piece for a financial institution,” said Riley. “The special sauce is being able to customize it to that financial institution.”

Another technology that’s generating a lot of interest, especially in the U.S., is the interactive video teller (IVT), or having a video teller at an ATM or a remote branch.

“There’s a massive runway to get into video,” said Myers. “Video via teller at the ATM, via a remote-type branch. Video is a big thing and something we have the capability to share.”

“I’ve seen it with two big money center banks,” said Riley. “And I recently had to open a credit union account for a client and it was actually a good experience because I’m used to top banks. I was surprised how they had integrated the IVT into the whole transaction. With the push of a button, I can be dealing with a rep, I choose the denomination of funds, I’ve also seen it with a couple of big banks using it to displace closed branches.”

“That technology is being deployed to maintain the personal touch and ensure that the customer journey and the support required by that customer is available at the push of a button,” said Myers. “That results in major efficiency for the bank because they are not having to staff multiple banks, especially those that seldom get foot traffic.”

Finally, all banks must make it a priority to stay solvent and competitive by ensuring the safety and accessibility of cash for their customers.

“Security is a major part,” added Myers. “Securing the ATM, securing the cash within the ATM. The other key bit here is availability. Making sure their solution is available to customers. Our services and our services techs ensure that our fleet of ATMs are continuously up, striving to get to 100%. This technology is really forward-thinking and AI-driven. What it tells us and tells our techs is that when one of the systems are about to go down, so we can perform preventative maintenance to ensure the uptime remains.”

The post Accessibility to Cash Is Still King appeared first on PaymentsJournal.

America is on a trend to go completely cashless. The Hill points out that 40% of American consumers reported to be cashless last year, meaning all their purchases were made using digital payments. In place of cash, 28% of consumers favored credit cards and 29% favored debit cards.

This could have been influenced by COVID-19; cash is seen as unsanitary and turned people off from utilizing it. COVID-19 does not spread on dollar bills, but a germophobic tendency swept the nation. Additionally, merchants set up plexiglass between the shopper and store clerk, putting a literal barrier in the way of handing cash over at the point of sale. These two factors, combined with a coin shortage of 2020, led many consumers to turn to digital payments and the behavior of using cards over cash stuck.

Benefits of a Cashless Society

A lot of the benefits to a cashless society seem to be advantages upfront. However, as they get dissected, it’s not all rainbows and sunshine. A few examples include the following:

• Convenience: It is easier to insert or tap a card or a smart device instead of counting out cash and getting loose change in return at the register. There are also perks involved with digital forms of payments such as credit card rewards. However, credit card debt is on the rise. Are people more likely to overspend when using a card over cash? Yes.
• Protection against theft: When a merchant only accepts cards, they are safeguarding themselves against cash burglary. There is no way to trace cash, so the bad guy has no trail to follow with the stolen cash. However, bad guys are getting smarter and are learning how to commit fraud on digital platforms, including many reported instances of peer-to-peer (P2P) scams.
• Curated ads: Marketers got smart with the digital age and began to curate ads based off a consumer’s preferences. With that, consumers are targeted with ads for products they would be interested in. It is a trap to the consumer who is always being marketed by a product that they want but ultimately do not need. This could lead to increased consumer debt.

Every time a card is used to pay for something, a digital trail is left behind. Banks and retailers have a vested interest in knowing how consumers spend money. Both banks and retailers alike work with marketers to predict and influence shopper behavior. It is clear, businesses highly value consumer data. Another party that is also interested in this data is the federal government.

Digital Currency

The Federal Reserve launched a centralized banking digital currency pilot program last year, which it plans to expand this year. The digital dollar flowing on government-owned rails enables the government to track and monitor consumer spend behavior. The Hill explains how the government could get direct insights around your medical conditions, political donations, personal lifestyle, how much liquor you consume and any other behaviors you would like to keep private. Even smokers might need to worry more.

This boils down to the very important question: what will they do with that information? As of now, there are no checks and balances put into place with this newly developed digital currency. 

Digital currency is most efficient in a completely digitized society. In the UAE, cops are now utilizing SMS text messages for traffic fines. Cops no longer pull over the driver, they look up the registered owner by license plate and use AI to confirm the driver before texting the number registered associated with the vehicle and charging the fine.

This seems reasonable at first; the person was behaving in an unsafe manner by speeding on the highway and the government utilized technology to punish and stop the behavior, thus keeping surrounding citizens on the highway safe. However, it is taking the humanism out of the ordeal. What if that person was speeding because they were on their way to the emergency room? There are always exceptions to be made, but those exceptions have no room in an automated, digital and cashless society.

If you are a law-abiding citizen, you may believe you have nothing to worry about. In the U.S., we follow the principle that people are innocent until proven guilty. However, innovation with digital currency such as automated fines and temporary holds on bank accounts may not always follow that principle. Some digitized societies follow the principle of guilty until innocence is proven. 

There is no stopping a cashless society. However, it is imperative that protections are set into place for consumers before the cons outweigh the pros.

Overview by Sophia Gonzalez, Research Analyst, Debit Advisory Service at Mercator Advisory Group.

The post Is a Cashless Society as Good as Everyone Thinks? Some Disadvantages Stand Out appeared first on PaymentsJournal.

It’s no secret that cash is becoming extinct in 2022. After a recent study by Link found that cash payments across the UK would make up as little as 10% of all transactions in the next decade, we could be on our way to a digital cashless future. 

With 70% of UK-based respondents now opting to pay with a card over cash, the evolution of online banking has continued to transform how we move money in 2022. From a spike in fintech adoption to a rising interest in cryptocurrency, money management has become a data-based affair.

As we jump into a cash-free tomorrow, could big data be playing a key role in banking’s digital shift? Read on as we delve into the future of predictive payments, digital data security and AI’s impact on the financial sector. 

Are We Heading Towards A Cashless Future?

59% of the global population believes that cash will disappear by 2030 according to Thoughtworks research. After Fintech proved to be the most successful evolving industry in 2021, it’s no surprise that digitally active audiences are opting for new technology-infused transactions aids such as Paypal and Monzo.

In fact, in the wake of COVID-19’s push towards an e-commerce boom, online payments soared as more consumers than ever before engaged with cross-border transactions and took steps to simplify how they exchanged money.

“Cashless transactions are rocketing and the UK has by far the largest number of payments made by card, phone or electronically in Europe, amounting to annual revenue of some €106 trillion per year,” claims Thoughwork’s Financial Director, Phil Hingley. “Some retail sectors – such as transport – are already almost entirely cashless and I see other sectors rapidly catching up. The question is, when will cash disappear from our pockets?”

As card payment stats continue to multiply, so does the use of other forms of digital transactions. Cryptocurrency adoption, for example, has taken off in a post-COVID digital arena after 97% of digital currency users confessed their confidence in the cashless currency form. 

The question is, how is big data driving this gradual shift? As the mastermind behind fintech success, AI and big data-based systems are constantly influencing smart money movement and breaking barriers for instant payment apps.

“With coins extinct and paper currency on its last legs, consumers will be making instant payments from their mobile and wearable devices,” Hingley predicts. “Big data will guide our buying decisions, restocking our shelves and giving answers to the financial questions we’ve had for the last decade.” 

How Will Banks Use Big Data In A Cashless Society?

Firstly, let’s have a closer look into what the term big data could really mean for the banking industry.

Defined by Investopedia, “Big data refers to the large, diverse sets of information that grow at ever-increasing rates. It encompasses the volume of information, the velocity or speed at which it is created and collected, and the variety or scope of the data points being covered (known as the “three v’s” of big data).”

Currently, the big data and analytics market is worth over $274 billion worldwide. As one of the fastest growing industries alongside financial technology and artificial intelligence, big data has had a significant impact on a number of sectors, ranging from corporate security to legal decision-making to smart finance.

Banking institutions, in particular, have over 1 Exabyte of stored data in 2022, which is collected from call logs, web interactions, consumer histories and institution visits. 

As society slips into a cashless future, traditional banking methods simply don’t cut it in 2022. With the popularity of open banking rising amongst consumers, new digital first institutions are using big data to stay ahead of high levels of online transactions, cross-border payments and a push for fintech-infused money movement.

Here are some of the current key uses of big data in the banking sector and the benefits a data-led shift could have for the financial industry:

• Data Comparison: Investing in big data analytics has provided banking institutions with a wealth of access to consumer expenditure history, incomes and transactions. With a wider range of smart analytics at hand, banks can digitally predict future transactions and use consumer data to influence credit extensions, loan handouts and mortgaging.
• Fraud Prevention: Big data science is constantly used to assess risks within the baking industry. Infusing blockchain-based cyber security, big data analysis can aid banks when processing information that requires auditing, reporting and compliance verification. This reduces the risk of consumer fraud and information-based breaches.
• Consumer Personalisation: Investing in big data enhances customer base segmentation. Using analytics, banks can divide consumers into several sectors, according to data-based indicators. With more information at hand, banks can therefore diversify their customer service and feedback, based on predictive data models.

Are There Cash Challenges Ahead?

While big data’s impact on the financial industry continues to remain positive amongst the majority, a cashless future could still pose challenges to a select few. 

After a recent study found that 8 million consumers in the UK either still rely on cash payments or struggle to make a digital payment, a cashless future may pose an issue to older generations, small business vendors and disconnected consumers.

The post A Cashless Future: Can Big Data Change How We Pay? appeared first on PaymentsJournal.

Current society is moving more and more towards digital and card-based payment. However, there is continued benefit to traditional cash payments that are difficult to replicate. University of Virginia professor Lana Swartz writes in the MIT Technology Review:

Cash is the best transactional tool for increasing community and individual autonomy that we have invented so far. It offers many affordances that prove hard to replicate. Cash does not need someone else’s signature to spend. It does not specify where you can spend it, or on what. It is anonymous: no one needs to know who you are for you to spend it. It generates no data about your transaction for third parties. It transacts without fees for the payer or the payee. You know how much you have on hand: it cannot be frozen in your account by an opaque third-party payment processor on a whim, or reversed by a scammer, or eaten away by fees until you tip into overdraft without realizing it. It does not rely on many layers of brittle infrastructure of both hardware and software in order to operate at the point of sale.

Although there have been historical issues with paper currency, there are key areas where cash continues to thrive, including serving underrepresented communities. Those communities may end up operating on different levels due to lack of access to modern payment options:

The future of transactional media might look something like its past. An industry consultant once told me that “in the future cash will be the ‘c word,’ not something nice people use.” Indeed, the future is likely to be cash-light rather than fully cashless. Those relegated to cash-only status will transact on unequal terms.

A potential scenario is a payments spectrum with cash on one extreme and cryptocurrency on the other. The remainder will continue to be filled in greater volumes with card and digital payments.

Overview by Jordan Hirschfield, Director of Research at Mercator Advisory Group

The post Cash Is King… Only in Some Places appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: Credit Surcharging and Cash Discounting: Approaches to Managing Processing Costs

Cash Discounting Regulation in the United States:

• As opposed to credit surcharges, cash discounts are relatively non-controversial and are legal throughout the United States.
• Card networks address the process of cash discounting within their regulations, but regulate it to a much lesser extent than credit surcharging.
• With few exceptions, states have largely remained uninvolved in regulating the practice of cash discounting.
• Wyoming is the only U.S. state with a limitation on the practice of cash discounting, prohibiting discounts in excess of 5% for the purpose of inducing payment by cash.

About Report

Mercator Advisory Group’s most recent report, Credit Surcharging and Cash Discounting: Approaches to Managing Processing Costs, examines the changing regulatory landscape for surcharging and discounting, and offers recommendations on how to effectively adopt either strategy.

Credit surcharging and cash discounting are two approaches to shifting the cost of credit processing from the merchant to the consumer. While either approach can help merchants lower operating expenses and support their bottom line, they both come with challenges and risks. Merchants should be aware of the complex regulatory environment surrounding these strategies and weigh the risk of losing customers to competitors who do not surcharge or offer discounts.

“For small merchants struggling with profitability, two main approaches exist to shift the expense of credit transactions onto consumers. In many ways, credit surcharging and cash discounting are two sides of the same coin: one charges a fee to those who choose to use a credit card, one offers a reward to those who choose cash. Still, these two approaches have experienced dramatically different treatment by state regulators and credit card networks alike,” stated the author of the report, Laura Handly, Research Analyst at Mercator Advisory Group.

The post Cash Discounting Regulation in the United States: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: Credit Surcharging and Cash Discounting: Approaches to Managing Processing Costs

Current Trends in Credit Surcharging and Cash Discounting:

• Surcharging is the practice of adding a charge to credit card transactions to cover the cost of processing fees. 
• Just over half (51%) of small businesses in the United States make use of credit surcharges.
• For small businesses faced with high credit processing fees and narrow profit margins, credit surcharging can make a meaningful difference.
• Discounting is the practice of subtracting some or all of the price of credit card processing from the purchase price for cash transactions.
• In 2020, the Federal Reserve found that 23% of respondents in 2019 preferred to pay with cash, a 4% decrease from 2016.
• By contrast, 29% of consumers preferred to pay with credit in 2019, an increase of 5% from 2016.

About Report

Mercator Advisory Group’s most recent report, Credit Surcharging and Cash Discounting: Approaches to Managing Processing Costs, examines the changing regulatory landscape for surcharging and discounting, and offers recommendations on how to effectively adopt either strategy.

Credit surcharging and cash discounting are two approaches to shifting the cost of credit processing from the merchant to the consumer. While either approach can help merchants lower operating expenses and support their bottom line, they both come with challenges and risks. Merchants should be aware of the complex regulatory environment surrounding these strategies and weigh the risk of losing customers to competitors who do not surcharge or offer discounts.

“For small merchants struggling with profitability, two main approaches exist to shift the expense of credit transactions onto consumers. In many ways, credit surcharging and cash discounting are two sides of the same coin: one charges a fee to those who choose to use a credit card, one offers a reward to those who choose cash. Still, these two approaches have experienced dramatically different treatment by state regulators and credit card networks alike,” stated the author of the report, Laura Handly, Research Analyst at Mercator Advisory Group.

The post Current Trends in Credit Surcharging and Cash Discounting: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 U.S. North American PaymentsInsights: The State of the Consumer Market – Prepaid/Gift, Credit, and Debit Cards

Frequency of Debit Card Use for Cashback:

• 13% of debit card holders with a cashback option receive cash back in a store a few times a week.
• 14% of debit card holders with a cashback option receive cash back in a store once a week.
• 13% of debit card holders with a cashback option receive cash back in a store a few times a week.
• 28% of debit card holders with a cashback option receive cash back in a store a couple of times a month.
• 14% of debit card holders with a cashback option receive cash back in a store once a month.
• 21% of debit card holders with a cashback option receive cash back in a store a few times a year.
• 7% of debit card holders with a cashback option receive cash back in a store once or twice a year.

About Report

Mercator Advisory Group has released a new primary research report titled 2021 U.S. North American PaymentsInsights: The State of the Consumer Market – Prepaid/Gift, Credit, and Debit Cards, summarizing the findings from the Summer 2021 North American PaymentsInsights survey of 3,001 U.S-based adults. The report aims to highlight the key findings from the survey as they relate to consumer experience with prepaid, gift, credit, and debit cards. The report brings together various aspects of consumers’ experience with the different payment methods covered, as well as relevant behavioral habits and attitudes. Readers of the report will get an idea of how consumers use various payment cards, how they view card features, and the challenges that they encounter.

“The past 18 months have seen an unprecedented shift in consumer payment behaviors and attitudes, driven by disruptive factors including the COVID-19 pandemic, product shortages, and the accelerated adoption of online shopping. Tracking and understanding the shifts in consumer preferences is instrumental to planning for the future and creating innovative payments solutions that satisfy consumers’ ever changing needs.” – Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

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Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: International Prepaid Market Developments and Growth Trends

Number of Cashless Transactions by Region:

• In 2016, Europe had 154.8 billion cashless transactions, narrowly beating out North America.
• That same year, North America had 150.6 billion cashless transactions.
• Asia came in third in 2016, with 126.5 billion cashless transactions.
• Latin America lagged behind, with just 40.9 billion cashless transactions in 2016.
• All four regions experienced noticeable growth in the number of cashless transactions between 2016 and 2020.
• By 2020, Asia had dramatically more cashless transactions than any other region in the world. 
• Europe had the second highest number of cashless transactions in 2020, widening the gap  between North America. 

About Viewpoint

Mercator Advisory Group’s most recent report, International Prepaid Market Developments and Growth Trends, reveals some of the most important trends within the global prepaid market.

The international prepaid market is booming, but it is not expanding at the same rate everywhere. In emerging markets in Latin America and Asia, where consumers have more limited access to other forms of cashless payments, prepaid cards serve an important role in daily life. As e-commerce and demand for non-cash payment types rises in these regions, prepaid cards are experiencing profound growth.

On the other hand, in regions where prepaid markets are well established—namely Europe and North America—legislators are cracking down on fraud associated with prepaid cards. New regulations may threaten the growth of prepaid card markets in these regions.

Across all regions, prepaid card markets have found new use cases in recent times and there is a great deal more growth to be had within the market.

“The prepaid market is witnessing sustained and significant growth throughout the world, with an average estimated CAGR of 13% through the year 2023. As e-commerce spreads globally and demand grows for cashless payment methods, prepaid cards stand to benefit. Government initiatives in support of transitions to cashless payments are numerous,” states Laura Handly, analyst at Mercator Advisory Group, and the author of the report.

The post Number of Cashless Transactions by Region: appeared first on PaymentsJournal.

PayPal is putting a strategy in place that it hopes will help to capture more in-person transactions in Europe. Two big trends are supporting this:

1. Although the global pandemic is still ever present with consumers, more are venturing out to do their shopping in stores on a regular basis.
2. The use of cash has taken a nosedive. According to eMarketer, cash made up 27.4% of in-store purchase transactions in Europe, but this share is expected to drop sharply to 15.4% by 2024.

Here’s how eMarketer explains that PayPal is going to help with the transition to digital payments:

Payment processorEuronet brought PayPal’s QR code offering to epay, its suite of digital payment solutions, per a press release. The tie-up lets merchants using epay—which comprise 748,000 point-of-sale terminals in 60 countries—enable PayPal’s QR code solution for in-store customers. The offering is live in Germany and is expected to roll out to more markets.

The Euronet partnership can bring PayPal further into in-store payments. Progress made against COVID-19, aided by vaccination campaigns, may have helped bring more consumers back into stores in Europe. This may push merchants to offer a wider range of digital payment solutions to address evolving shopping habits. Enabling its QR code payment solution across Euronet’s POS can help PayPal gain both a stronger foothold in stores and a larger presence in Europe overall.

PayPal also expanded its business debit card into Belgium, Finland, the Netherlands, and Portugal. The PayPal Business Debit Mastercard gives merchants instant access to their PayPal balances and lets them spend the funds wherever Mastercard is accepted. The card offers 1% cashback on transactions processed as credit and can be added to most mobile wallets.

Expanding its business debit card offering can help PayPal deepen its relationship with merchants by offering a tool that gives them instant access to their funds. And as more sellers use the card, PayPal also boosts its payments volume. The firm may also be looking to compete with players like SumUp, a European mobile POS provider that has also employed a similar tactic.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post PayPal Gets Ready to Win More In-Person Transactions in Europe appeared first on PaymentsJournal.

The innovation train just keeps rolling as another startup emerges in the B2B payments space. Centime is based in Massachusetts and is led by founder and CEO BC Krishna, who some readers may recall was the founder of payables fintech Mineral Tree. Through its platform, the Centime startup is providing better cash flow options to companies in the SMB segment, which can be broken down into many sub-segments, but shares a common general issue of maintaining adequate levels of liquidity. 

This has been especially punishing during the pandemic, so new entries like Centime are creating ways to improve cash visibility, provide speedier execution in financial operations, and easier access to credit where needed. We covered the importance of more advanced cash cycle automation in a recent member report. 

The release at PRNewswire indicates that the company has joined the Visa Fast Track program for fintechs, which provides some advantages to innovative startups, including faster onboarding to the Visa network and easier access to its partners across the globe, as well as support from payment experts where required.  

There is a link in the release for those interested to learn more about the program. The release also states that Centime will be working with bank partner FNBO for easier access to commercial credit card lines.

‘Centime’s Cash Flow Control solution empowers small and mid-sized businesses to control and manage cash flow. The relationship with Visa will help Centime power the solution, which allows clients to monitor cash, improve decision-making with real-time cash flow forecasting, nudge late-paying customers and instantly access cost-effective credit to bridge liquidity gaps.’

We managed to chat with CEO Krishna for a few minutes, who indicated that the firm has a strong funding base, great partners, and a unique approach to the glaring cash flow issues faced by SMBs. He advised that there will be much more information available about how the Centime platform solves this common business problem in the coming weeks. 

“We’re delighted to be part of Visa’s Fast Track program,” Centime founder and CEO BC Krishna said. “Small and mid-sized businesses can plan better and grow faster by using Centime to gain control over cash flow. Working with bank partners and empowered by Visa’s network, our clients can now easily access cost-effective credit to meet their working capital needs.”…“By joining Visa’s Fast Track program, exciting fintechs like Centime gain unprecedented access to Visa experts, technology and resources,” said Terry Angelos, SVP and Global Head of Fintech, Visa. “Fast Track lets us provide new resources that rapidly growing companies need to scale with efficiency.” 

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Centime Links Up With Visa’s Fast Track Program appeared first on PaymentsJournal.

• Barclaycard Visa credit cardholders can earn up to 15 per cent cashback at their favourite retailers online and in-store with the new Barclaycard Cashback Rewards
• The new rewards programme provides personalised offers at brands across retail, hospitality and leisure
• Cashback can be redeemed towards a credit card balance, traded up for an e-voucher, or donated to a customer’s preferred charity
• The new benefit is available to all new and existing Barclaycard Visa credit cardholders, who can find out more information at https://cashbackrewards.uk.barclaycard/

Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, has announced a new Cashback Rewards programme with Visa giving shoppers automatic cashback when spending at a range of high street and digital retailers.

The programme provides customers with personalised offers towards their favourite brands, based on their previous shopping habits, when spending on their Barclaycard Visa credit card. Once signed-up, customers can start earning up to 15 per cent cashback when making purchases at a variety of well-known retailers including Uber Eats, Costa and Holiday Inn Express.

Customers can sign-up effortlessly by clicking through to the new Barclaycard Cashback Rewards site: https://cashbackrewards.uk.barclaycard/. Once registered, they then have access to personalised offers from their favourite UK retailers, both in-store and online.

The Barclaycard Cashback Rewards offers cardholders the opportunity to save money, as the easing of lockdown sees the return of more normal spending patterns, with Barclaycard data showing spending on non-essential items increasing by 9.4 per cent* in June 2021 compared to the same period in 2019.

In addition, complementary consumer research shows consumers continue to have value front of mind, with 40 per cent** shopping around for the best deals to make their money go further. Moreover, spending looks set to continue, as 20 per cent suggest they will be taking a staycation in the upcoming weeks.

Whether dining and drinking at a favourite eatery, taking a break in the UK or shopping at a much-loved retailer this summer online or in-store, the new Barclaycard Cashback Rewards will help Barclaycard customers make the most of their spending.

Cardholders can also have their cashback redeemed back to their Barclaycard, trade up for an e-voucher, or donate to a chosen charity. Those already earning cashback with an existing Barclaycard Rewards card could earn additional cashback of up to 15 per cent by signing up to the new Barclaycard Cashback Rewards.

José Carvalho, Head of Unsecured Lending said:” Our spending data shows that consumers’ shopping habits are changing. Not only do we all want more flexibility about where we shop, but we are also looking for better value for money in the purchases we make.

“Knowing how important this is to our customers, we are delighted to announce the new Barclaycard Cashback Rewards with Visa, helping cardholders get more out of their everyday spending on their Barclaycard. We have designed the rewards programme to provide tailored offers based on where our customers like to shop and most often, while also ensuring signing up is as seamless as possible with easy access to the rewards.”

Cathy Dargue, Client Director at Visa said: “We’re delighted to partner with Barclaycard for the new Barclaycard Cashback Rewards. Providing cardholders with the latest and best products has always been a crucial part of our longstanding partnership with Barclaycard, and the new programme will give cardholders access to better deals, and the opportunity to earn cashback – at a time when all of us are more conscious about how and where we spend.

“This has been a truly collaborative effort by both Barclaycard and Visa and we’re excited to give something back to customers though such a substantial rewards programme – providing better value when shopping at their favourite stores.”

To learn more and sign up today, visit: https://cashbackrewards.uk.barclaycard/

The post New Barclaycard Cashback Rewards Enables Cardholders To Earn Cashback From Their Favourite Retail Brands appeared first on PaymentsJournal.

Some more investment activity across the fintech space covering financial operations, which has been on a tear during the past year as the lingering pandemic has refocused eyes on the need for business transformation to digital systems and processes. This piece is posted at Tech Crunch and points to a $50 million cash infusion for the California fintech Paystand, a payments-as-a-service outfit using blockchain and cloud tech to offer a billing and payment platform. We again see a non-traditional model that de-emphasizes transaction fees, instead creating a flat monthly fee model. 

‘It’s pretty easy for individuals to send money back and forth, and there are lots of cash apps from which to choose. On the commercial side, however, one business trying to send $100,000 the same way is not as easy….Paystand wants to change that. The Scotts Valley, California-based company is using cloud technology and the Ethereum blockchain as the engine for its Paystand Bank Network that enables business-to-business payments with zero fees.’

As we have been advising now for years, the bulk of corporate investment in digital financial operations during the past five years or so has been more focused on the payables side of the business, but not always in a comprehensive strategic manner.  In the 2021 Outlook, we pointed out that managing the financial cash cycle involves systems and processes touching everything from procurement to payables, trade financing, receivables, and reconciliation.

The cash conversion cycle for corporations is the time from inventory investment to receiving cash for a sale. Those firms that do a good job of understanding how to best organize these operations have a distinct advantage over laggards.  As this brief article points out, Paystand solutions are more directed towards the receivables part of the puzzle, which has been receiving a greater share of digital transformation focus during the past couple of years. We see this as a continuing trend for some time, and in our view companies not transitioning will be finding themselves at a competitive disadvantage not too far into the future.

‘Paystand’s view of the world is that the accounts receivables side is harder and why there aren’t many competitors. This is why Paystand is surfing the next wave of fintech, driven by blockchain and decentralized finance, to transform the $125 trillion B2B payment industry by offering an autonomous, cashless and feeless payment network that will be an alternative to cards, Almond said…… The company said it will use the new funding to continue to grow the business by investing in open infrastructure. Specifically, Almond would like to reboot digital finance, starting with B2B payments, and reimagine the entire CFO stack…. As part of the investment, Jazmin Medina, principal at NewView Capital, will join Paystand’s board. She told TechCrunch that while the venture firm is a generalist, it is rooted in fintech and fintech infrastructure. She also agrees with Almond that the B2B payments space is lagging in terms of innovation and has “strong conviction” in what Almond is doing to help mid-market companies proactively manage their cash needs. “There is a wide blue ocean of the payment industry, and all of these companies have to be entirely digital to stay competitive,” Medina added. “There is a glaring hole if your revenue is holding you back because you are not digital. That is why the time is now.”’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Paystand Banks $50m to Make B2B Payments Cashless and with No Fees appeared first on PaymentsJournal.

Top credit card issuers shuffle their offers in an attempt to reignite credit card payments. Here are five top card plans in flux. Expect many more to come as issuers attempt to rebuild their credit card portfolios. Chase’s Slate Edge comes out as the most creative of the bunch. For revolvers, it is excellent; for transactors, perhaps not.

Chase Slate Edge.

Someone in 270 Park Avenue nailed this. It is probably the most innovative in the market. Better Rate- and no points. That’s chutzpah.

• Bankrate reports that the card comes with no rewards points.  Now, I would never use that model-I like to get the points, pay it off, and hate to revolve. But if you do the math, someone who revolves is far better off passing on the rewards than incurring a 20% interest rate.    The posted rate is 14.99% to 23.74%, based on Prime, but the site promises, “Automatic consideration for 2% APR reduction if you spend $1,000 by your next account anniversary and make timely payments.”

And that is a fantastic, creative offer.

Citi Prestige:

It appears that Citi is sunsetting this high-end travel card. The Points Guy once called it “the best travel card.” Benefits included trip delay insurance, American Airlines Admiral Club, and a $495 annual feel. Back when the high-end market emerged in 2017, we asked Are High-Fee/High-Reward Premium Travel Cards a Sustainable Business Model?

The answer is no. There are some specific use cases. American Express Platinum is one, and so is Chase Sapphire, but the audience is not travelers as much as it is perfect for a well-heeled rewards hound.  Note that both Amex and Chase just raised their fees on their premium card.

Citi-Custom Cash

Citi brings a spin to rotating rewards that add value to consumer rewards management.  If you shift card usage based on rotating reward programs or follow high point multipliers for certain spend segments, this might be a hit. For example, instead of managing issuer-driven verticals, such as Chase Freedom’s 5% bonus for Gas Stations and Home Improvements in 2Q21, Discover’s Gas Stations, Wholesale Clubs, and Streaming Services, the Citi Custom Cash offers a smart option.

According to Citi, the card automatically adapts to spending behavior and pays 5% back on the eligible category with the highest spend.  Like adaptive controls used to adjust to account-level risk, the adaptive reward process reacts to a cardholder’s spending pattern.

Bank of America

Yet, another cashback from BoA.  The product offers an unlimited 1.5% cash back card.  I just converted to it from my Bank of America Spirit card because that product was a sleeper. But, unfortunately, I do not see every flying Spirit again and got the card only to give away the sign-up bonus.

Wells

In my view, Wells paid its price when it hired Charlie Scharf. The new business is now more like Citi or Chase based on the hiring strategy for the management team. In addition, the Wells Fargo Active Cash pays an excellent 2% flat cashback and offers a cash bonus.

Expect more- hopefully as creatively designed, with the Chase Slate Edge and Citi Custom Cash as an example!  But, me-too offers do not hurt, either.

Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Shuffling Cards: The First of Many Credit Card Revamps appeared first on PaymentsJournal.

A cashless world is still a long way from reality, says GlobalData

The much discussed ‘cashless society’ is coming closer to reality across the world amid changing consumer attitudes and widespread technological adoption. However, while some markets such as Sweden, the UK, and several countries in Asia-Pacific (APAC) have adopted cashless payments quite swiftly over the last few years, many are still progressing very slowly. Different markets have their own unique circumstances and there is no one-size-fits-all model, says GlobalData, a leading data and analytics company.

According to GlobalData’s report, ‘The Cashless World – Evolving Payment Environments in Key Asia Pacific and Western Markets’, the UK and Sweden are two of the developed economies that have adopted cashless payments most swiftly. Countries that are trying to push for further cashless payment adoption can learn from some of the steps they have taken.

Cashless progression in the UK has been due to the comprehensive rollout of NFC payment acceptance and adoption by consumers – specifically contactless payment cards. Meanwhile, Sweden took a very different approach, taking advantage of its existing digital national identification and bank account system called BankID. With around 80% of the Swedish population signed up to BankID, the Swish mobile wallet was able to piggyback on this system to gain a high level of penetration. The tie-up between the two systems encouraged consumers in Sweden to embrace mobile wallets almost instantly.

Arnie Cho, Senior Payments Analyst at GlobalData, says: “In developed markets, consumers are used to payment cards for cashless payments, and they feel no urgency to switch to mobile wallets. However, in developing markets where consumers can leapfrog directly from cash to mobile wallets, they tend to have faster cashless progression due to the fact that mobile wallets are a big leap ahead and often times resolve issues around financial inclusiveness.”

In markets that are still developing, industry and government efforts are mainly focused on the adoption and acceptance of mobile payments, with consumers shifting directly from cash to mobile wallets. The digitization of banking and payment services in developing nations is being pushed to help include financially underserved individuals in the formal economy. In these countries, QR code-based mobile payments are being adopted. For markets in Southeast Asia, QR-based systems are much cheaper than accepting payment cards (and mobile wallets are generally more widely held than payment cards), which encourages merchants to accept cashless mobile payments. Mobile wallets offer a digital payment method to underserved individuals while also helping progress the journey towards a cashless payment environment.

Cho adds: “Over the next few years, the push for cashless adoption and acceptance will continue in many parts of the world. The payment environment is developing at different rates in each country. Each market will progress at its own pace and adopt a path that is most suitable to its unique circumstances. However, in terms of achieving a true cashless society, there is still a long way to go even for countries such as Sweden, as certain segments of society are still dependent on cash.”

The post A Cashless World Is Still a Long Way from Reality, Says GlobalData appeared first on PaymentsJournal.

The Covid-19 pandemic has accelerated the march towards digital payments around the world. People are adopting increasingly digital lifestyles, with innovations such as contactless cards and mobile payments increasingly accepted by merchants everywhere. In Southeast Asia, consumer attitudes have shifted strongly towards cashless payments and e-commerce, and especially so since the beginning of the pandemic. According to Visa’s Consumer Payment Attitudes Study 2021, 54% of Southeast Asian consumers now prefer digital payments over cash.

Elsewhere, Swiss consumers are increasingly shifting towards cashless payments. Switzerland is known for its 1000 franc banknote, worth USD 1087. With the Euro area issuing no banknote larger than 500 euro (USD 597), Switzerland’s widespread use of a bill with such a large denomination marks it as a straggler in the adoption of digital payments in the region. According to a recent Swiss National Bank survey, the proportions of payments made with cash has dropped “significantly” in recent years, and that while paying with cash was still preferred by most, the proportion of transactions using cards or mobile applications has markedly increased.

With widespread investment in and consumer pressure for cashless options, digital payments are likely to continue to grow in popularity globally for the foreseeable future. 

For more on this topic, see this article from Reuters:

“Around 43% of one-off payments in supermarkets and restaurants are made with cash, the most popular payment instrument, the survey said.

But cash has lost some of its appeal, with the figure dropping from the 70% level in the last SNB survey in 2017.

‘Non-cash payment methods have…come to be considered, at least in part, as easier to use than cash,’ said the study, which was carried out between August and November 2020.

‘Compared with 2017…its usage share has dropped significantly. The coronavirus pandemic has given additional impetus to this shift from cash to non-cash payment methods.’

Increased online shopping has boosted the popularity of cards and apps during the pandemic, as has the tendency to buy more at supermarkets during lockdowns.”

Overview by Laura Handly, Research Analyst at Mercator Advisory Group

The post Pandemic Accelerates the Adoption of Cashless Payments Globally appeared first on PaymentsJournal.

Cashless gambling has arrived big time in Las Vegas. That would be at Resorts World, the first mega-resort soon to open in more than a decade on the Strip. The new complex, owned by Malaysian firm, Gentling Group, is partnering with payments vendor Sightline to make the casino floor a totally digital experience. Casino patrons can use a Resorts World mobile app to load a digital wallet, then hunker down at slots and table games hoping to hit it big.

Additionally, the hotel and related dining and entertainment venues are all digital as well. Cashless gambling has been emerging in the past few years with other developers including Everi and Scientific Games getting in on the action, too. Resorts World timing is lucky as post-pandemic demand has brought leisure travelers back to the Strip for that elusive jackpot. But digital or not, keep one thing in mind—the house always wins.

The following excerpt from a Fox5 Vegas article reports more on the topic:

Resorts World, the first ground-up resort development on the Strip in more than a decade, will be the first Las Vegas casino to feature cashless wagering when it debuts on June 24. According to a news release, Resorts World “will be the first Las Vegas casino where consumers can utilize a digital login and cashless wagering experience at both slots and table games.”

According to the release, as part of GamingPlay, guests will have three ways to load their digital wallet: by depositing cash at one of the NEO Kiosks provided by NRT Technology, a global leader in enterprise payment systems for casinos, or at the player services desk, or by enrolling in Sightline’s Play+.

In addition, guests also have three different ways to input and present their loyalty card on the casino floor, including a physical loyalty card, digital loyalty card, or entering their phone number at any slot machine, according to the release.

“Launching cashless gaming solutions at the first major Las Vegas casino opening in a decade presents a tremendous opportunity for Sightline to further the digital transformation of the consumer experience in gaming,” said Joe Pappano, CEO of Sightline Payments.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Resorts World and Sightline Payments Bet On Cashless Casino appeared first on PaymentsJournal.

This posting in CPA Practice Advisor is from the co-founder of San-Francisco-based fintech startup Anduin, which specializes in automated solutions for cash cycle operations, something that we have been professing to members as a necessary step for many companies in the post-pandemic state. 

The article makes reference to several studies/external papers and also leads to a link for downloading a white paper on the subject. So anyone interested should browse through and see if anything interesting.  The audience seems to be accounting firms that might utilize AI-enabled (machine learning) software to improve their work cycles and resulting cash management.  However, the gist of the message is applicable across multiple verticals.

‘Many accounting firms are still managing their financial back office with disconnected payment systems and outdated practice management software. This forces them to rely heavily on manual, administrative efforts to wrangle billing, collections, and payment processing. The broken cycle leads to lost revenues, slow cash flows, and exasperated partners – and as bad as that sounds, it’s far from the end of the story….Firms tend to overlook a major unintended consequence of poor billing practices: the impact on their client relationships. Like it or not, monthly billing is probably the most regular touchpoint you have with your larger clients, meaning the billing experience goes a long way toward shaping the overall client relationship.’

The piece goes on to discuss reasons why so many firms continue to be mired in paper-based financial and other work operations, with packed month end closings rather than a normal, ongoing digital flow of billing, acceptance , etc.  As we have pointed out in many a posting, a main culprit is corporate inertia, which is essentially to keep doing things as they have always been done, because they seem to work just fine, even if terribly inefficient and often dangerous for client relationships. 

The author goes on to point out the growing trend towards client demand for better experiences, or else.  So more companies should be looking to modernize, and the sooner the better.

‘Moreover, digitally transforming your invoice delivery and payments process will create a far superior experience for your clients. You can differentiate your firm with a better work-to-cash cycle that helps your clients understand your value and allows them to pay quickly and easily. The frictionless and personalized experience will make them feel special, and you’ll achieve that elusive delight you’re aiming for.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Creating a Better Client Experience Through a Better (AI-Powered) Work-to-Cash Cycle appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: North American PaymentsInsights, U.S.: Data Summary Report; ATM Usage and Preferences 

Preferred Method for Getting Cash By Gender: 

• Overall, 40% of U.S. consumers prefer using an ATM to get cash back when making a purchase in a store.
• Another 40% of consumers prefer getting cash via cash back through a debit purchase.
• Men are more likely to prefer using an ATM (50%) than getting cash back with a debit purchase (36%) to get cash. 
• Women are more likely to prefer getting cash back with a debit purchase (44%) than using an ATM (30%) to get cash. 
• Overall, 21% of consumers prefer whichever method is more convenient to get cash. 
• More women (27%) than men (14%) prefer whichever method is more convenient to get cash back.

About Report

Mercator Advisory Group’s most recent report, North American PaymentsInsights, U.S.: Data Summary Report; ATM Usage and Preferences documents consumers’ current usage metrics of ATMs in the U.S. national market. The survey of 3,000 U.S. adults (December 2020) represents a continuation of a series of consumer and business surveys conducted annually by Mercator Advisory Group since 2009.

This Data Summary Report presents the survey results for U.S. consumers’ use of ATMs, through commonly-used graphs with core demographic breakdowns, for easy incorporation in planning/analysis documents. This is just one of multiple Data Summary and Analysis Reports on the United States for program subscribers from this survey, on topics including Buy Now, Pay Later lending, bill payment, subscription buying, fraud experiences, and effects of the COVID-19 pandemic.

“These survey results provide up-to-date baseline data for financial institutions and other stakeholders serving the U.S. market,” stated Amy Dunckelmann, Vice President, Research Operations at Mercator Advisory Group. “The U.S. continues as a dynamic market for the ATM industry.”

The post Preferred Method for Getting Cash By Gender: appeared first on PaymentsJournal.

CVS customers will no longer be kept waiting for their cashback rewards. CVS Pharmacy announced an enhanced customer loyalty program that will now provide cashback right after each purchase, for both in-store and online.  

Previously, CVS shoppers saw cash rewards every quarter. Consumers are now hybrid shoppers who want to see consistency and immediacy across different channels. Instant cashback should also speed up higher sales as well.

The following excerpt from an Adweek article reports more on the topic:

CVS Health’s retail division, CVS Pharmacy, is updating its loyalty program’s core 2% cash-back feature for the first time in 20 years so benefits are disbursed immediately after each transaction, rather than on a quarterly basis.

The upgrade to the pharmacy chain’s ExtraCare Rewards program applies to existing benefits, such as 2% back in so-called ExtraBucks for every purchase. Members can access these rewards in the CVS app, on CVS.com and on its digital and paper receipts, which the retailer said reflects the omnichannel reality of retail today.

“Customers really want more flexibility and faster access,” Michele Driscoll, CVS’ vp of customer engagement, loyalty and personalization, said of the changes. “Our customers have told us they want a similar experience shopping in-store and online, so the aim here is to use rewards both in-store and online.”

The updates were largely driven by customer feedback, which included in-store observations and calls to the retailer’s customer service line, Driscoll explained. “A lot of what we’re working for is to create a personalized experience,” she added.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post CVS Pharmacy Makes Loyalty Cashback an Instant Remedy appeared first on PaymentsJournal.

Nothing has been highlighted more in the past 15 months than the importance of positive cash flow, especially in certain industries more directly affected by the pandemic. Understanding the cash position of your firm and the predictability of flows are key to the planning cycle. 

In this particular posting at Affordable Housing Finance, written by staff at JPMorgan Chase, we have an example of how bank-provided treasury services can help manage such complications and keep your business afloat.  The case offered in this piece is around building owners of affordable housing units.

‘The questions seem simple enough: Who are you paying? How are you paying them? Who are you collecting payments from, and how?…Yet, as most multifamily affordable housing owners and operators will tell you, answering those questions is seldom simple or easy….Cash management and accounts receivable/payable is a rolling challenge—especially amid widespread disruption, like a global pandemic. Knowing with precision what your cash position is at any point in time requires exceptional reporting methods. This is all the more true when receipts are arriving from all sorts of directions, such as: Checks; Money orders; Payment subsidies from local, state, or federal sources; and Wire transfers from funding sources.’

The piece goes on to mention the types of assistance that the bank can offer its clients, including those that may be assumed to carry a fee but are absorbed as part of the relationship.  The ability to digitize processes in cash operations is very important to controlling an organization’s liquidity position, especially in uncertain times. 

Taking advantage of professional services is something that these types of firms should be considering. As more data is available in digital form, the ability to utilize that data with modern tech creates further opportunities to improve working capital as a strategic advantage.

‘“Owners and operators should have a strategic perspective on the best ways to finance their projects and how to best leverage working capital,” he says….Businesses ought to embrace the opportunities that treasury services present. Consider banking partners with the talent, resources, and commitment needed to transform your treasury functions into a strategic business asset.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post The Unexpected Benefits of Treasury Services appeared first on PaymentsJournal.

Canada’s card payment market, which has been on the rise for the past few years, registered a decline of 2.8% in 2020 due to COVID-19 with reduced consumer and commercial spending. However, with the gradual recovery in economic activities, card payments are expected to rise by 6.8% to reach C$872.3bn (US$683.9bn) in 2021, according to GlobalData, a leading data, and analytics company.

Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “The payment card market in Canada is mature, with each individual holding at least three cards in 2020. Canadian consumers are avid users of card payments, with high frequency of card payments (218 times per debit card in 2020), according to GlobalData.

“Persistent efforts from the country’s financial authorities and banks to ensure a robust banked population, a high level of awareness of electronic payments, and increasingly developing payment acceptance infrastructure have been successful in encouraging consumers to use electronic payment methods for day-to-day, recurring transactions. Though the COVID-19 pandemic has impacted consumer spending, it has also highlighted the importance of non-cash payment methods, pushing the use of card payments in the country.”

The outbreak of COVID-19 has resulted in a significant shift in preference for consumers towards the use of electronic payments-especially contactless payment methods. According to the results of a survey conducted by Payments Canada in November 2020, approximately 47% of Canadians surveyed report using their contactless debit and credit cards more often than pre-COVID. To encourage the shift away from cash, the contactless payment limit was increased from C$100 ($78.41) to C$250 ($196.02).

The overall decline in consumer spending was somewhat offset by a rise in online spending, as wary consumers stayed at home and used online channels for purchases. According to a study from Payments Canada dated May 2020, 28% of credit card users were using them more frequently for online payments compared to pre-pandemic levels. With credit and debit cards accounting for over one-third of total e-commerce payments, the rise in e-commerce will drive the overall card payments market. Mr Sharma adds: “Canada’s card payments market is all set to rebound and grow, with revival in economic activities, rising consumer spending and growing demand for digital payments such as contactless and e-commerce payments. Overall, the card payments market is expected to grow at a compound annual growth rate (CAGR) of 6.1% between 2020 and 2024 to reach C$1 trillion (US$811.6bn) in 2024.”

The post Card Payments in Canada Set to Rebound and Rise by 6.8% In 2021, Says GlobalData appeared first on PaymentsJournal.

Reuters reports that El Salvador has become the first country in the world to adopt Bitcoin as legal tender. The cryptocurrency will now be El Salvador’s second official medium of exchange, alongside the U.S dollar, which will remain its primary currency. El Salvador’s government announced that it will guarantee Bitcoin’s convertibility to the dollar and all of the country’s merchants are now required to accept it as a payment method (except those that don’t have the technical means to do so).

El Salvador’s President Nayib Bukele is touting the move as a way to streamline cross-border remittances from Salvadorans working abroad and expand financial inclusion to the 70% of Salvadorans that lack access to traditional financial services. According to a 2018 report by the UN Economic Commission for Latin America and the Caribbean, remittances from the Salvadorian diaspora in the U.S amounted to almost $5.5 billion annually, comprising 21% of El Salvador’s GDP.

The embrace of Bitcoin is also expected to encourage the development of broadband internet access and other digital infrastructure in underserved regions of the country.

Some observers are however voicing concern about the implications this may have for El Salvador’s ongoing negotiations with the IMF regarding a $1 billion financing program. Others are expressing concern about what this means for money laundering and tax dodging tactic, which are notoriously easier to deploy when transacting in cryptocurrencies.

It is also unclear how Salvadoran merchants are going to react when forced to accept payments in such a volatile currency and how many of them will have the technical means to comply with the mandate.

It remains to be seen whether transacting in Bitcoin lends some much need stability to El Salvador’s economy or if it is simply an attempt by the government to create a semblance of progress by riding the crypto hype wave. In any case, this delivers great encouragement to Bitcoin investors and cryptocurrency enthusiasts as it will likely boost demand for the coin and contribute to the already ubiquitous buzz about an impending crypto revolution.

It is no surprise that Bitcoin’s price is already up by over 10% compared to 24 hours prior, at the time this article was written.

Overview by Sam Klebanov, Research Analyst at Mercator Advisory Group

The post El Salvador Goes All in on Bitcoin; Becomes First Country to Recognize It as Legal Tender appeared first on PaymentsJournal.

Here is a complicated issue.  Are consumers and businesses saving too much cash? I’d say you can never squirrel too much money away, but it looks like that might be an issue for deposit accepting institutions.

Today’s WSJ covers the shift in savings by businesses following COVID. 

• U.S. companies are holding on to billions of dollars in cash. Their banks aren’t sure what to do with it.
• When the coronavirus pandemic hit last year, corporate executives rushed to raise money. Unfortunately, banks have been holding that cash ever since, and because companies are reluctant to borrow from them, they can’t turn it into income-generating loans.
• That has weighed on banks’ profit margins, and some have started pushing corporate customers to spend the cash on their businesses or move it elsewhere.
• Bankers say they thought the improving economy would reduce companies’ desire for holding cash, but deposit inflows have continued in recent weeks. Chief financial officers and treasurers, many still wary of the pandemic’s impact, say they aren’t ready for big changes, even if they earn little or nothing on their deposits.

The WSJ provides a chart on Total Deposits in U.S. commercial banks; it illustrates the cash movement into deposits. For example, on March 4, 2020, U.S. savings deposits at commercial banks grew to $13.48 trillion.  On May 19, 2021, the metric rose nearly 50% to $17.10.

• High deposits usually aren’t a bad thing for banks, as long as they can use the money to make loans. But bank lending has been slow as many companies prefer to borrow money from investors. For banks, total loans equaled 61% of all deposits as of May 26, down from 75% in February 2020, according to the Fed data.
• According to the Federal Deposit Insurance Corp, the industry net-interest margin, a key measure of lending profitability, fell to a record low in the first quarter.

The WSJ does not present consumer savings rates, but the Fed tracks the number here.  In March 2020, the U.S. consumer savings rate grew to 12.9% from COVID-worried consumers.  Two months prior, in January 2020, the savings rate was  7.6%, on par with the prior year.  In the latest reported numbers, reported for April 2021, the consumer savings metric rose to 14.9%

Three takeaways here.

• In managing 2021 credit policy forecasts, expect slow, steady portfolio buildups.  Revolving debt has been hovering under the pre-covid peak of $1.1 trillion for a year.  In the latest reported numbers, the metric stands at $963.7 billion.  Mercator expects this number will approach the peak in mid-2022, but it will be slow, steady growth, not a rapid buildup.
• Slow build up bears well for credit losses, and while the current charge-off rate increased slightly to 2.95% in Q12021, the number is still relatively low and will likely normalize in 2022 around 3.5%
• The Asset-Backed Securitization market will be slower through 2022, as credit card issuers will use deposits to fund credit card investments since high savings will be cheaper than Wall Street Rates.

The short story: Savings levels are up for consumers and businesses.  It might be bad news for some banks, but it sure feels good to have money in the bank.

Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Savings Rates: Too High For Its Own Good? appeared first on PaymentsJournal.

In this referenced blog post at Finextra, the author (a senior at a global tech and consultancy firm) discusses the differences between and growing automation of cash and treasury management, which are generally interconnected and critical financial processes at corporates across the globe, pretty much regardless of size. 

We have been covering this general area of impact in ongoing member research and actually called it out as a key theme in our 2021 Outlook, indicating that digitalization of financial operations has accelerated in 2020 and will continue as corporate inertia around such investments has been greatly challenged

‘As treasury gains strategic mileage with tectonic shifts in banking architecture and digital embodiment of access and privileges, it becomes imperative for the treasury teams to retain control and ensure round the clock visibility across cash flows, fund requirements, risk scenarios, business disruptions. Organizations are becoming increasingly agile and resilient to contain the impact of external shocks amidst a complex intertwining of supply chains and payment systems. Cash management awaits a significant performance overhaul in areas such as cash forecasting, forex (FX) payments, liquidity risk management and receivables processing with accuracy concerns at the helm.’

The author goes on to point out all the areas being impacted by technology, including the most basic friction point, which is corporate onboarding.  As various points in the chain of events become digitized, the result is more useful data, which can then be converted into straight-through processes and actionable insights for improved decision making. 

The use of AI (in the form of machine learning) is a quickly growing technology and becoming core assets in product offerings from some of the largest corporate banks.  Other tech areas include cloud and APIs, each of which is also in our Outlook.  Worth a quick read.

‘Application Program Interfaces (APIs) are working their way up in the treasury environment through significant use cases in client communications as well as batch processing of payments. APIs render the use of legacy SWIFT MT940 communications redundant by providing real-time access to instant payments, debit notifications to treasury management systems. APIs also help reconcile payments by generating cash receipts in the system for better monitoring and error-tracking, which in turn lead to revamped liquidity management as well as efficiency in accounts receivables….Leading banks have also been implementing cloud-based data centralization through treasury management systems, FX trading platforms and ERP software. The benefits include lesser dependence on hardware, elimination of manual errors and agility all leading to cost optimization and efficiency.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Envisioning Resilient Treasury and Cash Management Dynamics for Corporate Banking Efficiency appeared first on PaymentsJournal.

This release can be found at businesswire and speaks to a new partnership between Paystand, the Silicon Valley fintech that provides cloud-based billing & payment platform for B2B companies, and Sage, the accounting software firm. 

Paystand utilizes a blockchain-based architecture for its’ PaaS capabilities and the integration is directly with Sage Intacct, so businesses using this solution can access the Paystand payments services.

‘For the first time, Sage Intacct customers will be able to create a “self-driving money” experience for their customers and receive payments instantly across Paystand’s zero-fee bank network. The Paystand Sage integration also gives Sage Intacct customers a modern Payments-as-a-Service model, which moves them off the legacy banking infrastructure and provides a cloud-based payment platform that unlocks scalability and helps finance teams improve margin and operating cash flow….Delivered as a native integration to Sage Intacct, Paystand’s technology lets customers:

• create smart invoices with embedded payment options and a branded, next-gen payment experience
• streamline cash flow management with automatic reconciliation of daily bank transfer data
• save time through automated cash application and the ability to easily reconcile deposits, refunds, disputes, fees, and adjustments.’

This is another example of the accelerated trend towards end-to-end automation of financial operations, with a more recent recognition of the value in strong receivables/reconciliation capabilities.  Corporate banks have a need to modernize their infrastructure as ongoing challenges such as these will continue growing.

‘“Blockchain has created the blueprint for decentralized finance, and money is now software,” says Jeremy Almond, CEO of Paystand. “Yet, in 2021, businesses and finance teams are still held back by pre-internet infrastructure and monopolistic banking practices that limit their full potential. Our integration with Sage Intacct gives an entire class of companies access to a new payment network that unlocks growth and puts businesses first – not the card networks.”…“Our goal at Sage is to help businesses improve productivity, make effective decisions, and optimize efficiency through automation,” said Melody Williams, VP of Sales Strategy and Operations at Sage. “Partnering with Paystand is a way to make this goal a reality, and we’re excited to work with an industry pioneer that shares our vision of helping businesses scale faster, drive growth, and increase ROI.” ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Paystand and Sage Partner to Make B2B Payments Instant, Intuitive, and Cashless for Sage Intacct Users appeared first on PaymentsJournal.

For over a year, it seems COVID-19 is all that anybody talks about. While news topics and phone conversations have grown stale because of this, the payments industry has been anything but stagnant. The quick and unexpected digitization of the bill pay market took industry professionals by surprise, forcing them to work overtime to adapt to the needs of their clients and those clients’ respective customers.

To further discuss the digitization of financial operations systems and the benefits of an order-to-cash cycle, PaymentsJournal sat down with Rick Scholz, Director of Payment Advisory at Deluxe®, Beth Bourgoin, Receivables Product Manager at Deluxe, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

What is an order-to-cash cycle?

COVID-19 certainly made it clear that the commercial enterprise payments space would need to continue to make progress in the digitization of solutions that impact the cash cycle. In late 2019 and into 2020, however, it was clear that the existing capabilities weren’t going to cut it. “In other words, it seemed that companies were not necessarily taking advantage of the rapidly advancing technology improvements that we’ve had,” explained Murphy.

Once the pandemic hit, the companies that had never addressed the technological shortcomings of their financial operations went into a low-grade crisis mode. Over a year later, more of these organizations are proving that financial operation systems and processes—end-to-end, order-to-cash, and receivables management—have become vital to the assessment process.

“That whole [order-to-cash] process from ordering, selling, invoicing, accepting payments, posting the cash to the general ledger, and then completing that entire cycle over and over again, is really an interconnected thing,” added Murphy. It’s how a business receives, processes, manages, and completes the orders their customers.

Since the global pandemic, the importance of managing this process has undoubtedly made its way back to the forefront of the minds of financial professionals.

Digitizing financial operations systems

Deluxe’s clients are always looking to further digitize their payments . According to Beth Bourgoin, “Speaking most broadly in what we’re seeing is, anywhere you’re hearing the word mail, like printing and mailing being used, especially in a billing process today, businesses want to change that to click.”

What exactly does this entail? Instead of having to rely on physical things—envelopes and other office supplies and mailing service providers—clients want the ability to send bills and other invoices virtually: Click, send, and now it’s done. Cutting out manual printing, mailings, and office materials is also a cost efficient and time saving approach. Digital correspondence is also more trackable compared to traditional post and can provide more options to pay.

By sharing ACH payment information through electronic invoices, businesses are setting the precedent of digital payments: I’ve sent your invoice digitally, so please send payment to us in the same manner. “That really is what makes the collection process that much easier,” said Bourgoin. “It’s easier for the buyer or the payer to go in and click on a web page. It gets [the funds] to the company who’s collecting the payment [faster]. And really it brings more benefit to the application part.” Application is a crucial step in the process. It’s where the client can see which invoice data is available and subsequently offer a new website for its customers to make digital payments.

Another benefit of digitizing is the accessibility of this invoice data. However, remittance data itself also needs digitization. To use electronic payment data effectively, businesses need to be incorporating technology. If the technology isn’t there, FIs and other businesses will undoubtedly run into struggles with the growing number of people who are working remotely and finding ways to apply faster payments. Electronic bill payment sites (EBPP) can really help to support digitization.

“It really depends on [the client’s] industry, [and] it depends on the industry vertical, whether an EBPP site is even a viable option. So no matter what the payment source, there’s then all different potential pathways a payment can take,” concluded Bourgoin.

Moving in the right direction: an ‘end-to-end’ view of the order-to-cash approach

There are a number of scenarios that demonstrate the difficulties companies perceive when considering an ‘end-to-end’ view of the order-to-cash approach. The more difficulties that arise, the harder it becomes to standardize the process.

“But that doesn’t mean you can’t do anything about it…and the opportunities really are in controlling that apply link in the chain,” said Bourgoin. She believes the easiest opportunity for the client to gain some control over the process is by understanding the internal processes across that entire chain. For example, what are the people who are operating on that chain doing when it comes to billing, collecting, applying, and managing revenue and liquidity? This understanding is crucial when considering one’s own pain points, as well as comprehending how a particular link is impacting other areas during application and vice versa.

There is also concern about the handling of exceptions. If a cash application team member decides to apply a payment to reach their goal, even though they know it cannot be handled, what happens to the funds afterward? Can the funds be used, or do they sit in a suspended account? Are there then false collections happening because of improper application? These are all valid concerns contributing to the difficulties that lead to hesitance in adoption for many companies.

What it comes down to is businesses having an understanding of their current end-to-end processes. An awareness of gaps and risk factors will allow these businesses to then seek out solutions and vendors that are so particular that they can choose to fix one problem area, such as collections or invoicing.

“The biggest reason that it’s difficult to do an end-to-end review is organizational,” added Scholz. “We find way too often that the different pieces of the chain are all managed by different parts of the organization.” The solution is to pull together people from each different area of the chain and create a dialogue that centers on the financial well-being of the company as a whole.

New technologies that impact the effectiveness of accounts receivables automation

New technologies are hitting the payments market all the time, creating opportunities for businesses to implement these technologies today, regardless of their strategy or what they offer as payment options. The technologies that these businesses choose will depend on the types of payments they accept and their industry vertical.

Fortunately, there are accounts receivables automation opportunities available, regardless of payment type or vertical. This is where mapping technology comes into the picture. “It’s that technology that aggregates the data [and] creates the normalized views for the data,” explained Bourgoin. “And it’s not just the payment data, but it has the remittance data available and images. It’s really a one-stop shop for all of your information.”

This same technology can also be easily leveraged to automatically update ERP systems. It can eliminate most manual functions, such as employee keying and manipulating reports. There are many differences between digital and paper, but this is not something to be intimidated by. Rather, Bourgoin suggests business owners ask themselves this question: how much technology do I need? The answer to this is both flexible and scalable, and it depends entirely on the specific corporate and industry needs of the client.

Takeaway

New technologies are beneficial in a digitized world, and they can even positively impact some older technologies. Within the payments industry, customers are expecting seamless transactions and access to their bill pay documents and other data, while businesses are looking to provide a faster, more on-demand experience. Deluxe’s main goal is to help their clients maintain a streamlined order-to-cash cycle so that the company is able to both preserve and enhance profitability, as well as grow its business.

The post Maintaining a Streamlined Order-to-Cash Cycle appeared first on PaymentsJournal.

In 2020, the global pandemic hit countries all over the world, and the economic impact forced businesses to reevaluate their basic financial operations. When past due payments displayed harrowing growth, immediate adjustments in cash flow management became crucial.  

Accounts receivable (AR) management is the process of ensuring that clients pay the money owed to businesses on time. If businesses are not receiving payments when they are due, it is likely that the slowdown in their cash flow will have a negative impact on their day-to-day operations.

According to the International Monetary Fund, 2020 global gross domestic product (GDP) decreased by an estimated 3.5% over the previous year. This is one clear indicator of a struggling economy, particularly in regards to cash flow. Sky-rocketing unemployment rates reached a shocking 14.8% in April 2020, as reported by the Congressional Research Service, so it should come as no surprise that many customers were forced to default on their payments.

Businesses had to find a solution, and they had to do it quickly. That solution took on a digital form, and technologies such as cloud computing, AI, and APIs were implemented to achieve a swifter transformation of receivables operations. With that came enhanced efficiency and insight into company cash flows, as well as a better relationship with receivables.

Leveraging technology to allow for multiple electronic payment options allows businesses to improve their cash flow during the COVID-19 crisis and beyond. PaymentsJournal had this to say: “If your business accepts electronic payments, customers can wait until the day the payment is due to make it. This method can help to improve cash flow for the business.” A variety of different payment options not only adds to the likelihood of repayment, but also provides a more positive customer experience.

Additionally, Days Sales Outstanding (DSO) can be brought down significantly with automated communications and collections. Using AI-driven software, businesses can send out consistent reminders to their customers about due dates and overdue payments. Along with email reminders, businesses can send text messages and phone calls. Making sure unpaid invoices are not ignored is a simple yet effective way to hold customers accountable.

In a new report from Mercator Advisory Group, “Businesses Need Receivables Automation to Keep Cash Flow Positive During Pandemic Recovery,” Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group, takes a look at the developments in receivable management over the past year, as well as specific components of AR and technology trends impacting business owners in regards to their receivable management processes, systems, and strategies.

The post Pandemic Recovery: What Businesses Need to Keep Cash Flow Positive appeared first on PaymentsJournal.

When you’re hot—you’re hot. That’s what Square is demonstrating with its recently announced results keeping the fintech on an upswing. Its merchant payments business is doing well, and significantly, Square is getting more volume from larger businesses that provide more long term stability to transactions.

Then its Cash App segment is finding more growth from wider adoption of digital wallets. Cash App has more room to run although it can be impacted by economic cycles and consumer spending. Not to be left out, there is Square’s expanding business of enabling users to buy and sell bitcoin in the Cash App.

The following excerpt from a Marketwatch article reports more on the topic:

Both sides of Square seem to be clicking as the economy strengthens, and now analysts are excited about the possibilities for Square as the company begins to connect its merchant and Cash App businesses together.

Though Square’s merchant and Cash App businesses operate separately, analysts have long been excited for the company to start driving links between the two entities, and the company gave a glimpse of that in its Thursday shareholder letter. Square discussed how, in the first quarter, it integrated its merchant loyalty program into the Cash App, so that customers who earn rewards shopping at Square sellers can manage their rewards from within the mobile wallet.

“We think one of our superpowers is the fact that not only do we have an ecosystem on the seller side that serves multiple verticals at once but we also have the buyer side in Cash App, and our goal over time is to realize more of these connections,” Chief Executive Jack Dorsey said on Square’s earnings call. He sees “a ton” of opportunities for links between the two businesses, also highlighting usage of Cash Card debit cards at Square merchants.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Square’s Merchant and Cash App Businesses Continue To Roll appeared first on PaymentsJournal.

• PXP Financial undertakes extensive consumer research across six countries
• Across Europe and in the UK, 41% of shoppers would feel positively about a cashless society
• Just under half (48%) of all respondents have tried contactless as a result of the pandemic

London, UK, 05^th May 2021 – PXP Financial, the global expert in acquiring and payment processing services, has today published a research report ‘The COVID-19 Effect on European E-Commerce and Retail’, exploring UK and European consumer attitudes to the future of retail shopping.

The report uncovers current thinking towards COVID’s impact on the high street, the concept of a cashless society and the alternative payment methods that are currently being utilised in Germany, The Netherlands, Spain, Italy, Poland and the UK.

Combining answers from respondents across all countries in the PXP Financial research, over half (55%) of all participants think the high street was already on the decline before the pandemic, 41% would feel positively about a cashless society and 48% have tried contactless as a result of the pandemic. Other forms of mobile transactions such as wallets and wearable payment forms also increased, further adding pressure on retailers to have the necessary payment systems to process mobile transactions going forward.

The report highlights that if merchants use solutions which can generate data insights from customer payments, they can quickly identify how best to optimise the retail experience for their customers – whether that is through targeted personalised promotions, in-store-only redemption of rewards, or online discounts. Only by getting a deeper understanding of their customers will merchants be able to foster deeper loyalty and greater sales volume.

Commenting on the findings of the report, Koen Vanpraet, CEO of PXP Financial, believes retailers can thrive – both in the digital space and the physical. “Covid may have affected the way people pay, but it doesn’t necessarily mean the end of European high streets as we know them. Forward-thinking merchants and payment players will adapt to the ‘new normal’ by using innovative payment technologies to replace cash usage. By working together to better understand consumer behaviour, retailers and payment players can capture consumer imagination with personalised promotions and value-added services that will deepen customer loyalty.”

“This new retail landscape that we find ourselves in doesn’t have to mean the end of the high street. It can also offer a prime opportunity for merchants to join with payment organisations to promote safer, quicker and more efficient cashless payments. At the same time, European retailers can gain valuable insights into their customers, enabling them to adapt to changing consumer needs much more quickly and efficiently than before,” Vanpraet concluded.

By and large consumers were already adapting their purchasing behaviour in line with the growth of e-commerce. While the pandemic has accelerated the shift towards online shopping, the bricks-and-mortar high street is still regarded fondly by shoppers, and retailers can still count on the loyalty of their customers. But it’s more important than ever for those retailers to ensure that shoppers have the widest possible choice of payment methods which should be considered in retailer strategies going forward.

For more information, or to download PXP Financial’s whitepaper, The COVID-19 Effect on European E-Commerce and Retail’, visit: https://info.pxpfinancial.com/the-covid-19-effect-on-european-e-commerce-and-retail

The post PXP Financial Launches Pan-European Research Report on COVID-19’s Effect on E-Commerce and Retail appeared first on PaymentsJournal.

This is a thought-provoking article that looks at the potential impact of Central Bank Digital Currencies (CBDC) by a former World Bank chief economist and former first deputy managing director of the International Monetary Fund. 

“Meanwhile, the US Federal Reserve, the European Central Bank (ECB), and others have begun to assess the prospects of issuing their own digital currency. The People’s Bank of China (PBOC) has already distributed packets of digital yuan in pilot cities, and the Central Bank of The Bahamas has gone even further, having fully issued a CBDC known as the “sand dollar”.

At the retail level, a CBDC would offer some obvious advantages, and would operate much like a credit card in effecting payments. A common argument is that it would help the poor and others who are currently underserved by the banking system.

It would also make it much easier for governments to administer social transfers like the household cash disbursements made during the pandemic. And a well-functioning international system of digital currencies would sharply reduce cross-border transaction costs.

But CBDCs have complications of their own. One crucial question is where CBDC accounts would be held. If it is in the central bank, how will privacy for transactions be preserved? Equally unclear is what role would be left for private banks, which are currently the predominant source of credit in most market economies. If banks no longer receive deposits, how will they issue loans?

For such an arrangement to function well, the CBDC would need to strike a balance between anonymity (privacy) and control of the system. Otherwise, there will be an abiding concern that the government can too readily access individual account holders’ information and intervene in credit allocation.

The alternative is that central banks would allocate deposits to member banks, which would then continue to function as sources of credit. In this case, there would need to be strong fractional reserve requirements, or other problems might arise.

There are also complications at the international level. Would central banks be willing to accept payments in other central banks’ CBDCs? Could countries retain control of their money supply once it has taken a digital form? In any case, it is difficult to imagine that major central banks would be willing to underwrite the international financial system without a high degree of cooperation, coordination, and control.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Is CBDC Competition Healthy or a Threat to the Current Financial System? appeared first on PaymentsJournal.

Research released by Paysafe shows almost 60% of North Americans and Europeans tried a new payment method in the last 12 months

May 5^th, 2021. Houston, Texas – More than eight in ten (86%) of U.S., Canadian and European consumers say that their payments habits have changed since the start of the pandemic, with 59% trying a new payment method for the first time, rising to 77% in the 18- to 24-year-old age group. That’s according to new research released by leading specialized payments platform Paysafe (NYSE: PSFE), in which 8,000 consumers were surveyed for the company’s latest Lost in Transaction report.

The research*, which was conducted on behalf of Paysafe by Sapio Research in March and April 2021 and covers the U.K., Germany, Italy, Austria, and Bulgaria as well as North America, explored changing consumer behaviors towards payments. Unsurprisingly, the key driver cited by respondents for adopting new payments methods was due to being unable to make in-person payments (33%), but the need to track spending more closely (26%) and concerns over fraud (25%) also came up as strong trends.

In terms of awareness, more than a third (38%) of consumers say they are now more informed of the wide range of different payment methods available to them than they were prior to the pandemic, and almost a third (31%) are now more likely to use an alternative payment method when making an online purchase, rather than just automatically reaching for their credit or debit card.

That said, card payments continue to be the dominant online payment method overall, with more than half of global consumers having used a debit (54%) or credit (51%) card to complete a transaction in the past month. Against this backdrop, however, digital wallets are emerging as the most popular alternative payment method (APM) with 43% of respondents using them globally in the last month. While monthly usage is significant in the U.S. (40%), it rises as high as 47% in the U.K. and 55% in Italy.

Overall, 32% of consumers globally are using digital wallets more frequently than prior to the pandemic. Prepaid cards are being used more frequently by 13% of global consumers, with their popularity higher in the U.S. (16% of Americans). And 8% of Europeans and North Americans are using online cash, or eCash, solutions more regularly, with specific U.S. usage again slightly higher (11%).

The research also reveals that having a choice of payments at the online checkout has been a key differentiator, even more so during the pandemic, with more than half (53%) of global consumers agreeing they would not return if they suffered a poor experience or lack of choice. Although a large proportion of consumers (63%) seek tighter payment security measures, the number of consumers prioritizing convenience has increased by 110% in the past 12 months.

When it comes to in-store shopping, 43% of consumers also noticed which retailers made efforts to upgrade their checkout in reaction to the pandemic, with 28% saying that businesses did not react quickly enough to make it safer. However, 48% of global consumers and half (50%) of Americans reveal they are planning to shop in stores as frequently as they did pre-COVID-19, highlighting the importance of an updated checkout for offline retailers too. Offering contactless payments in-store appears essential, with 28% of Americans refusing to shop at retailers without tap-and-pay.

And, indicating the perhaps surprising comeback for cash after the pandemic, 50% of global consumers plan to make at least 25% of their transactions using cash in the future. Leading European countries and Canada, a third (33%) of Americans will avoid stores where they can no longer pay with cash.

Philip McHugh, CEO at Paysafe, commented: “Consumers have adapted and gotten to grips with alternative payment methods over the last year, partly because they had to due to the pandemic.  Through our ongoing research into payment trends, we continue to witness that COVID-19 has been a real accelerator in the adoption of alternative payment methods and choice is everything.  The good news is, it’s now easier than ever for merchants to integrate into a payments platform and access a huge range of payments methods via one connection.”

McHugh added: “Concerns around payments security have also been a constant theme coming through in our research, and consumers are increasingly alert to the threat of cyber risks, so it’s not just about offering choice, it’s also about ensuring peace of mind from a security standpoint, coupled with a frictionless experience.  No doubt about it, this has been a tough year for retail, but we’re also seeing many merchants – both online and offline – swiftly adapt to these trends and modify their payments offering to remain competitive; the ones that succeed to do this will be the ones who emerge from this crisis stronger than before.”

To read additional key takeaways from the research, as well as further analysis, read the full report.

The post COVID-19 Triggers Changes in Payments Habits Amongst over Eight in Ten Consumers appeared first on PaymentsJournal.

Consumers need for immediate access to liquidity goes beyond crisis situations. Millions of households in the United States currently have a need for immediate access to money they don’t yet have. Whether their balance shortfall is due to the pandemic or an emergency expense, financial institutions can help account holders bridge the gap.

To learn how Fiserv is enabling financial institutions support their customers, PaymentsJournal sat down with Ken Patrick, General Manager of Deposit Liquidity Solutions at Fiserv and Brian Riley, Director of Credit Advisory Service at Mercator Advisory Group.

What are deposit liquidity solutions?

Deposit liquidity solutions provided by financial institutions are tied to the account holders’ deposit account, and are designed to meet their varied, yet occasional short-term liquidity needs. Unfortunately, financial institutions have not always been an option when account holders’ needed funds.  

“When you look at it from a consumer perspective, [there] is a wide gap out there between a deposit and when people can have access to those funds, and it’s ironic that we are at a point when a lot of the world is moving toward faster payments within depository institutions,” said Riley. “So [deposit liquidity] is really a positive product that’s out there to help customers.”

Because financial institutions lack a robust set of deposit liquidity solutions, many consumers are turning to places other than their primary financial institution to access short-term funds. However, notably, a Fiserv survey found that most consumers would rather be getting these funds from their primary financial institution.

“So why do they say that? I think it boils down to three key points: trust in their financial institution, convenience, and overall costs,” explained Patrick. “And I believe that as of now, a traditional financial institution has a competitive advantage in those areas. And my challenge to them is: are you acting on that advantage?”

A well-rounded deposit liquidity strategy can meet consumer cash flow demands…

Recognizing that there is no one-size-fits-all solution, financial institutions are taking a balanced approach with a portfolio of deposit liquidity solutions. A set of proactive solutions for customers who recognize they have a need, and proactively request access to liquidity. These include providing consumers accelerated access to deposited check funds, so they can avoid hold times and slow funds availability policies. Further, based on an account holder’s deposit account history, a financial institution can prequalify a customer for a certain amount of money that they can use and repay over a 90-day period.

“We also advocate reactive solutions for when someone inadvertently overspends their account, the solution steps in to cover them by assessing and managing risk at the account level to facilitate responsible overdraft limit-setting practices”.

“You need multiple arrows in the quiver to service customers. What we have seen is financial institutions have been good with providing these reactive overdraft services. However, there is an opportunity going forward to augment that revenue stream and diversify their liquidity strategy by adding proactive solutions,” said Patrick.

…But financial institutions have historically hesitated to address this demand

According to Patrick, three factors stand out as to why financial institutions have failed to implement a holistic deposit liquidity strategy.

“What’s been holding back progress is uncertainty and the extreme volatility in this space. There’s always been a path forward for these solutions, but it’s a highly regulated environment that gets in the way of people making large investments,” he explained.

Second is complexity, which comes into play during implementation. Building deposit liquidity solutions requires cooperation across multiple technology platforms, which in general are controlled by a multitude of vendors. “You need to be a visionary leader, engaging all key stakeholders and an excellent manager to get them implemented,” he added.

There is also the tendency to view deposit liquidity solutions as a nice-to-have rather than a must-have, a notion that Patrick strongly disagrees with.

Deposit liquidity solutions: What’s in it for banks and financial institutions?

Using the unique, real-time, qualification and risk-scoring methodology from Fiserv, financial institutions reduce cost of transaction to the customers and provide more flexible and affordable deposit liquidity solutions. Because of the enhanced access to funds, financial institutions benefit from the resulting spike in customer loyalty and are able to compete with non-FI providers. Simply put, the ability to offer consumers deposit liquidity services during times of need, within the trusted walls of their financial institution, generates loyalty to that FI.

Offering an anecdote, Patrick explained that a friend of his—a since-retired CEO of a large bank—received letters from account holders thanking him personally for the positive impact the bank’s deposit liquidity solutions had on their lives. The CEO later commented that it was not often that banking professionals at the executive level were told directly by customers that one of their products truly helped them in a moment of need.

But that’s not all. Deposit liquidity also offers what Riley referred to as having “downfield advantages for things like retention and new accounts. It can foster significant growth within a financial institution by having [deposit liquidity solutions] as a core offering.”

Added liquidity supports the demand for self-service solutions in a new world

We have seen a significant shift to digital and self-service options. Deposit liquidity solutions are able to meet the growing demand for such platforms.

“We say we should [have been] prepared for something like that [shift] years ago, we were not, we learned a lesson, and now is the time to take action so financial institution account holders have affordable liquidity options available from the provider they trust the most ” concluded Patrick.

The post Unpacking the Need for Financial Institutions to Offer Deposit-Based Liquidity Solutions appeared first on PaymentsJournal.

Don’t look for the counter and point-of-sale register to order and pay for a burrito—they aren’t any. At least if you happen to be in Taco Bell’s new digital-only restaurant in the Midtown Manhattan. The Times Square location will accept only mobile orders and also utilize self-service kiosks to select and pay for menu items.

Quick Service Restaurants (QSRs) are following the preferences of consumers that are trending toward cashless and self-service orders. Chipotle and Starbucks are also pursuing digital-only order and pay as well. QSRs can have smaller stores and higher throughput at high volume locations. Consumers will welcome the convenience and immediacy of not waiting in line as well.

The following excerpt from a Nation’s Restaurant News article reports more on the topic:

Taco Bell announced Tuesday that the Yum Brands company is opening a new Cantina — complete with digital-only ordering kiosks, digital pickup cubbies, and exclusive menu items — in New York City’s Times Square on April 14. Taco Bell previously hinted at the opening of the “completely digital yet in-person experience” in March when the company outlined its growth plans and focus on new store layout concepts.

This will be the latest location of Taco Bell’s Cantina — the Irvine, Calif.-based company’s funky offshoot with 20+ locations, which usually offers alcoholic beverages and custom menus — and will be the first with a completely digital-only experience. The colorful Times Square Cantina will swap out analog menu boards and ordering counters for 10 digital kiosks where customers can place their orders in-person and pick them up at the front of the restaurant.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Taco Bell Serves Up Only Digital Orders In Times Square appeared first on PaymentsJournal.

Partnership enables Bakkt App users to convert digital assets to buy, gift and store gift cards

PLEASANTON, Calif. AND ATLANTA – April 6, 2021 – As consumers and merchants accelerate their adoption of digital payment options, Blackhawk Network and Bakkt® have launched a partnership that enables users to easily purchase eGifts using digital assets, such as bitcoin, supported loyalty points and cash.  

Blackhawk’s industry-leading portfolio of eGift brands enables Bakkt users to buy, send and redeem digital gift cards for everyday shopping using the Bakkt App. Gift cards from over 60 retailers including DoorDash, PetSmart, and major retailers will be available for purchase and for use in peer-to-peer transfer in the Bakkt App. Bakkt’s network will drive engagement for retailers and enable consumers to unlock additional spending power from the digital assets they collectively hold.  

“Consumers appreciate the versatility of gift cards to convert digital assets into real spending power,” said Helena Mao, vice president, global strategy for payments at Blackhawk Network. “Blackhawk is excited to launch this partnership with Bakkt and deliver on our commitment to innovative payment solutions which accelerate the growth of our partners and meet the demands of our customers.”  

“Today, consumers do not realize or leverage the real value of digital assets, including gift cards, due to the fragmented state of personal finance tools and services,” said Bakkt’s CEO, Gavin Michael. “Bakkt aims to provide the app, marketplace and payments infrastructure to make all digital assets transactable, and our partnership with Blackhawk Network is a significant part of enabling that flexibility and utility for consumers.”

This partnership brings together two innovators with solutions for merchants and consumers in the digital marketplace. Known for being a pioneer in bringing together disparate payments and shopping experiences, Blackhawk is now a driving force innovating tomorrow’s digital experiences. The Bakkt App—which requires registration to use—enables consumers to unlock the value of digital assets, including bitcoin, supported loyalty points and gift cards, while giving merchants and loyalty program sponsors deeper customer engagement and a lower cost of payment acceptance. The gift card management functionality within the app allows users to aggregate physical and digital gift cards, check their balances, and buy, spend or send gift cards all from one place.  

The post As Digital Payments Continue to Surge, Blackhawk Network and Bakkt® Partner to Make it Easier to Purchase eGifts with Digital Assets appeared first on PaymentsJournal.

30 March 2021

Walgreens to offer new bank account with Mastercard debit card leveraging InComm Payments’ platform

InComm Payments to enhance Walgreens-branded gift card program

DEERFIELD, Ill. & ATLANTA, March 30, 2021 – Walgreens today announced an agreement with InComm Payments, a leading global payments technology company, to provide convenient and accessible financial services options for its customers. Together, the companies will launch a new bank account offering for its customers to be established at MetaBank* with a Mastercard debit card that will serve Walgreens shoppers both in-store and online and allow them to earn myWalgreens Cash rewards on all purchases as part of the new myWalgreens customer loyalty program launched in November 2020.

This agreement is part of Walgreens’ alternative profit strategy and recently announced broader initiative to launch new financial products and services that reinforce its ongoing commitment to offering differentiated services and benefits to its customers. The new banking solution will complement Walgreens’ plans to continue its health and well-being focus and enhance its loyalty program and customer personalization. The solution leverages InComm Payments’ modern digital banking-as-a-service platform. Walgreens shoppers will be able to find the product in-store or sign up directly online and then easily manage their everyday finances in a new easy-to-use mobile banking app. The bank account is expected to be available at nearly 9,000 Walgreens stores and online in the second half of 2021.

“Walgreens is committed to helping customers with their health and well-being needs, and we’re pleased to expand our financial services offerings to further enrich the experiences and ways we meet customers’ financial needs,” said John Standley, president, Walgreens. “We look forward to exploring and introducing even more customer-focused health and well-being payment initiatives in the near future, while creating new revenue streams.”

“We’re honored that Walgreens has selected InComm Payments’ financial services solutions to provide further benefits to its customers and communities,” said Stefan Happ, President of InComm Payments. “This new product offering will establish Walgreens as a destination for financial services, building on Walgreens’ legacy as a one-stop shop for pharmacy and convenience.”

In addition, Walgreens and InComm Payments plan to relaunch the Walgreens-branded gift card program. InComm Payments will oversee management of Walgreens’ existing physical gift card program, launch Walgreens’ digital gift cards, and enable digital purchase and redemption on walgreens.com. InComm Payments will also facilitate broader distribution of the Walgreens gift card across B2B, loyalty, rewards and e-commerce channels. The expansion further strengthens InComm Payments’ and Walgreens’ 12-year partnership while enhancing the Walgreens brand and customer experience in-store, online, and via mobile.

*Bank accounts will be demand deposit accounts established at, with debit cards issued by, MetaBank®, N.A., Member FDIC, pursuant to license by Mastercard International Incorporated.

About Walgreens

Walgreens (www.walgreens.com) is included in the Retail Pharmacy USA Division of Walgreens Boots Alliance, Inc. (Nasdaq: WBA), a global leader in retail and wholesale pharmacy. As America’s most loved pharmacy, health and beauty company, Walgreens purpose is to champion the health and wellbeing of every community in America. Operating more than 9,000 retail locations across America, Puerto Rico and the U.S. Virgin Islands, Walgreens is proud to be a neighborhood health destination serving approximately 8 million customers each day. Walgreens pharmacists play a critical role in the U.S. healthcare system by providing a wide range of pharmacy and healthcare services. To best meet the needs of customers and patients, Walgreens offers a true omnichannel experience, with platforms bringing together physical and digital, supported by the latest technology to deliver high-quality products and services in local communities nationwide.

About InComm Payments

InComm Payments is a global leader in innovative payments technology. Leveraging dynamic technology and proven expertise, InComm Payments delivers enhanced end-to-end payment platforms and emerging financial technology solutions that help businesses grow across a wide range of industries including retail, healthcare, tolling & transit, incentives, mobile payments and financial services. By enabling omnichannel connections to an ever-expanding consumer base in an increasingly digital ecosystem, InComm Payments creates seamless and valuable commerce experiences across the globe. With more than 27 years of experience, over 500,000 points of distribution, 386 global patents and a presence in more than 30 countries, InComm Payments leads the payments industry from its headquarters in Atlanta, Ga. Learn more at www.InCommPayments.com.

About MetaBank^®, N.A.

MetaBank^®, N.A., a national bank, is a subsidiary of Meta Financial Group, Inc.^® (Nasdaq: CASH), a South Dakota-based financial holding company. MetaBank, is a financial enablement company that works to increase financial availability, choice, and opportunity for all. MetaBank strives to remove barriers that traditional institutions put in the way of financial access, and promote economic mobility by providing responsible, secure, high quality financial products that contribute to individuals and communities at the core of the real economy. Additional information can be found by visiting www.metapay.com or www.metafinancialgroup.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210330005424/en/

The post Walgreens Announces Further Expansion of its Financial Services Business Strategy with InComm Payments appeared first on PaymentsJournal.

The Miami has focused its future on bitcoin through marketing and legislation that will allow Miami to accept bitcoin for tax payments. It appears to be working, in that the cryptocurrency exchange FTX will have naming rights for Miami’s N.B.A. arena if it passes the vote by county commissioners. 

Wyoming is also fighting for bitcoin investments so let the battle begin:

“Mayor Francis Suarez of Miami is selling his city as the world’s cryptocurrency capital. “We want to be on the next wave of innovation,” he told DealBook. To make that happen, Mr. Suarez said he was “refashioning” the city’s “fun in the sun” image. Thanks in part to the mayor’s marketing efforts, tech and finance titans have flocked to Miami during the pandemic.

Visions of Bitcoin City. Last month, the Republican mayor suggested Miami pay municipal workers and accept tax payments in Bitcoin, as well as invest city funds in the cryptocurrency. Local officials have agreed to study the proposals. The notion made him popular in the crypto community, advancing his rebranding campaign. His efforts have also won him campaign donations from tech investors, attracted money to cultivate Miami’s burgeoning tech sector and may soon pay a big county bill.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Keep Your Cash, Miami is Chasing Bitcoin appeared first on PaymentsJournal.

New co-branded credit card suite provides valuable rewards on everyday purchases including cash back on medical expenses, drug store purchases, travel and more

Wilmington, Del. (March 22, 2021) – Barclays US Consumer Bank announced today the launch of a new suite of co-branded credit cards for AARP members. The AARP® Essential Rewards Mastercard® from Barclays and the AARP® Travel Rewards Mastercard® from Barclays make it easy to earn cash back and travel rewards for everyday spend in categories that are important to AARP members related to health and wellness as well as travel, medical expenses, drug store purchases, gas, restaurants, hotel, airfare and more.

With nearly 38 million members, AARP states that its mission is to empower people to choose how they live as they age. The new suite of AARP Mastercard products from Barclays provides even more options for cardmembers to enjoy valuable rewards on every purchase.

The introduction of the new credit cards from Barclays also provides added value to the collection of AARP member benefits. With insights gained from in-depth research commissioned by Barclays on the interests and needs of self-identified AARP members, Barclays developed two card programs with a custom-tailored set of rewards and benefits that are designed to appeal to different segments of the expansive AARP membership base.

The AARP Essential Rewards Mastercard from Barclays is the ideal card for everyday use, while also providing benefits to support health and wellness offering:

•       3% cash back on gas and drug store purchases

•       2% cash back on medical expenses

From the road warrior to the international traveler, anyone passionate about travel will enjoy the AARP Travel Rewards Mastercard from Barclays with:

•       3% cash back on airfare, hotel stays and car rentals

•       2% cash back on restaurant purchases, including food delivery services

•       0% foreign transaction fee

Both cards receive

•       No annual fee

•       1% cash back rewards on all purchases

•       0% introductory APR for 15 months on balance transfers made within 45 days of account opening

•       Earn a $100 intro bonus with $500 spend within first 90 days

•       Easy rewards redemption for cash back, statement credits, gift cards, merchandise, and AARP memberships starting at $16 in rewards

•       No limit to the rewards that cardmembers can earn and rewards never expire as long as the account is open and in good standing

•       $0 Fraud Liability Protection

“AARP members told us they were looking for more in a credit card,” said John Larew, President and CEO of AARP Services (ASI). “We heard them talk about needs like wellness benefits, prescription purchases and caregiving needs. We knew we wanted to work with an issuer that would innovate with the 50+ consumer in mind, and Barclays has done that.”

With each new account and every eligible purchase, Barclays has committed to support AARP charitable affiliate, AARP Foundation, through a cause marketing program that will help fight social isolation across the United States. With a focus on building social connections, Essential Connections Powered by Barclays will support AARP Foundation’s efforts to equip low-income older adults with the tools they need to stay socially connected to their communities.

“Barclays’ support for AARP Foundation’s Essential Connections program to increase vulnerable older adults’ social connections to their communities will improve their physical and emotional health and well-being, not just during the pandemic but long after it ends,” said Lisa Marsh Ryerson, President, AARP Foundation.  “We must do all we can to help older adults, who have suffered greatly during COVID-19, to strengthen the social connections that are so essential to their ability to lead longer, healthier lives.”

Through Essential Connections Powered by Barclays, the company will donate $10 per new account opened and 1% of all eligible electronic and telecommunications purchases to AARP Foundation to support social connections work, up to $1 million annually.

“For nearly 20 years, Barclays has teamed-up with some of America’s best-known brands to offer co-branded credit cards and financial solutions that help people thrive,” said Nichelle Evans, Managing Director, Travel and Affinity Programs at Barclays. “With these new credit cards for AARP members from Barclays, we are offering a suite of products designed to help Americans live life to its fullest, offering valuable cash back and exciting travel reward benefits, while also helping those facing social isolation become active members of their community.”

Current AARP® Credit Card from Chase cardholders can continue to use their card as usual and will receive communications from Barclays later this summer with information about the conversion to the new AARP Mastercards from Barclays. Learn more at AARPcreditcard.com/Barclays.

To apply for the new cards or to learn more about the benefits listed above, visit AARPcreditcard.com.

About Barclays

Barclays US Consumer Bank is a leading co-branded credit card issuer and financial services partner in the United States that creates highly customized programs to drive customer loyalty and engagement for some of the country’s most successful travel, entertainment, retail and affinity institutions. The bank offers co-branded credit cards, small business credit cards, installment loans, online savings accounts, and CDs. For more information, please visit www.BarclaysUS.com.

Barclays is a British universal bank.  We are diversified by business, by different types of customer and client, and geography. Our businesses include consumer banking and payments operations around the world, as well as a top-tier, full service, global corporate and investment bank, all of which are supported by our service company which provides technology, operations and functional services across the Group. For further information about Barclays, please visit www.Barclays.com.

About AARP Services Inc.

AARP Services Inc., founded in 1999, is a wholly owned taxable subsidiary of AARP. AARP Services manages the provider relationships for and performs quality control oversight of the wide range of products and services that carry the AARP name and are made available by independent providers as benefits to AARP’s millions of members. The provider offers currently span health products, financial products, travel and leisure products, and life event services. Specific products include Medicare supplemental insurance; credit cards; auto, home, mobile home and motorcycle insurance; life insurance and annuities; member discounts on rental cars, cruises, vacation packages and lodging; special offers on technology and gifts; and pharmacy services. AARP Services also engages in new product development activities for AARP and provides certain consulting services to outside companies.

About Mastercard

Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all. www.mastercard.com

About AARP Foundation

AARP Foundation works to end senior poverty by helping vulnerable older adults build economic opportunity and social connections. As AARP’s charitable affiliate, we serve AARP members and nonmembers alike. Bolstered by vigorous legal advocacy, we spark bold, innovative solutions that foster resilience, strengthen communities and restore hope. To learn more, visit www.aarpfoundation.org or follow @AARPFoundation on social media.

About AARP

AARP is the nation’s largest nonprofit, nonpartisan organization dedicated to empowering people 50 and older to choose how they live as they age. With a nationwide presence and nearly 38 million members, AARP strengthens communities and advocates for what matters most to families: health security, financial stability and personal fulfillment. AARP also produces the nation’s largest circulation publications: AARP The Magazine and AARP Bulletin. To learn more, visit www.aarp.org, www.aarp.org/espanol or follow @AARP, @AARPenEspanol and @AARPadvocates, @AliadosAdelante on social media.

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The Federal Reserve Bank of Atlanta published an interesting working paper that analyzes data regarding person-to-person (P2P) payments.  The analysis is based upon data from the 2015 to 2019 Survey of Consumer Payment Choice (SCPC) and Diary of Consumer Payment Choice (DCPC), which is to say pre-pandemic. 

While the industry has been commenting on the enormous growth that P2P apps have recorded in the last few years, this report reminds us that those volumes are still a rather small portion of the overall P2P money exchange that includes a lot of cash and check, underscoring the on-going need to support these payment types and also the growth opportunity still available for digital solutions.  Here are a few interesting snippets from the report:

• Despite the availability of electronic options for p2p payments over the past two decades,

paper payment methods continue to dominate for p2p payments. From 2015 to 2019, the vast majority of U.S. consumers used paper methods when conducting p2p transactions. Approximately two-thirds of p2p transactions were settled with cash in 2019.

• Our empirical analysis uses mixed multinomial logit and machine learning methods to analyze

trends in the p2p market. The mixed logit find that among the three payment methods listed (cash, check, and electronic technologies), the most significant factor is the value of the transaction. We find that a $40 increase in the transaction value from $10 to $50 would, on average, result in a 20 percentage point decrease in the probability of using cash.

• … we find that approximately 93 percent of consumers rank electronic technologies second. Our results are consistent with consumers preferring cash for low-value p2p transactions and substituting towards electronic technologies for high-value transactions. Given the large percentage of consumers who rank electronic technologies second, our results are suggestive that p2p electronic technologies could be at their inflection point.

At the risk of sounding like a complete payments wonk, it would be fascinating to see a similar analysis with updated data from 2020.  

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Our Favorite Payment Type for P2P Transactions; Cash appeared first on PaymentsJournal.

Digital payments involves a lot more than just initiating the payment type, since things happened before that and some more things will happen after this action.  Some entity will eventually receive the payment and have to do something with it. 

In this posting at Cision PR Newswire, offered up by BlueSnap, a Massachusetts-based digital payments platform provider, the focus is on accepting various forms of digital payments using automated processes and accrued benefits thereof.  Reference is also made to a downloadable survey summary conducted during the past six months.

‘More than 80% of businesses say the future of their company is threatened by late payments, a result of outdated accounts receivable (AR) processes, according to a new report from global payment technology expert BlueSnap….The new research reveals that current AR practices are impacting cash flow, human resources and customer retention while also being a drain on senior executive time within B2B businesses….The BlueSnap Progressing Payments Report found that 93% of organizations experience negative consequences due to their current approaches to AR, with more than a third (37%) unable to forecast cash flow accurately….On average more than a quarter (27%) of customers exceed their payment terms, resulting in 30% of an organization’s monthly revenue being tied up in AR. This is such a major issue that 81% of businesses agree that the future of their business is threatened by a lack of cash flow, brought on by overdue invoices.’

We recently released member research on the benefits of digitizing cash cycle systems and operations. There is the obvious cost efficiency gained by eliminating manual effort and all the errors that accompany such processes.  However, the real gains are in better working capital control, improved transactional speed across the supply chain, and resulting cash flow improvements. 

This has been especially valuable during the pandemic but is a regular feature at the best-run companies, especially those that take an end-to-end approach to reviewing financial operations across the organization.  Survey results might also be interesting to some readers so worth taking a look.

Respondents recognized the need for change – 95% thought they should be investing more in AR automation and payment technologies, with predicted benefits including improved cash flow (32%), better forecasting and planning (30%), and reducing late invoices (27%).…However, they also saw the opportunity for increased growth – 28% believe it would give their organization the ability to invest and grow, while 25% linked AR automation to winning more business from existing customers. … “As more and more businesses digitize their entire organization, and the lines blur between markets, those companies that can react quickest will be the ones that succeed,” explained Dangelmaier. “That means automating as many processes as possible. This is the only way they can cut the opportunity for error, improve overall accuracy and access the data they need much faster. In doing so, they can understand how much cash they actually have and see where the opportunities for investment and growth lie.” ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post 80% of B2B Businesses Move to Adopt Digital Payments for Better Efficiency and Increased Cash Flow According to New Study by Bluesnap appeared first on PaymentsJournal.

Announces an integration that will enable businesses to make Direct Tax payments as well using Visa commercial cards by end of March 2021.

Mumbai, March 9, 2021: PayMate, the market leader in B2B payments, today announced that its full-stack payment automation platform has processed over $130 million GST payments monthly during the pandemic year through bank-issued Visa commercial cards. These transactions are projected to grow over $250 million being processed every month in the upcoming fiscal year ending March 2022. 

PayMate’s GST payment automation feature allows businesses to make bulk payments towards challans generated on the GST portal across multiple GSTINs. The challans are fetched onto the PayMate platform in a single step, followed by a digital approval process on the platform; thereby eliminating manual efforts and saving considerable time. 

During the pandemic, over 80% of businesses have faced difficulty in managing their cashflows , as they were delayed and unpredictable; in turn making it difficult for them to make their statutory payments such as GST on time. In such a scenario, the availability of funds on credit via a commercial card proved to be a boon. 

Additionally, by end of March 2021; businesses will be able to make their Direct Tax payments such as TDS, Advance Tax, Self-Assessment Tax among others on the PayMate platform. To do so, businesses have to select the challans, enter the amount to be paid and proceed to pay in bulk or adhoc. Moreover, large enterprises can choose to make all their Direct Tax payments using a single login for their subsidiary companies instead of multiple logins; making this enablement one of its kind.

Tax payments can also be made along with other supplier payables in bulk using commercial credit cards, thereby giving a single-window with automated payment and reconciliation, detailed reports, and clear visibility into cash-flows. Further, using the PayMate platform to the best of its abilities eliminates the need for using multiple software tools and traditional book-keeping records; thereby making businesses more efficient, and gain greater control and transparency over their finances. 

Speaking on this announcement, Ajay Adiseshann, Founder & CEO, PayMate says, “Usually, statutory payments such as GST and Direct Taxes are paid using EFT. However, the exceptional capability of enabling businesses to use commercial cards for these payments has proved to be extremely fruitful as we are providing additional avenues to businesses for using their commercial credit cards on our platform. And we are sure that this will attract more small, medium, and large businesses to adopt PayMate.”

Large conglomerates such as Marico and Redington India have been using the PayMate platform extensively for GST payments. Pawan Agrawal, CFO, Marico Limited says, “In addition to our vendor payments, we have now started making GST payment via PayMate’s automated and API-based GST payment feature which comes with Bank issued VISA commercial card enablement. It has been a seamless experience for our team to execute pan-India GST transactions in a hassle-free and timely manner”.

Varun Varada, Treasury Head, Redington India further adds, “PayMate has eased up the process of GST approvals and payment for all REDIL branches located across India (28 states) by integrating their portal with GST website, thereby with single click we were able to approve all the GST payments of 28 states in single shot. Time and energy were saved.”

PayMate enhanced its platform during the COVID-19 year and introduced a unique invoice discounting marketplace that allows suppliers to get working capital funds simply by offering a discount on unpaid invoices. This new addition has already won the Business Today – Money Today Award 2021 for ‘Best Fintech in Payments’, making it our second successive win. Sharing his thoughts on the win, Ajay further adds, “We are thrilled to have won the award for the second consecutive time and are determined to continue enhancing our holistic, full-stack platform to large, medium, and small businesses for end-to-end payables and receivables automation. We’ve already geared up to double our overall customer count from the existing 58,000 and achieve a run rate of USD 10-15B on gross processing volumes on the card rail by March 2022.”

PayMate is also gearing up to offer its B2B payments platform into Central Europe, the Middle East, and Africa (CEMEA) region in partnership with Visa, starting with the GCC region. The platform is already live in the UAE and is in process of going live soon in the Kingdom of Saudi Arabia and targeted to go live in Oman by end of 2021. 

PayMate works closely with Visa and leading local banks to enable businesses with digital payments, faster access to credit, and more efficient ways to manage cash-flow. 

The post PayMate Automates and Achieves an Annualized Run-Rate of $1.3 Billion in GST Payments through Its B2B Payments Platform appeared first on PaymentsJournal.

In a recent announcement, FIS has released it’s findings highlighting the growth in digital wallet vs cash for at the point of sale.

E-commerce spending rose at the fastest rate in five years in 2020, while cash usage for in-store purchases dropped sharply, as global customers made increasing use of mobile wallets and other alternative payment methods during the pandemic in 2020, according to a new report released today by financial technology leader FIS®

Worldpay’s annual Global Payments Study from FIS explores existing and potential developments in payments across 41 countries. Findings from the 2021 report show that during the global health crisis, lockdowns, shelter-in-place orders and personal safety measures accelerated the shift towards digital payment methods in all areas of consumer spending.

Some of the highlights from the report from an In-store payment trends include:

· Globally, use of mobile wallets exceeded cash for the first time for in-store payments. Cash usage dropped 10 percentage points in 2020 to account for just one-fifth of all face-to-face payments worldwide.

· Use of cash for in-store payments fell by half or more in Canada, the U.K., France, Norway, Sweden, and Australia.

· Cash payments in the U.S. made up $1 trillion of in store payments in 2020, down from $1.4 trillion in 2019.

· The Asia-Pacific region continues to lead in the use of mobile wallets at point-of-sale, with about 40 percent of in-store payments in that region now being done through contactless payments. However, use of mobile wallets accelerated across all regions in 2020 and now accounts for about 10 percent of payment methods in North America, 8 percent in Middle-East-Africa, 7 percent in Europe, and 6 percent in Latin America.

The report projects that cash will account for less than 10 percent of in-store payments in the U.S. by 2024 and only 13 percent of worldwide payments. The report projects digital wallet payments to account for more than a third (33 percent) of all in-store payments over that same period (16 percent in the U.S.).

From an ecommerce trends perspective the report highlights the following trends:

· Total eCommerce spending grew globally 19 percent last year to $4.6 trillion in value. That growth was the highest in the past five years and represented two-to-three years of typical acceleration in a single year. Analysis shows global eCommerce spending could grow to $7.3 trillion by 2024.

· Globally, usage of digital wallet-based transactions in 2020 grew 7 percent. By 2024, the report projects that digital wallets will account for more than half of all eCommerce payments worldwide.

· The reports shows that the adoption of buy-now-pay-later transaction methods continues to rise rapidly in Europe and North America and is expected to double by 2024.

· Conversely, usage of traditional payment methods such as cards and cash-on-delivery are quickly losing share and expected to account for less than 40 percent of eCommerce transaction payment methods by 2024.

Jim Johnson, Head of Merchant Solutions at FIS, said, “Our new research shows that the world is entering a new phase of adopting digital payment methods.” A cashless future was brought closer to the horizon by the global pandemic. The implications are profound for merchants. In order to meet the diverse preferences of the rapidly changing habits of consumers, they must build technology-centered strategies and do so in a way that drives financial inclusion for underserved communities around the world.

“The growth opportunities will be huge and potentially game-changing for those companies that are savvy enough to embrace smarter commerce and invest.”

The post FIS Shows the Growth of Digital Wallet Use In Recent Report appeared first on PaymentsJournal.

Expanding partner network highlights distributor benefits of Bitcoin Depot 

ATLANTA – Bitcoin Depot, the largest and fastest growing Bitcoin ATM (BTM) operator, announced today that it has added 50 Independent Sales Organizations (ISOs) and independent ATM deployers (IADs) to its partner channel, further solidifying its dominance of the BTM market. The company now operates over 1,700 BTMs in the U.S. and Canada. 

By partnering with Bitcoin Depot, ATM companies can simplify deployment of BTMs at multiple locations, at no cost to them and at scale. While deployment of traditional ATMs continues to decline due to an over saturation of terminals, BTMs are filling the gap as a profitable alternative. As Bitcoin adoption surges, these trends will continue to grow. In 2020 alone, over 7,060 BTMs were deployed worldwide, compared to 2,263 in 2019. Bitcoin Depot estimates that in the next ten years there will be as many BTMs as there are traditional ATMs today.  

“For ATM companies, adding Bitcoin kiosks to their portfolio is a win-win. It allows them to supplement traditional ATM placements with BTMs, essentially adding a more viable revenue stream to the mix,” says Mark Smith, Business Development Manager for Bitcoin Depot. “Gas station and convenience store owners also have an opportunity to drive more of their customers into the store, as well as obtain greater wallet share.  For example, customers will stop in to get cash at the ATM, then deposit some of the money into the bitcoin kiosk and spend the rest in-store.  

Bitcoin Depot’s Partners benefit from:  

• Leading partner program in the industry with best-in-class BTM experience 
• Earnings up to $25,000 per BTM placement through its extensive global network 
• 100% turn-key experience, delivering end-to-end management of the BTM 
• Uncapped growth potential, no bitcoin-expertise and zero capital investment  
• Increased foot traffic and greater business exposure 

Become a Bitcoin Depot Partner today: https://bitcoindepot.com/host/ 

The post Bitcoin Depot® Signs On 50 ISOs and IADs appeared first on PaymentsJournal.

Deliver drivers provide fast service for restaurant meals, so it’s only fair to give them fast pay. Now, Canada’s big food delivery player, SkipTheDishes, steps to the table. They’re partnering with Stripe’s Instant Payouts and Visa Direct to make faster payments happen.

Gig economy workers as well as the QSR (Quick Service Restaurant) vertical have become sweet spots for real-time payouts. Companies find lower staff turnover while workers get better access to their hard-earned cash.

The following excerpt from a Business Insider article reports more on the topic:

It is more important than ever for workers in the gig economy to have fast and easy access to their wages. In a recent Visa survey of gig workers, 70% said they would work additional shifts for quick money when needed if they could be paid in real-time. Today, Visa announced a new offering with SkipTheDishes, Canada’s most popular food delivery network, to enable real-time funds disbursement to their independently-contracted couriers across Canada.

The new feature, called SkipTheDishes Fast Cash, is facilitated by Stripe’s Instant Payouts product, made available through Stripe’s financial institution partner and powered by Visa Direct, Visa’s real-time push payments platform, and is now live and available to tens of thousands of SkipTheDishes couriers across Canada.

“Visa Direct’s real-time funds disbursement capability allows funds to be available to individuals in minutes – including nights, weekends, and holidays – providing flexibility and choice for gig workers to access their earnings,” said Brian Weiner, Vice President & Head of Product, Visa Canada. “Faster access to money is critical during this time, and Visa Direct is uniquely positioned to help companies like SkipTheDishes provide this unique offering.”

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Stripe and Visa Dish Payments To Canadian Delivery Drivers appeared first on PaymentsJournal.

Solution allows guests to exchange cash for network-branded gift cards to use at venue concession stands and retail shops

ATLANTA and BUFFALO, N.Y. –  January 26, 2021 – InComm Payments, a leading global payments technology company, today announced it has partnered with Delaware North, a global hospitality company, to implement its cashless payment solution at select sports venues where Delaware North operates food and retail services.

The InComm Payments solution allows fans to exchange cash for a network-branded gift card at a venue’s guest services office and other locations so they can use the card to purchase food, merchandise and other goods. The gift cards, which can feature the home team’s logo, have no purchase fees and are network-branded so they can be used anywhere the payment network is accepted, both inside the venue and outside of it.

Delaware North is among the first sports hospitality companies to work with its clients to implement the InComm Payments solution. Through its Sport Service division, Delaware North operates in more than 25 major professional sports venues in the United States.

“We know our clients are looking for solutions to be able to go cashless while ensuring their patrons have an easy way to pay for food and merchandise,” said James Clayton, who oversees payment solutions for Delaware North. “InComm Payments’ technology makes the cashless transition smooth for everyone, including our cash-preferred customers – particularly because the gift cards are open-loop. That means guests can simply take the card home and use any remaining funds however they please.”

At stadiums, fans will be able to load between $5 and $500 on the cards, stadiums will have conversion stations available at various locations on gamedays and possibly on non-gamedays.

“We are excited that our recently launched solution will get traction with this partnership with Delaware North as stadiums and venues reopen to fans,” said Adam Brault, Senior Vice President, Financial Services, at InComm Payments. “A large portion of the consumer base is cash-preferred, and Delaware North was quick to adopt this convenient solution that will result in a seamless game day experience for these consumers.”

The post Delaware North Implementing InComm Payments Cashless Solution at Select Sports Venues appeared first on PaymentsJournal.

In 2015, Martin Shkreli rocketed the price of a lifesaving AIDS drug from $13.50 per pill to $750 when running Turing Pharmaceuticals. Two years later, he was found guilty on two counts of securities fraud and a single count of conspiracy.

America has been littered over the years with ‘conmen’ obtaining ‘dirty money.’ In fact, the ‘conman’ starting with Charles Ponzi to Bernard Madoff and beyond are the stories that created the traditional definition of ‘dirty money.’ It is defined by The Cambridge Dictionary as ‘money that someone gets in an unfair, illegal, or dishonest way.’ But that definition is being redefined by the Covid-19 pandemic. Today, ‘dirty money’ has been defined as unsanitary–literally.

It reminds me of when I was a little kid. My parents would have me hold some change to keep me occupied. I would put a quarter in my mouth. My parents would exclaim: “Vincent, take that out of your mouth, money is dirty!” We are in a world where touching money is not only dirty, but dangerous–and unhygienic. Also, when I grew up, my parents preferred to pay in cash. And while cash may still be king on a company balance sheet, it has been relegated to a last-ditch payment method when we make a personal transaction today. Contactless payments are now front and center.

And the shift has been swift. In the US, the use of contactless cards has gone up about 150% per month since March 2020–the start of the pandemic. Before March, less than 10% of Americans used their contactless feature. Now it is well above 50%. A July survey by the Federal Reserve Bank of San Francisco found that 28% of respondents said they are avoiding using cash and using card payments instead due to the pandemic.

Past our shores, cash is on the decline in every country around the world. In March, the World Health Organization advised the public to use contactless technology where possible, to prevent the spread of the disease. Many retailers have stopped accepting cash altogether, instead encouraging customers to use contactless card payments or mobile apps to pay in a touch-free, more hygienic way. Given concerns that the virus can live on dollar bills for around 48 hours, and ATMs potentially touched by hundreds of hands without a deep clean in between, many of us have instead embraced touch-free payments.

As we move to touchless payments, the elephant in the room is not payment methods–it is health.  The European Banking Authority (EBA) and the World Health Organization (WHO) advises not using cash to better stem the spread of the virus. The WHO goes so far as to recommend ‘holding a card above a payment terminal’–or contactless payments –or using a smartphone payment app.

As we move towards a more digital-focused society, government bodies are increasingly worried about the effects on vulnerable members of society. In particular, the elderly, those who remain unbanked, and those without smartphones are still reliant on cash and could be left excluded in a digital-first payment ecosystem. In a post-COVID world, these same groups are those who could be most exposed to further viruses from cash circulation. So, with touch-free payments important to improving hygiene, there is an important question to consider: could digital exclusion be a barrier to a COVID-free society?

In the immediate future, the use of biometrics to verify payments is a way to balance both security and hygiene. With a fingerprint biometric smart card, consumers can scan their fingerprint on their own payment card to secure a transaction above the contactless payment limit. This process secures the card to the owner and ensures they don’t need to touch shared pin pads during a purchase. Therefore, consumers can shop feeling assured that their money, and their personal health will be protected, regardless of how much they are spending.

By embracing fingerprint biometric payment cards, banks and payment providers will not only improve consumer security and hygiene, but also make the process of purchasing goods using their contactless card quicker and easier. Ultimately this can help cut the transaction time and, in today’s difficult retail environment, help to reduce queues at the checkout.

These changes have even led many analysts to suggest this large-scale shift to contactless card payments could mean the end for cash in the long term, as more consumers embrace contactless to increase hygiene during the payment process, and beyond.

So, the new definition of dirty money is actually what I learned as a little kid.  When my parents said: “Vincent, take that out of your mouth, money is dirty!”  How little did I know how right my parents were.

The post Dirty Money Redefined appeared first on PaymentsJournal.

Amidst all of the doom and gloom predictions that the COVID-19 pandemic has brought us there is a glimmer of hope in some recent data. A recent announcement from Brian Moynihan, CEO of Bank of America, reports that consumer spending on credit and debit cards is actually up in 2020 compared with 2019.

Perhaps not surprisingly, this BofA announcement appears to be in line with the most recently available retail spend data from the U.S. Census. While the Census data takes all types of payments into account (credit, debit, cash, etc.) it does show a similar trend.

As an article in Business Insider points out about the Moynihan announcement:

The issuer anticipated major pandemic losses, but factors like shifting consumer spending habits and stimulus payments helped it avoid substantial losses. In preparation for adverse financial consequences to come as a result of the crisis, the issuer doubled its overall YTD allowance for credit losses in Q2.

Credit and debit card spending volume dipped 11.3% year over year (YoY) in the period, with credit card spending seeing the bigger decline. However, the introduction of government stimulus payments and extended unemployment benefits helped boost volume late in Q2 going into Q3, which saw combined credit and debit card spending grow 2.5% YoY.

Moynihan noted that although spending in key sectors like travel and entertainment remains low—with restaurant dining expenditure down 25% annually, for example—higher spending in other categories, like home improvement, has made up for these declines.

The article also mentions that Moynihan and JPM’s Jamie Dimon are also proponents of another stimulus package. Given the results generated, in part, the first stimulus package, I’m not all that surprised. The infusion of some much cash into the system not only helped the consumers it also proved beneficial to the banks as many consumers chose to spend their stimulus money with a credit or debit card.

Right now the second stimulus package is slated to be about $908 billion assuming the folks on Capitol Hill can come to a consensus. Couple that with increasing consumer confidence brought about by the release of the Coronavirus vaccine. These two factors may help open up some industries, like travel and restaurants, which have been clobbered by the pandemic.

More than ever I think it is critical to keep a close watch on the consumer confidence numbers and the potential for positive momentum in the U.S. economy.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Cautious Optimism for the U.S. Economy? appeared first on PaymentsJournal.

Over the years, consumers have become accustomed to getting what they want when they want it, usually by doing no more than clicking a few buttons. They can watch new shows by the season, get same day shipping from marketplaces like Amazon, and order groceries online for immediate delivery. 

So it makes sense that this desire for immediacy extends past commodities. Employers are beginning to implement a system referred to as on-demand pay, which is exactly as it sounds: pay day, any day. On-demand pay gives employees access to wages as they are earned.

The Consumer Financial Protection Bureau (CFPB) recently released an advisory opinion titled “Truth in Lending (Regulation Z); Earned Wage Access Programs,” which explains the nuances of earned wage access (EWA) and the complications of regulatory uncertainty.

To help simplify the document and discuss on-demand pay and early access to wages, PaymentsJournal sat down with Jason Lee, CEO of DailyPay.  

The CFPB is defining boundaries

We know what on-demand pay is, but how do employees access it? 

Well, it is typically done through a third-party provider, such as DailyPay. This third-party is the one distributing net pay, so the employer doesn’t have to go through the process of running the actual payroll. “That’s really the value that [DailyPay is] adding,” remarked Lee.

But when money goes out, that money must be returned. There are two models that highlight how this return happens:

• The employee doesn’t pay anything back, and a settlement happens behind-the-scenes with the use of advanced technology. This is the preferred method of DailyPay.
• Repayment from the employee. This is like a direct payback through an employee-authorized  payroll deduction or withholding. 

So what’s the CFPB got to do with this? “The CFPB opinion really clarified that that second set of models—or that second set of earned wage access, if structured in accordance with a number of different provisions, including no fees associated with it—[is] not a lending transaction,” said Lee.

The analysis from the CFPB determined that if the employee is repaying the vendor from which they are receiving the funds, even if it’s through a payroll deduction, the analysis from the CFPB determined that, if there are no fees or low fees associated with the transaction, and so long as several other criteria are met, then it does not qualify as a credit or a borrowing transaction.

Seven factors for assessing EWA

In the advisory opinion, the CFPB created a qualifying rubric outlining seven elements on which it is basing its analysis of early access to wages. The terms require employer integration, verification using employer-based data, payroll integration, no employee account debiting, no tips, and other things direct to consumer (D2C) players can never do.

“The methodology of payback in wage deduction models is through a payroll deduction directed or authenticated by the actual employee,” remarked Lee. While models dependant on wage deductions  look like borrowing transactions (i.e. the employee is directing a repayment of something), so long as there are no fees, the employer verifies the employee’s data, the employee can select the destination account for on-demand pay, and the employee’s account is not debited,the CFPB would not consider the transaction a credit or borrowing transaction.

But generally, the CFPB lays out a framework that is generally supportive of employer-integrated on-demand pay.  Fundamentally, the workers have already earned the wages they are gaining access to, and this is the primary differentiator between on-demand pay and tapping into a line of credit.

Fees associated with early access to wages earned

The CFPB opinion piece talks about fees quite a bit. But what exactly do they mean by fees?

“I think it’s similar to a transaction processing fee,” explained Lee. As with an ATM withdrawal, earned wages is a withdrawal of funds that already exist, but to process those funds, there are associated fees that need to be covered. So in order to convert that money into usable funds, employees may also have to pay a nominal processing fee. 

And most of us would agree that a few dollars for the withdrawal of cash is reasonable. But I think [the CFPB has] been intentionally vague,” concluded Lee. “And I would suspect that the ambiguity was intentional, to ultimately be clarified through future action or rulemaking.”

What are DailyPay’s thoughts on the opinion?

DailyPay created the on-demand payment industry, and it set the ground work for the practices championed in the opinion’s framework.. 

However, “our model is not really covered by this [opinion] in the sense that we’ve never required repayment from the employee,” clarified Lee. And DailyPay has never considered itself to be a credit instrument because a credit instrument, by definition, requires repayment. Therefore, there has never been any ambiguity on the services being offered.

“But I think as a general matter, it’s a good thing,” insisted Lee. “I think this clarifies that transactions, like the ones that are being described by this set of heuristics, are ‘not credit.’”

The post On-Demand Pay: What Does the CFPB Have to Say About It? appeared first on PaymentsJournal.

Nearly three-fourths (72%) of Americans plan to continue using cash in the COVID-19 era and beyond; two in five (43%) would prefer to perform banking activities at an ATM

For today’s consumer, ATM use largely focuses on accessing cash, and that access is still important in the COVID-19 era, according to new MetaBank^® research. There’s also an opportunity to reimagine a key industry mainstay — the ATM — as a technologically advanced, interactive teller machine focused on self-service.

These are among the key insights identified in MetaBank’s research on the ATM industry landscape, which was announced today. MetaBank, N.A. (“Meta”), is a national bank, a subsidiary of Meta Financial Group, Inc.^® (Nasdaq: CASH) and a leader in providing innovative financial solutions to consumers and businesses throughout the country.

“The ways consumers want and need to access cash and other banking services are evolving, in part due to the COVID-19 pandemic,” said Sheree Thornsberry, Meta EVP and Head of Payments. “This presents a tremendous opportunity for financial institutions and Independent ATM Deployers to reimagine the way they work together and the future of the industry itself, as our research showed consumers are increasingly interested in options that allow for self-service.”

In August 2020, Meta surveyed more than 1,200 U.S. adults to examine their post-pandemic sentiments about ATM and cash usage. Then, Meta paired that with a pre-pandemic analysis of the ATM industry aggregated by Mastercard from a number of expert sources, including Federal Reserve System, ATM Industry Association, Bankers Equipment Service, RBR Global, Star Financial Services, Transaction Network Services, Wall Street Journal and more. Key trends identified from this research include:

• Cash is still being used, even in a COVID-19 world. From March to June 2020, the peak of stay-at-home orders in many places nationwide, more than half of Americans (55%) withdrew cash from an ATM. In fact, Americans withdrew cash during this time a lot — 44% withdrew cash more than once, and 7% even did so more than ten times. Why? For everything from day-to-day purchases (11%) and small expenses (11%) to peer-to-peer transactions (8%). Further, nearly one in five (19%) value having cash more now than they did before the pandemic, and 59% say it has not changed their position on the use of cash.

• ATMs are primarily used to obtain cash — and there’s an opportunity to leverage this industry mainstay for more.  Despite advancements that have given ATMs more functionality than ever, 60% only use them for the purpose of cash withdrawals. But, because of high operational costs, banks are shuttering branches at a record rate. This will likely be accelerated by COVID-19, as 24% say they’re less likely to visit a bank branch due to the pandemic.¹ In a post-COVID world, self service will be key. ATMs can help to fill this need, and the Meta research showed consumers have an appetite for this shift — 43% of Americans are interested in completing banking activities like cashing checks, making deposits and withdrawals or video conferencing with a remote teller at an ATM instead of having to physically go into a bank branch.

• Rising costs will also trigger an increase in Independent ATM Deployer (“IAD”)-managed ATMs. Over half of all ATMs are currently deployed by Independent ATM Deployers (“IADs”). In the coming years, this percentage is expected to increase. The operational costs of managing a fleet of ATMs have been and continue to be very high, causing financial institutions to outsource a number of their ATM operations to IADs. Some financial institutions are selling, outsourcing ATM operations or creating branding agreements with IADs. Branding agreements allow banks to maintain their presence and customer loyalty without the costs associated with growing a fleet of ATMs.

Through its ATM sponsorship services, Meta supports hundreds of thousands of ATMs nationwide with access to national and regional debit networks. Meta balances innovation and oversight, fostering collaborative partnerships with industry leading IADs, processors and networks, and has the largest ATM footprint in the country.

The post MetaBank® Study Reveals Opportunity to Reimagine ATMs appeared first on PaymentsJournal.

Revolut, the fastest-growing technology company in the UK, and international online advertising platform, Adzooma, today announced that they will be providing Revolut Business customers with an advertising cashback incentive thanks to their exclusive partnership.   

This is the first marketing specific incentive Revolut Business has launched in conjunction with a trusted partner, and the first and only offering of its kind for Google, Microsoft or Facebook Ads.

If all Adzooma users participate in the cashback offer, they will collectively save an incredible £2,265,000 a year in ad spend alone. In addition to that, all users who sign up to Revolut Business through Adzooma will be able to access all the regular perks that a Revolut Business account offers, including free international payments, smart business cards, accounting integrations and much more.

Adzooma and Revolut’s successful partnership began in April this year, bringing collaborative benefits to all users, and enabling customers to generate a more effective online strategy for their business through the Adzooma platform.

Antonio Lopes, Growth Partnerships Manager Revolut Business said: “In our pursuit to help businesses manage their finances safely online, we’re proud that business owners trust Revolut Business with their online spend, especially with advertising. Together with Adzooma, we thought of leveraging the security, transparency and control of our cards with the smartest advertising platform in the UK to create an increasingly beneficial value proposition for online businesses across the globe. 

“We’re super excited to be launching this partnership with Adzooma – building upon their already stellar product and helping businesses further optimise how they go about managing their ad spend.”

Adzooma’s software is a proprietary solution that provides one-click optimisations, custom automation and white-label reporting in one simple interface, eliminating the need for additional resource time and providing real-time data on all marketing activity.

David Sharpe, Director and co-founder of Adzooma said: “As a company, we are continually looking for ways to help support businesses to save time and money.

“Given the amount of online advertising spend we see generated via our online platform, we know that even a small cashback percentage can allow for huge savings. Hence through the power of our Revolut Business partnership, we spotted an opportunity to bring this benefit and saving to all types of businesses. 

“Whilst there are many reward schemes available on the market today, no other offering exists that enables customers to upscale their online ad spend for free in order to propel their business forward.”

For users to benefit, the process is simple. Users just need to open a Revolut Business account by visiting the Adzooma website, connect all Facebook, Microsoft and Google accounts to Adzooma, and then enjoy the ad spend cashback rewards from each account. The more businesses utilise their Revolut Business corporate card, the more rewards they will be able to unlock.

Robert Wass, Director and co-founder of Adzooma also added: “We were tremendously proud to announce our partnership with Revolut Business this year and are delighted to bring to market this industry first together. 

“Revolut are a multi-billion-dollar company with over 13 million users, who have become a global and well-respected online brand. Hence, we’re delighted to be a partner of theirs and look forward to leveraging our combined expertise in order to share even more fabulous benefits with our users.

“This partnership signifies the scale of our services and accessibility, and this latest offering is the easiest way for businesses to reduce their online ad spend costs.”

Adzooma’s association with Revolut reflects the huge popularity and adoption Adzooma’s software has gained across the UK, and internationally in recent years.

*Deal is valid for Revolut Business eligible geo locations.

The post Adzooma and Revolut Business Launch Industry First Marketing Cashback Incentive appeared first on PaymentsJournal.

ATMs provide a convenient way to access cash when needed, and cash is still the preferred payment method for many transactions. However, there are some disadvantages to ATMs and cash use. First, ATMs can be expensive to use, particularly if you withdraw a large amount of cash. Second, cash can be easily lost or stolen, and it can be difficult to replace. Finally, ATMs and cash are not always available when you need them.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2021 Outlook: U.S. Debit Cards and Alternative Products

ATMs and Cash Use Took Some Interesting Twists in 2020:

• Cash withdrawals had been trending down and continued to do so in 2020, but not as precipitously as some predicted. 
• Some consumers were concerned about cash & COVID-19 and avoided it. Others gravitated toward cash as a safe haven in a crisis. 
• The ATM came to the rescue as branches closed or operated by appointment only.
• Purely transactional activities moved to ATMs, giving FIs reason to expedite digital transformation plans for their ATM fleets.
• P2P app use skyrocketed as more consumers looked for cash-free and remote options.
• Existing users found new reasons to use P2P apps, including reimbursing others for shared shopping trips and sending funds to friends and family in need.

About Report

The events following the onset of the global pandemic helped to crystalize consumer attitudes regarding payment habits.

The progression of digital payments, contactless options and the momentum achieved by faster and real-time payments shone a light on the path these payment types would take as they leapfrogged in development and use by two to three years in the span of just a few months. The pandemic gave users a reason, beyond technology for the sake of technology, to adopt these payments. 

The post ATMs and Cash Use Took Some Interesting Twists in 2020: appeared first on PaymentsJournal.

InComm Payments, a leading global payments technology company, announced today the launch of a new solution empowering sporting and entertainment venues to provide attendees with a cashless payments experience. The solution allows consumers to exchange cash for an open-loop gift card at the venue’s guest services office, enabling the cardholder to purchase food, merchandise and other goods from vendors in the event space using funds loaded to the card. 

The Jacksonville Jaguars of the National Football League are adopting the system for use at their home stadium of TIAA Bank Field in Jacksonville, Fla.

“The transition to cashless payments ecosystems has been steadily gaining traction within venues nationwide, but finding inclusive payment alternatives is crucial as major sporting events begin welcoming back their fans,” said Adam Brault, Senior Vice President, Financial Services, at InComm Payments. “It is important to remember that a sizable consumer demographic still prefers to use cash for their everyday purchases, so venues need to accommodate these attendees in a convenient way. The solution has been well received by attendees at TIAA Bank Field, and we look forward to rolling out our cashless solution to more venues across the country in the weeks to come.”

The gift cards that cash-preferred consumers will receive at participating venues can be branded with the home team’s logo and will have no purchase fees. The cards will be open-loop gift cards, which can be used anywhere the network is accepted in the U.S., both inside the event venue and outside of it.

“We want to ensure consumers visiting TIAA Bank Field have an easy way to pay for food and merchandise, and they enjoy a memorable game day experience,” said Ryan Prep, senior director of facility operations for the Jacksonville Jaguars. “InComm Payments’ technology makes the cashless transition smooth for everyone. Guests can simply take the card home and use it in their next visit to a Jaguars game or wherever the card’s network is accepted.”

The cashless payments solution is currently active within TIAA Bank Field. For more information on the venue, visit www.tiaabankfield.com.

For more information on the new cashless payments solution for sporting and entertainment venues, visit www.InCommPayments.com.

The post InComm Payments Launches Cashless Payment Solution for Sports Venues appeared first on PaymentsJournal.

We just released a member Viewpoint that summarizes the recently completed AFP annual event, which like all other industry trade gatherings in 2020 was delivered via a virtual event experience. In that event overview, we discuss some of the key trends in the payments track sessions, of which there were a couple of dozen.

Interestingly enough about 20% of the payments track sessions had something to do with receivables, which has traditionally been the somewhat neglected segment of cash cycle operations.This started changing in the past couple of years and now receivables technology is getting as much if not more focused attention as other parts of financial operations. 

This referenced piece is found in Cision PR Newswire and was provided through the receivables automation fintech Billtrust, which is in process of going public via a stock deal with South Mountain Merger Corp. It talks to one of the key developments in the AR space, which is the increasing use of machine learning (generally included under the AI umbrella technologies).

‘Billtrust, the B2B accounts receivable automation and integrated payments leader, has recently upgraded its Cash Application software’s advanced machine learning capability, significantly improving match rates and reducing manual processing while converting payments to cash as fast as possible….Billtrust’s Cash Application quickly adapts to a supplier’s ERP system without being explicitly programmed, delivering a tailored experience based on how accounts receivable teams work with their systems and data. Modeling from remittances and data, match rates improve over time as the model learns usage while adapting to any invoice structure changes. Higher match rates allow users to get through their worklist efficiently with fewer exceptions meaning faster access to cash.’

In AR processes, companies want to optimize match rates between remittance data/payments and the associated invoices. The faster this can be done, the more quickly the cash can be applied to the correct accounts in the GL. Like everything else during the past 9 months, the DSO improvement here can be critical to working capital effectiveness.

This matching process has been further complicated (ironically enough) by the increase in various forms of e-payments, which often arrive disassociated from remittance data. Machine learning (ML) is being used to improve automated matching rates over times as patterns emerge and strengthen the algorithms. This is an area that Billtrust has been adding capabilities.

‘Since the July 2020 upgrade, Billtrust customers have seen a 12.4% increase in overall match rates and an 18% increase for electronic payments. One Billtrust customer, heavy equipment dealer Gregory Poole Equipment Company, transitioned to upgraded machine learning in July 2020 and has reported strong match rate increases and an increase in auto-matched envelopes. “We’re a complex organization, so improving our match rates was a challenge,” said Mary Stumpf, Accounts Receivable Supervisor. “Billtrust more than met the challenge, and the transition to a new machine learning-powered platform was seamless. We continue to see excellent results with strong match rate performance, which is more important than ever with a remote workforce. It’s really incredible how machine learning actually adapts to our systems for continuous improvement.“‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Billtrust Upgrades Advanced Machine Learning in Cash Application Software, Speeding Cash to Businesses During Pandemic appeared first on PaymentsJournal.

This piece shows up in Digital Commerce 360 and is penned by a senior at a Fintech, specializing in payments and receivables. One of the many things that the pandemic has highlighted (highly reinforced might be more accurate) is that ‘cash is king’ (in the working capital sense of course, since all cash payments have declined quite a bit during the past eight months). So this article focuses on the importance of timely payments and collections strategy/effectiveness. We recently covered this in a webinar on cash cycle automation, which is directly related to improving a company’s working capital management capabilities.

‘As many organizations battle against a backdrop where sales have slowed, they’ve had to adapt to a blazing change in where and how they work. Companies find themselves at an inflection point where embracing digitization has become mission-critical—especially when it comes to the order-to-cash process….But the truth is, a reluctance to abandon traditional payment methods still exists in the B2B industry, as evidenced by the fact that 42% of B2B payments (which account for $25 trillion annually in the U.S.) are still made by paper check. But the winds of change are beginning to blow: a recent study of small to large businesses found that 64% of firms say they are shifting away from physical invoices, and 70% say they’re planning to automate their accounts/receivable process.’

Two of the key components of the cash conversion cycle are DPO (more controllable) and DSO (less controllable), and the author points out that pre-pandemic, payers were extending DPO through delayed payments. This of course puts pressure on suppliers who need to fund operations. Borrowing money to fund short term liabilities is not a good way to manage a business, which is exacerbated as one moves down the size scale of businesses. Smaller businesses have a tougher time raising money to begin with. Automation helps solve this by digitalizing processes and placing more decision intelligence in the hands of the trading partners.

‘There’s no denying that the pandemic and its ensuing economic downturn have created a list of challenges for businesses that are unlike anything they’ve experienced before. Besides the obvious—that COVID-19 has forced most businesses to develop survival-first responses that include reduced spending—several other factors have contributed to a landscape that’s strapped for cash and, as a result, has placed many businesses on the brink of collapse….For one, supply chain disruptions have caused many businesses to go under and others to rethink the entirety of their global supply chains, meaning churn rates are higher. Second, accounts-receivable and accounts-payable teams who’ve been tasked with maintaining the financial health of their organizations have had to adapt to remote configurations almost overnight. With B2B payments historically lagging when it comes to technology adoption, this only compounds the complexity and inefficiency inherent in highly manual tasks and outdated processes….And third, with studies finding that one-third of businesses say the biggest impact on cash flow is getting paid by clients on time, delays in receiving payments are proving to have significant negative consequences as organizations take hits to their days sales outstanding (DSO), the average number of days it takes a company to collect payment after a completing a sale.’

Worth a quick read to understand some of the pressure being placed on businesses and why the rush to automation is occurring as we speak (or read, I suppose).

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Late Payments and Low Cash Flow: 2 Big Reasons to Go Digital appeared first on PaymentsJournal.

Brazil, like many other countries around the globe, is largely a cash dependent nation. That is to say, that cash is a dominant way to pay for many of its consumers. Further, Brazil has a large unbanked population which comprises about 45 million adults. Where does PIX and QR codes come in?

According to a Worldpay study, 47% of Brazilian consumers prefer to use cash when paying at the store.  Compare that with the U.S., where a recent Mercator PaymentsInsights survey identified in-store cash preference at 14%

The Brazilian government is hoping to decrease the country’s dependency on cash and, at the same time, increase financial inclusion with the introduction of PIX. PIX is a new payment transfer system that relies on the consumer’s smartphone and QR codes to pay from goods and services – online and offline – pay bills, and for government services among other things.

All financial institutions with more than 500,000 accounts must participate in PIX with the hope that the unbanked will see the benefit and sign up.  As note in a recent article in PaymentsNews (paywall):

Consumers will be able to choose PIX for e-commerce payment and as a P2P payment method, while businesses can use it to make payments to employees or freelancers. Additionally, merchants can deploy a QR code for its use at payment terminals or other displays.

Such an arrangement will spur competition in the Brazil payments space, unlike RTP and Zelle, which facilitate money movement between banks and bank accounts, Baker added.

Brazil’s central bank is looking to shake up the country’s banking landscape, particularly with the potential of the country’s estimated 45 million adults without bank accounts possibly being lured into using PIX and dropping reliance on cash.

With PIX is in good company. The use of QR codes had been popular in other parts of the world for several reasons as my colleague Brian Riley pointed out in his report QR Code Developments Might Disrupt the Disruptors, he point out:

A reason that central banks endorse the use of QR codes is that low-cost merchant acceptance helps identify untaxed sellers. Cash economies, from Mexico to Vietnam, have a problem of merchants failing to report income to tax authorities. Taxing authorities lose the opportunity to generate revenue, and there is no visibility on the consumer’s ability to spend.

On the other side of the transaction, central banks seek to increase the use of QR codes to encourage consumers to fund bank accounts. Globally, the World Bank estimates that 1.7 billion adults have no formal banking relationship. In India, where almost 100 million people over the age of 15 have no banking account, the Indian government’s overhaul of the banking system drove the usage of QR codes as a means of financial inclusion. Similarly, China, where more than 200 million lack a bank account, was a natural market for payment acceptance by means of QR codes.

If this goes as planned, the introduction of PIX can speed up the movement of money across Brazil much the way QR code based payments have in other countries.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Brazil PIX QR Codes appeared first on PaymentsJournal.

As technology has rapidly progressed in recent years, many once popular items, devices, and facets of daily life have faded into obsolescence. With nearly everyone owning a smartphone, everything from physical maps to CDs have become increasingly less common.

To many commentators in the payments industry, cash is next on the chopping block of technological progress. Their thinking is that with the proliferation of alternative payment methods and the ongoing pandemic, consumers will finally abandon paper money once and for all.

In an executive brief, Sarah Grotta, Mercator Advisory Group’s Director of Debit and Alternative Products Advisory Service, offered her take on the longevity of cash and whether we’re poised to become a cashless society.

Consumers’ relationship with cash—it’s complicated

Many experts in the payments industry have been focused on creating a cashless society by displacing paper currency with electronic payment methods, which they argue are safer, quicker, and more reliable ways to transact. However, Grotta explained that this may be a misguided pursuit.

“Consumers have kind of a complicated relationship with cash,” said Grotta. Although many consumers have embraced new payment technologies, cash remains popular for a large portion of the population. “There’s just a ton of people who find cash entirely convenient for them and, in some ways, safer than other forms of payment, particularly online and mobile payments,” she added.

But transitioning entirely to a cashless society wouldn’t just inconvenience those who still prefer cash; it could economically disenfranchise a significant portion of the population. Nearly 14.1 million American adults are unbanked, according to a recent survey from the Federal Deposit Insurance Corporation (FDIC). And lacking a bank account, these people primarily use cash to conduct their daily affairs.

“I think that those who are really pushing the cashless society are sometimes forgetting about the fact that as we move towards a cashless society, you could be, in fact, disenfranchising a certain percentage of the population,” said Grotta.

Cash, COVID, and contactless

The pandemic has caused many to predict that cash will be replaced even quicker than before, as consumers flock towards contactless payment methods to avoid handling germ-laden paper bills. But, “I don’t necessarily see that as the case,” said Grotta, noting that Mercator’s survey work paints a more nuanced picture.

While 19% of consumers reported that they withdraw cash from an ATM less frequently since the pandemic began, a comparable 17% of consumers reported withdrawing cash more frequently and 47% reported no change, according to Mercator’s data. “People run out and get cash because they feel very comfortable with that,” explained Grotta.

However, other payment methods have seen increased adoption. “We did see some growth in contactless cards, and certainly we’re seeing a growth in P2P applications,” said Grotta. From her perspective, cash will continue to slowly decline in popularity, but it will not go away completely.

Instead of focusing on creating a cashless society, people should focus on “creating the products and services that are perhaps better than cash. And consumers will naturally segue to those better solutions,” said Grotta, adding that, “if you take a look back at 100 plus years of payment history, we never truly get rid of any type of payment transaction, we just add new ones.”

The post The End of Cash? Not So Fast. appeared first on PaymentsJournal.

Digital payments have evolved tremendously over the past few years, raising the question: where will digital payment technologies take us in the future? As more consumers become tech savvy the opportunities are endless, especially as we are only just now tapping into the unprecedented potential from global smartphone penetration with 3.2 billion smartphone users in 2020 against a global population of about 7.7 billion, or 41.5 percent according to Statista.

The impact of COVID-19 has further accelerated the shift in payment preferences, partly because of convenience, and partly because of the advice and emphasis to avoid physical cash where possible. Regardless of the reasoning, digital payments are not disappearing, and are only going to increase in popularity over the years to come.

Unsurprisingly, cards are currently the preferred choice of payments around the world, surpassing physical cash, yet mobile wallets are quickly gaining mass popularity with the industry set to reach $1 trillion in 2020.

So, to predict and ponder on where the future of payments is heading, let’s take a look at a snapshot of where we are today…

Moving towards a cashless society

According to the European Central Bank, the total number of non-cash payments in the euro area increased by 8.1% to 98.0 billion in 2019 compared with the previous year, with a total value of €162.1 trillion, and card payments accounted for 48% of the total.

Needless to say, Europe has a sophisticated and mature digital payments market, and the traditional cash infrastructure is now witnessing a decline in bank branches and ATMs, further demonstrating Europe’s move away from cash. In fact, Global data has predicted Finland, Sweden, and the UK are likely to be some of the countries leading the way to a cashless society.

On the other side of the world, China is currently the global leader in mobile wallet consumption, with nearly 70% of Chinese consumers using mobile wallets regularly. The country is projected to generate almost 80% of global mobile wallet revenues in 2020 and with these stats it is also expected that China is a strong contender in the race to a true cashless society. However, South Korea is giving China a run for its money (excuse the pun), and is predicted to be within the top-three cashless countries by 2022, with the majority of the infrastructure already in place and more than half of the country’s 1,600 bank branches no longer accepting cash deposits or withdrawals.

The unbanked

There are still countries that are highly dependent on cash, so what does their digital journey look like?

In Latin America’s developing market, 85% of transactions are cash based, and only 39% of the population has a bank account. This is partly due to the lack of trust towards the financial institutions, however despite the current uncertainty and mistrust experienced, there is a high adoption rate of mobile phones in the country, creating numerous opportunities for app based banking and payment alternatives which will inevitably drive digital payments. So much so that Brazil’s Nubank now has 8.5 million customers, and plans to expand and target millennials in Mexico, with further expansion into more of Latin America’s markets. Due to its substantial growth, it is now the most valuable neobank globally, with a valuation of more than $10 billion dollars.

A similar situation presents itself in India, where three out of four transactions are made by cash due to only a third of India’s population having access to the internet. Moreover, 20% of Indians have no bank account. Since 2016 there has been a slow but steady push towards digital payments which has now seen a surge in uptake since the Covid-19 outbreak. Digital payments will continue to be affected and influenced by the virus, but the infrastructure and smart phone penetration allows for a continuous increase in digitalisation. As a result, the government has a target of 1 billion digital transactions per day.

What’s next in the digital payments space?

In the not too distant future, we could see social media initiated payments, voice activated payments,  cryptocurrencies, biometric payments including facial recognition all becoming  mainstream. However, one point is for certain, mobile payments and mobile wallets will continue to gain mass adoption in the immediate future, and it’s worth paying attention to developing countries which will likely contribute substantially to this development.

As well as this, NFC and QR codes will see an uptake as a safe and fast payment solution. Despite the popularity of QR codes in China, other countries have been slower to adopt the payment method, especially the U.S. However, this is projected to change due to its cost effectiveness for merchants who will now require less infrastructure to process payments, whilst delivering more convenience for customers.

After China, the US, followed by the UK, are the second and third largest digital wallet markets, with ApplePay the most widely used product within both of these markets. With ecommerce now a global trend, this will further drive digital wallet consumption, and PayPal – once judged the worst business idea when it was first introduced in the era of cheques – is now the single most used digital wallet in the world.

The unbanked and underbanked segment throughout the world will provide the biggest opportunities for growth and innovation within the digital payments landscape and will contribute to the overall growth of digital payments. Financial inclusion provides opportunities for fintechs to deliver products which provide true value and address real needs, and in developing countries incumbents will be bypassed completely for a more agile and flexible approach in the form of challenger banks.

So, the question is, which country will win the race to a cashless society?

There’s an exciting digital journey ahead of us. However, as we continue to adopt digital payments wherever we are in the world, security and trust should be at the forefront of the experience, and therefore a secure, reliable, and robust payments infrastructure needs to be in place.

The post What Is the Future of Digital Payments? appeared first on PaymentsJournal.

The percentage of unbanked households in the U.S. is the lowest it has been since the FDIC starting monitoring this metric in 2009. According to a new report from the FDIC Survey of Household Use of Banking and Financial Services, only 5.4% of American households are unbanked (or approximately 7.1 million households out of a total of about 131 million households).

This is very positive news for many reasons, none the least of which is financial inclusion. Nations are often judged by the proportion of their populous actively involved in the economy. The thinking is that as poorer individuals gain access to financial systems, they have a greater possibility of getting out of poverty. Below is a good definition of financial inclusion and its benefits, drawn from a Business Standard posting:

Financial inclusion is a method of offering banking and financial services to individuals. It aims to include everybody in society by giving them basic financial services regardless of their income or savings. It focuses on providing financial solutions to the economically underprivileged. The term is broadly used to describe the provision of savings and loan services to the poor in an inexpensive and easy-to-use form. It aims to ensure that the poor and marginalised make the best use of their money and attain financial education.

Here comes the asterisk.

Unfortunately, this is 2020. No good news comes without a dark side. The Executive Summary for this survey points to a few caveats courtesy of the realities of today:

• Rising unemployment – the number of people who have lost their jobs as a result of the pandemic and its effect on the economy has put people out of work and that can lead to a decline in banked households.
• Difficulty accessing credit – as unemployment goes up, more people are in jeopardy of defaulting on their credit, thus banks tend to tighten their credit offerings thus preventing people from getting credit (a key component of financial inclusion).
• Decreased savings – as financial difficulties increase people will be forced to draw down on their savings. If this savings is in a bank, and it is depleted, the account can easily be closed.

Next year, when the FDIC publishes the 2020 results, what will the unbanked numbers look like? We can take guesses, but no one really knows. However, don’t be surprised if the number of unbanked increases thanks to this crazy year.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post The Unbanked Population in the U.S. is Decreasing* appeared first on PaymentsJournal.

The pandemic has created many new, unforeseen challenges for people around the world. Most of the issues dominating headlines and our collective headspace existed well before the pandemic. But now, in a world that feels like it’s been turned upside down, they have been exacerbated. The debate around payments innovation and cashless societies is a prime example.

Many governments and companies have pushed to outlaw cash to help flatten the curve and drive innovation in payments. But this initiative, while seemingly progressive and the obviously safer thing to do, has many unintended and dangerous consequences for unbanked or underbanked consumers. Fintech, as an industry, has a responsibility to examine the way forward. Truly innovative solutions will include all shoppers, not divide them.

Innovation Can’t Leave Unbanked Shoppers Behind

The recent acceleration of digital payments has led to the high probability of a cashless society. But, is this where we see the holy grail in payments innovation? An entirely cashless society excludes unbanked and underbanked consumers, leaving them with little options on how to make transactions. This is unsettling for shoppers, and potentially even worse for merchants as according to PPRO data, 26% of global consumers lack access to a bank account. Cutting cash also eliminates over a quarter of the world’s customer base.

Rather, existing solutions must be leveraged to ensure unbanked shoppers have access to global e-commerce. This can include cash-voucher payment methods popular in LATAM like Oxxo, RapiPago or BoletoBancario, where 38% of consumers don’t have a bank account and 13% of online transactions are made with cash.

There are also smartphone-enabled payment methods to consider, those that do not require a bank account like Africa’s M-Pesa or Asia’s GrabPay. While the use of physical cash has recently declined for safety reasons, Fintech must offer cash-enabled digital methods that are not tied to bank accounts, so unbanked shoppers are still able to participate in our global economy.

Going Cashless Raises Privacy Concerns

A move away from cash can lead to privacy concerns for consumers. All transactions will now be under a microscope, removing any anonymity from the shopping process. Many consumers around the world already have a distrust in financial institutions and thus opt for cash over cards.

Such preferences are clear in many regions around the world, including LATAM, APAC and Africa due to historical cultural, political, and economic factors. These regions have lacked robust banking infrastructures and, thus, have leapfrogged legacy methods like credit cards in favor of innovative solutions tied to consumers’ needs, such as cash-vouchers or mobile-based methods that do not require a bank account. Instead of the need to open a bank account, simply having cash on hand or a smartphone is enough to participate in global e-commerce.

Consumers Depend on Payment Flexibility

At the end of the day, it is in the merchant’s best interest to offer a blend of different payment methods that adheres to the various needs of global shoppers. Payment flexibility is a must-have in offering a seamless checkout experience, as 42% of U.S. shoppers stop a purchase if their favorite payment method isn’t available.

Some shoppers never carry cash, while others view cash as the only way they want – or are able – to pay. Case in point, according to PPRO data, only 14% of APAC consumers have a credit card, but 51% have access to a smartphone. While only 50% of consumers in the Middle East/Africa are banked and cash is used in 23% of online transactions.

The ripple effects of a cashless society are clear, so we must look to strike the right balance between cash and digital payment methods to benefit the consumer.

Banning cash is a lose-lose situation for merchants and shoppers around the world. Instead, we must use innovation to create viable payment solutions for all.

The post The Cashless Controversy: How Fintechs Can Be Both Innovative and Inclusive appeared first on PaymentsJournal.

As with most aspects of daily and commercial life, COVID-19 is changing the way people bank. Branch closures, limited hours, access by appointment only, and reduced staffing have disrupted traditional banking practices, forcing consumers to shift their financial activity to digital channels.

In some regards, COVID-19 has simply hastened existing trends in banking. New technology and shifting consumer expectations were already causing banks to focus more on their digital offerings in recent years. Still, the degree to which this digital transformation has accelerated is significant, especially as financial institutions try to plan for business after the pandemic ends.

To help banking professionals understand how COVID-19 is changing the industry and what this means for the future of consumer banking, PaymentsJournal and Cardtronics hosted a webinar titled “COVID-19 & The Rapidly Changing Face of the Distribution Channel.”

The webinar featured Justin Upton, General Manager of ATM Branding Solutions at Cardtronics, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group. During the event, Upton and Grotta discussed what branch transformation entails, trends in consumer banking prior to the outbreak of COVID-19, how the pandemic has influenced these trends, and what this all means for the future of banking.

“Branch transformation is not an event, it is something that is ongoing”

Unsurprisingly, branch transformation has become a hotter topic of discussion in recent months. The term means different things to different people, with some using it to describe the closure of physical branches to save money, while others use it to discuss changes in customer service practices.

Upton offered a more substantive definition: “To us, it’s really about looking at consumer behavior and how your cardholders choose to bank and then mirroring your service delivery after that.” He stressed that since different financial institutions serve client bases with unique needs, “there isn’t a one size fits all solution.”

Instead, each institution must determine how to improve its service delivery model without disenfranchising customers. The process should be gradual and spread out across different stages. Additionally, it should involve balancing the needs of customers, including those who prefer traditional banking in physical branches and those who are more comfortable with digital solutions. “Branch transformation is not an event, it is something that is ongoing,” Upton noted.

Pre-COVID changes to banking

To effectively right-size the branch network, financial institutions need to grasp trends in consumer habits and expectations. A good place to start is understanding what factors drive a consumer’s choice of their primary financial institution.

Upton explained that between 2015 and 2019, brand awareness and digital self-service became the primary drivers of customer acquisition for primary checking accounts, as the above graphic shows. In other words, people became less concerned with whether there was a physical branch they could go into and more interested in mobile capabilities.

Convenience goes digital

One of the most important considerations for consumers is convenience. People increasingly want quick, seamless experiences in all aspects of their financial lives. When it comes to today’s banking, convenience often relates to digital experiences rather than physical ones.

Upton also explained that when consumers were asked what a bank could do to become more convenient, they indicated that branch-centric factors (longer hours, number of locations, etc.) have become secondary in recent years. Instead, consumers are putting greater emphasis on self-service options that fit how they choose to live, showcased by the rising importance of mobile banking and the ability to use a variety of self-service ATMs fee-free.

Branch closures have been on the rise (but the branch is not dead)

The primacy of digital experiences contributed to many branch closures even prior to the pandemic. “You can see there have been a massive number of branch closures over the past 10-15 years,” said Upton. “We would expect this trend to continue even if the pandemic didn’t occur.”

That is not to say that physical branches became obsolete, as many customers still enjoy going into a bank and physically interacting with a teller. Customers still use branches for higher value interactions with branch staff—such as financial advice and welfare—although these tend to be by appointment only during this pandemic.

Moreover, people want to access to cash and therefore to ATMs, meaning that financial institutions need to maintain some form of a physical footprint for their customers. Grotta agreed with this assessment, pointing out that Mercator Advisory Group’s consumer surveys reflect similar trends. In one survey, 69% of consumers said that ATM locations near their home was an important consideration when selecting a financial institution.

Fees are also an important factor. Mercator found that 67% of consumers consider ATM fees when selecting a bank. Cardtronics’ data reinforces this finding; when consumers who recently switched financial institutions were asked the reason why, 28% reported it was due to fees.

COVID-19 has accelerated digital adoption

Since the pandemic forced physical stores of all sorts to close or drastically reduce hours, it comes as no surprise that it has reduced foot traffic in bank branches and accelerated branch closures.

Upton cited one survey which found that 65% of banks were considering branch consolidation in the near future. Even banks that aren’t closing have witnessed a steep reduction in people visiting physical branches. During April and May 2020, branch traffic fell more than 30% compared to the same time last year. The closure of branches and reduction in physical service means that consumers are forced to pursue digital alternatives. Mercator found that since COVID began, nearly a quarter of consumers reported using online banking more than they had before.

Further, a large portion of people (between 10-12%, depending on the technology) have reported using new payment technology for the first time, including mobile wallets and QR codes. While those percentages may seem low, Grotta pointed out that getting this many consumers to use a new product is exceedingly difficult: “Such a habit change would normally take years to achieve. Yet this year, due to the pandemic, it’s happened in a matter of a few weeks.”

Cash use is up too

Another trend caused by COVID-19 is the rise in cash use. Despite sensational news stories heralding the death of cash during the pandemic, paper money has actually become more popular. Mercator found that 19% of consumers reported withdrawing cash from an ATM more frequently during the pandemic than they had before, while 47% reported no change.

Data from the Federal Reserve reveals that the amount of cash in circulation shot up during the pandemic. Upton attributed the surge in cash use to a variety of factors, including consumers’ desire to better budget their funds in a time of crisis, a lack of access to credit, and a general desire to be prepared in case of a catastrophe.

What does this mean for the future?

After fleshing out how consumer banking was changing before the pandemic and the ways these changes were amplified by COVID-19, Upton and Grotta delved into what this all means for the future. Those interested in learning what the future has in store can listen to the webinar here.

The post COVID-19 & Consumer Banking: The Digital Transformation of the Branch appeared first on PaymentsJournal.

Cash management is an integral part of any business. In order to ensure financial stability, a company must effectively keep track of its various cash inflows and outflows. Failing to do so jeopardizes the company’s ability to meet current payment obligations and plan for future payments, two essential aspects of maintaining business stability.

Treasurers and CFOs are typically the individuals at a company tasked with handling cash management. Fortunately for them, there are a variety of tools and products at their disposal to help manage the entire cash flow cycle. This is especially true during the current pandemic. More treasurers are turning to digital solutions to keep cash flows operating in a time of social distancing and work from home requirements.

The sheer amount of cash management tools and services available makes choosing the right option a potentially challenging, if not daunting, decision. To help companies navigate this crucial decision, Mercator Advisory Group is hosting a webinar titled “Matching Solutions with Client Needs in the Cash Cycle: Mind the Gap.”

During the webinar, Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group, will discuss the challenges presented in the cash flow cycle and how Mercator can help companies find the right solutions to address them.

PaymentsJournal sat down Murphy to preview the upcoming webinar and learn more about cash flow management.

The many components of the corporate cash cycle

Murphy began the discussion by broadly outlining the various terms and components that comprise the corporate cash cycle. Up first was working capital.

“Folks that have taken finance courses will be familiar with the term working capital, and you hear that utilized a lot these days,” said Murphy. “It’s basically short-term assets minus short-term liabilities.”

Assets can include cash on hand, inventory, and accounts receivables, which are unpaid bills owed to that company; liabilities include accounts payables, or the money that company owes to others. Keeping track of working capital is important because if a company’s liabilities exceed its assets, it can have trouble paying its creditors and potentially go bankrupt.

In essence, the basic components “of the cash cycle [are] the time and the money involved to buy inventory, to store, to sell it, and then to collect on invoices after you ship and it’s received,” explained Murphy. Put another way, the cash cycle—also known as the cash conversion cycle (CCC)—measures the time it takes for a company to convert its investment in resources and inventory into cash flows from sales.

Murphy explained that the formula to calculate the cash conversation cycle contains three parts. To get calculate it, you must add the days of inventory outstanding (DIO) to the days sales outstanding (DSO), and then subtract the days payables outstanding (DPO) from the amount (CCC = DIO + DSO – DPO).

The following definitions can help make this formula understandable:

• DIO: the average number of days that a company holds its inventory before selling. This relates a company’s cash inflows.
• DSO: the average number of days that it takes a company to collect payment after a sale has been made. This also relates to a company’s cash inflows.
• DPO: the ratio that measures the average number of days it takes a company to pay its bills. This relates to a company’s cash outflows.

Being able to calculate CCC is important to any business. “Once a company tracks this cash conversion cycle, they can use it to better understand their own working capital efficiency, as well as compare themselves to competitors in the same segments,” added Murphy.

There are many products to help track cash flow

Since cash flow management is tremendously important but also fairly complicated, there are many cash cycle solutions available to help.

CFOs and treasurers can utilize “a slew of products that are associated with managing expenses and treasury management, including ERPs, treasury management systems, electronic invoices, payments, receivables, trade, finance, reconciliations, and so forth,” said Murphy.

Historically banks have been the ones to provide these solutions. Moreover, the offered services and software “have most often been point solutions,” said Murphy, adding “many vendors that provided solutions across cash cycle operations were normally specializing in one of the solutions and maybe two, but even if they had more, they weren’t actually packaging them as combined solutions.”

But with many fintechs cropping up in recent years, the cash cycle management landscape has changed. Now, there are more vendors to choose from than ever before and the solutions themselves have become more comprehensive and digitally-based. “This has become even more pronounced during the past six months with the onset of the pandemic,” noted Murphy.

Helping mid-tier banks keep up

For large multinational financial institutions, keeping up with the changing cash management landscape is not too difficult. They have the resources necessary to invest in developing their own digital tools and solutions. Or if they would rather not develop their own, many large FIs have the means to simply acquire fintechs that already offer these solutions.

In contrast, “mid-tier banks don’t necessarily have that budget flexibility or resource availability” to develop their own digital cash management tools, said Murphy. This is where Mercator Advisory Group believes it can help.

“We can help them think through that process and help build a more intelligent set of criteria to compete more effectively and fill the gap going forward,” explained Murphy. Those interested in learning more about cash cycle management and how Mercator Advisory Group can help can register for the webinar in the form below.

The post Finding the Right Cash Management Solutions appeared first on PaymentsJournal.

Something interesting is afoot in the U.K. ATMs are becoming harder to find and as a result cash usage is down. This decline in ATMs has been accelerated by the COVID-19 pandemic as branches are closing and store-based ATMs are also becoming scarcer as establishments close or ATM are removed to promote social distancing.

A recent article in the U.K. version of Wired magazine, The pandemic has killed cash, cites some scary statistics for those who still use cash:

ATM withdrawals dropped 60 per cent when lockdown began in March, according to Link, the UK’s largest ATM provider. Constituency data obtained from the GMB trade union shows that cash machines are vanishing at a breakneck rate, with an 8.9 per cent drop across the country from April to June. Throughout lockdown 9,000 ATMs disconnected from Link’s network at some point – a result of public places closing during the peak of the first wave, or neighbouring machines being removed to promote social distancing. As of July, only 33 per cent of these had been reconnected. While withdrawal volumes picked up once restrictions eased, figures from as recently as September 20 show that usage is still 40 per cent lower than it was this time in 2019.

The pandemic has brought on a surge in the use of plastic for many consumers around the globe. As we all know, e-commerce and remote purchasing has skyrocketed while in-store visits have declined, largely by necessity driven by the pandemic. Many of the new ways to acquire products and services rely on some form of card payment rather than cash. All this accelerates the timeline for a “world without cash.”

As the article makes clear, the drive to a “world without cash” is not without casualties. There is still a portion of people who rely on cash. The reasons for their reliance on cash could be a lack of technological savviness, perhaps being unbanked or underbanked, distrust in the banking system, or a simple behavioral comfort with cash. Whatever the reason, the article provides examples of people who are having a difficult time finding places to get cash and the problems they face as a result.

Will there be a significant decrease in available ATMs in the U.S.? Probably not any time soon, but that doesn’t mean that it isn’t in the future. Data from Mercator Advisory Group show American reliance on cash declining and the bulk of cash transactions are going to small ticket purchases (think QSRs and convenience stores). To combat the potential of the exclusion of cash users, some municipalities in the U.S. are mandating merchants accept cash.

In summary, if you want to see how cash will fare in the future, keep an eye on the number of ATMs installed.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Where’s the Nearest ATM? appeared first on PaymentsJournal.

Much time, and I mean a lot of time, has been spent writing about the surge of contactless purchase transactions around the globe in the wake of the COVID-19 global pandemic. Articles on the topic often combine commentary on the rise of contactless with coverage of a similar decline in the use of cash.

This article in PaymentsSource wishes the industry to think about the societal impact of contactless transactions at the expense of cash and calls out the need to protect the use and acceptance of cash for those with few financial options. There is also a reminder of the consequences to small businesses:

When COVID-19 hit, there was a 44% increase in the use of contactless payments, and some businesses even displayed “card only” signs. This caused those relying solely on cash to be cut off from vital goods and services at a time when they needed it the most.

Covid has accelerated what was already on the rise, driven by growing consumer use of mobile and contactless payments. Cashlessness presents an opportunity for government, financial service providers and the wider digital economy – especially the likes of Uber, Airbnb and Deliveroo who all benefit from the reduced friction.

The result of this combined push towards cashlessness is a 60% drop in ATM usage according to YouGov. The fall in usage – again operators make money from transaction fees – means the ATMs are becoming more costly and even driving potential losses. It is no surprise then that ATMs are disappearing from towns and villages across the country.

The impact of this move towards digital payments is being felt nationwide. Millions in the U.K. still rely on cash daily, and many are society’s most vulnerable. Immigrants, the homeless, ex-prisoners, the elderly and low-income workers operate in largely cash-based economies either getting paid or needing to pay with cash. This is amplified by a lack of access to bank accounts that offer digital payments.

This hasn’t just been a problem for consumers. Cashlessness can also have a negative impact on small businesses. There is an added cost for merchants who accept card payments which can limit their business’ profitability and ability to compete with larger retailers.

The issue is now so big that industry bodies have spoken out via the Federation of Small Businesses (FSB), whose national chairman Mike Cherry said: “Cash remains the payment method of choice for millions of small business customers, and for many it is still an essential part of the payments mix.”

Finally, the loss of anonymity that cash affords individuals is also off-putting for a part of the population. Digital payment data is routinely collected and stored, and while this is good for tax evasion and AML, there are concerns over privacy and civil rights that are yet to be addressed.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Contactless Payments, Cash, and Financial Inclusion appeared first on PaymentsJournal.

Bytemark, an innovator in the Mobility as a Service space, has entered a new partnership with InComm, a leading payments technology company, to enable passengers to add value to their accounts for transit and parking by using cash at thousands of brick-and-mortar retail locations across the United States.

The partnership will make transit more accessible to a larger group of passengers. Cash-preferred users can participate by paying for fares at popular retailers where they already shop. The move also allows agencies to strengthen their Title VI inclusivity programs.

The transit cash load option, powered by VanillaDirect™, will provide passengers access to a network of participating retailers with nearly 60,000 locations nationwide. This network, encompassing convenience and value stores as well as pharmacies, includes some of the nation’s largest retailers, many of which will offer transit payment options to customers for the first time.

“I am very excited about partnering with InComm®. With their local retail footprint combined with our Bytemark Bridge offering, we are shortening the access points to transit,” said Bytemark Chief Executive Officer Eric Reese. “As we roll out additional functionality of our Plan, Book & Pay™ solution, our ability to support agencies on a more local level affords their riders additional ways to access these cost-saving features, like fare capping, stored value, and multi-day passes.”

The service will be available as part of Bytemark Transact and can be used by Bytemark Passage and Bytemark Connect customers and as a standalone payments feature.

Customers can buy transit passes or load value to their in-app wallets. The stored value wallets can then be used as a payment method for future in-app purchases. Agencies reduce their transaction costs, and riders who want to use cash enjoy a convenient way to do it. Bytemark expects agencies to be able to take advantage of the feature within the next few months.

“InComm’s experience and existing retail network make them the perfect partner, and we couldn’t be more excited to add this payment method for our users,” Reese said.

Cashless systems deliver many benefits, first and foremost by decreasing unnecessary person-to-person contact. Cashless systems have been shown to have shorter dwell times and lower cost of operations, and they provide agencies with additional rider behavior insights, plus the ability to incentivize or reward travel behavior.

Stored value load for future purchases lowers the number of in-person interactions, a concern for many consumers in the wake of COVID-19. This feature may become even more important as more and more agencies consider going cash-free.

Allowing cash loads of stored value wallets or for ticket purchases can achieve the same benefits without removing a familiar payment method option.

“Bytemark has always strived to reduce onboard payments for our users as a matter of convenience and safety,” Reese said

The Bytemark-InComm partnership unites two well-respected brands recognized industrywide for their innovation and openness to collaboration. Bytemark provides fare collection solutions to some of the most forward-thinking transit agencies across North America and Europe. InComm has established partnerships with the nation’s leading transportation agencies since launching tolling and transit products in 2012.

“Bytemark represents an exciting product that offers incremental revenue to retailers by expanding transit ticket distribution,” said Michael Herold, Vice President of Business Development, Tolling and Transit at InComm. “The partnership with Bytemark’s transit platform enables retailers to offer ticketing solutions without the need for physical products or additional hardware, which falls in line with our strategy to make it easier for retailers to sell tickets. The real winners are those cash-preferred consumers who want to use the latest technology to pay for transit, parking, and other public transportation services; everyone wins.”

About Bytemark

Founded in 2011, Bytemark provides comprehensive Mobility as a Service (MaaS) and Payments as a Service (PaaS) solutions to cities and agencies around the globe. Bytemark helps partners deliver a seamless and enjoyable travel experience for their riders. The company’s core offerings include tools for travel planning, parking management, fare payments, and more. Bytemark holds patents for distributing electronic tickets with visual display as well as electronic ticket validation using proximity detection. Learn more at Bytemark.co.

About InComm

By building more value into every transaction through innovative payment technologies, InComm creates seamless and valuable commerce experiences. InComm’s unique products and services — which range from gift card malls to enhanced payment platforms — connect companies across a wide range of industries, including retail, healthcare, tolling & transit, incentives and financial services to an ever-expanding consumer base. With more than 25 years of experience, over 500,000 points of distribution, 386 global patents and a presence in more than 30 countries, InComm leads the payments industry from its headquarters in Atlanta, GA. Learn more at www.InComm.com

The post Bytemark and InComm® Establish Partnership Enabling Cash Payments for Mobile Transit Apps appeared first on PaymentsJournal.

The payments industry is constantly shifting due to technological innovation and changing consumer expectations. Driving many of these changes on the business side are fintechs, companies focused on applying technology that disrupts the financial services industry and empowers consumers in new ways.

Coming at financial services from a technology-led mindset, many fintechs rely on app-based digital platforms that allow people to conduct all sorts of financial activity with better rates and a finely crafted user experience. From loans to e-commerce and everything in between, app-based digital platforms have changed the way people shop, pay, and bank.

One major shortcoming of many fintech offerings, however, has been the physical interface, specifically, a way to work with cash. Even though consumers have more options to conduct financial transactions than ever before, app-based financial services, by their nature, do not provide a way to access or deposit physical currency. Given the continued strong consumer demand for cash, this shortcoming is not trivial.

To get a sense of how consumers’ cash needs interact with mobile banking features, Cardtronics commissioned a consumer survey with findings revealed in a recent white paper titled “Mobile Cash Access: Tomorrow’s Must Have Fintech Feature Explained.” The paper details how digital wallets offering cash access have a competitive advantage over those that do not.

Cash is critical

In an age where digital payment offerings abound, it is fair to ask what the role of cash looks like today and in the future. A plethora of digital payment platforms, from P2P wallets to tried and true debit and credit cards, continue to jockey for share of wallet and share of mind. However, despite the stiff competition, cash is still a critical part of payments.

“Consumers are not ready to give up cash,” noted Peter Reville, director of Primary Research Services at Mercator Advisory Group. “Despite a number of different payment solutions available to them, cash still plays a part in their payment repertoire,” he continued.

In fact, the Cardtronics paper, citing the Federal Reserve’s Diary of Consumer Payment Choice, points out that “cash payments account for 35 percent of in-person payments and nearly 50 percent of payments under $10.” Based on this fact, it’s no surprise that Cardtronics’ survey found that access to cash was important to consumers, even in the context of digital wallets and app-based financial services.

Cash access can help digital wallets become a consumer’s primary financial service provider

Between 50 to 60 million U.S. consumers use mobile banking applications of some variety. Many of these consumers use apps from traditional banks and credit unions, but up to 15 million consumers use a non-bank digital service as their primary financial services provider.

In either case, both traditional and non-traditional financial companies want to ultimately become consumers’ primary financial service provider. Cash access can help make this a reality.

When asked what features were important when choosing a primary bank or deposit account, 69.5% of consumers named “convenient, fee-free access to cash through an ATM.” The second most popular response, at 62%, was “convenient branch locations.” Right behind that response was “convenient locations to deposit cash,” at 59.2%. Consumers value physical access, an on-ramp to their digital finances firmly planted in the real world, and they want that access to be convenient and easy.

Companies in the digital wallet space should take note of these findings. In comparison to the nearly 70% of consumers who listed convenient access to cash as important, only 54.6% listed a “mobile banking application to manage my account” as an important consideration. While app-based or online banking has become table stakes, access to cash remains essential. As the authors of the Cardtronics report state: “The reality of today’s digital-first banking world is that consumers want both virtual and physical, and gaining a competitive advantage in the battle for consumer dollars requires integrating digital account services with physical ATM access.”

Mobile cash access at the ATM appeals to many consumers

Adding mobile cash access to a digital platform appeals to many consumers. For those already using digital platforms, including Venmo and Paypal, adding this functionally can result in increased use of that platform. Cardtronics’ survey found that 31% of consumers would “start using this service more often” if they had ATM access. A full break down of responses is presented below.

For those not using these non-traditional platforms—about 15% of consumers—adding mobile ATM access could encourage them to use such digital platforms for the first time. Cardtronics found that half of respondents reported a willingness to try an alternative financial platform, “with 31% saying they would ‘consider using’ such a service, 16% indicating they would start using such a service, and 4% saying they would begin using the service and start moving some of their traditional banking to the new service.” The findings are displayed in the graphic below.

Overall, 56% of all respondents “showed some level of interest in mobile access at the ATM.” Taken together, all these responses show how adding mobile ATM access to a digital wallet can drive usage and elevate the importance of that digital wallet in the consumer’s financial life.

How to offer mobile cash access

The Cardtronics report concludes by explaining how fintechs, and others, can offer mobile cash access. The functionality can be implemented using several different methods, including “using a one-time-use passcode delivered via the app, through tap-and-go using NFC (Near Field Communication), or by scanning a QR code.”

Another challenge is finding the right ATM network. For fintechs, creating an effective financial app that utilizes NFC or QR codes is the easy part. Finding ATM networks that support mobile cash access is more difficult. As the authors of the Cardtronics report noted, “connecting those digital bits and bytes to real-life dollars and cents has not been easy.” While there are many third-party ATM networks, fintechs should look for those that have best-in-breed solutions. These solutions must be flexible, have proven distribution channels, and entail “continuous technology investment in the ATM channel, including the ability to take in cash (not just dispense it) and provide a fully digital card-free interface via a mobile cash access strategy.”

Those interested in learning more can view Cardtronics’ white paper here.

The post The Importance of Cash… In Digital Wallets appeared first on PaymentsJournal.

The rise of electronic payment methods in recent years has led to predictions that cash could become obsolete. Despite the pessimism of the electronic payments boosters, cash use has remained a stable and enduring part of the consumer payments landscape. With COVID-19 disrupting daily life and altering consumer behavior in unexpected ways, a renewed perception that cash is on the way out has entered the media.

The argument goes that as consumers strive to avoid virus transmission, paper money may be too dirty of a payment method to use during the pandemic. Instead, the argument goes, people will flock to electronic payment methods that don’t require the physical exchange of an object they believe could potentially harbor the virus. While many surfaces and objects could become vectors of disease spread, science has proven that germs are more prevalent on non-porous surfaces like plastic and stainless steel than on banknotes.  So while the notion of cash as a mechanism for disease spread makes some sense at first glance, the reality is very different.

A recent report commissioned by Cardtronics and designed and executed by Javelin Strategy & Research explores consumer sentiment “toward cash and payments, including any hesitancy to use various payment instruments due to the health crisis.” The report, “Health of Cash Check-Up May 2020,” dispels the notion that consumers have a health-driven aversion toward cash and that cash is on the verge of decline; instead, the study finds that cash is alive and well.

Consumer payment preference is virtually the same as 2019

Consumer payment preferences reveal the clearest evidence that cash is not about to be displaced due to COVID-19-related health concerns. Payment preferences refer to how people prefer to pay in various situations.

Cardtronics’ report compared consumer payment preferences from April 2020, during the depth of virus-related lockdowns, to the preferences consumers expressed in the fall of 2019. As the report noted, “preferred payment methods are virtually identical today to the fall of 2019.” In the fall, 16% of all consumers picked cash as their overall most preferred payment method. By April, well into the pandemic-induced lockdown, 15% of consumers expressed the same sentiment. The virtually identical “favorite way to pay” result showed that consumers did not appear to be averse to cash use.

This finding underscores the fact that “Cash still has a place with the American consumer,” noted Peter Reville, director of Primary Research Services at Mercator Advisory Group. “It is still widely used in today’s economy.”

Consumers are not worried about cash

There is a common media narrative that people are worried about how dirty cash is, but when asked, consumers have largely said otherwise. Cardtronics found that only one in ten people consider cash to be “very unsafe.” In contrast, one in four consumers said cash was “very safe” to use. An additional 51% of people viewed cash as either safe or neutral, meaning that the vast majority of people do not consider cash to pose a health risk.

In addition to viewing cash as a safe way to pay, many believe it’s still as important as ever. The Cardtronics survey asked people to respond to the statement “Cash is as important today as it ever was.” In response, “Over 80 percent of respondents agreed or were neutral while only 6 percent strongly disagreed.”

Where cash rules

One reason why cash is regarded as so important is that many customers turn to it for lower dollar value transactions. For example, Cardtronics’ survey found that in 2019, 59% of consumers ranked cash as the ideal payment method for transactions below $10. By April 2020, the number dropped only slightly to 54%, still the most popular way to pay for small dollar transactions, further showing how cash remains popular despite the pandemic.

Reville explained that Mercator’s data reveals a similar attitude among consumers. “Our research shows that cash is most popular in the types of locations that are typically low-ticket like convenience stores and QSRs (fast-food).” For many, cash is simply the most convenient and quickest way to pay for smaller transactions.

In addition to low-dollar transactions, cash is still popular for peer-to-peer (P2P) payments. Cardtronics’ report found that among all consumers, 38% most preferred cash when receiving funds from another consumer. The next closest payment method was non-bank P2P money transfer services (such as Venmo), with 17% of consumers reporting this was their preferred method.

“Many consumers choose their preferred payment method because they say it helps them with money management,” said Reville. “For some it is credit cards, for some it is debit and for others it is cash.” When it comes to P2P transactions or those below $10, cash is the clear favorite.

Cash is critical for the underbanked

Another appeal of cash—and one reason why it will remain with us for the foreseeable future— is that it serves the underbanked and unbanked population. According to the Federal Reserve, a striking 22% of the population is either underbanked or unbanked (16% and 4%, respectively). For these people, cash is the most important way to pay for goods and services.

Nearly three in four underbanked consumers reported using “as much or more cash within their payment mix today versus before the crisis.” This finding mirrors Mercator Advisory Group’s research on the topic. Because of how crucial cash is for the most economically vulnerable members of society, Reville doesn’t believe cash will go away any time soon.

Payments are down across the board

One reason people may perceive cash payments to be declining is due to the overall decline in payments of all types, including the daily small dollar transactions, such as the visit to the coffee shop, that cash is known for. Cardtronics’ research found that nearly half of consumers reported spending less in April than they had two months prior. While all payments have declined in absolute terms, cash has not declined as a portion of the payments mix or in consumer preference, proving the resiliency and continued importance of cash as a consumer payment choice.

When stores open back up, expect cash to retain its popularity among a large portion of consumers. Despite some continued pessimism about the health of cash, this payment method remains truly alive and well.* Why medical experts are speaking up for cash in times of COVID-19 (CashMatters)

The post How Has COVID-19 Impacted Cash Use? appeared first on PaymentsJournal.

Since the onset of the novel coronavirus, consumers have had to face a shortage of their favorite foods, cleaning products, and, of course, toilet paper as manufacturing and processing were interrupted and the supply chain for these staples broke down. Now the most recent shortage the country is facing is a shortage of coins. While the use of cash for purchases has gradually declined, this shortage is an indication of just how critical cash still is in consumer transactions. 

Grocery store giant Kroger announced that it is no longer giving coins back in change. They are asking customers to either donate the amount normally provided in coins to the charity Zero Hunger, Zero Waste Foundation, or applied to their Kroger loyalty card, the balance of which they can then use against their next purchase.  The Fed has convened a task force on the issue too. Claire Greene of the Federal Reserve Bank of Atlanta wrote this about the issue in a blog post on Take on Payments:

Got any quarters sitting in a mug on your kitchen counters? Pennies napping between the couch cushions? Dimes lounging in the back of a drawer?

It’s time to get those coins moving again! You can think of coin circulation as the spinning wheel on an exercise bike, tracking from consumers to retailers to financial institutions to the Federal Reserve to financial institutions to retailers to consumers and around again. As in-person retailers around the United States restart their businesses, they need to restock the till. But where are those coins? The bicycle wheel is not currently spinning well because many coins went home with consumers in mid-March and have yet to get back into circulation.

How can you help? Bring your stash to a bank or retailer, and they’ll be happy to see you. One bank is sponsoring a raffle for coin depositors; another is paying a premium to account holders who bring in lots of coin (#getcoinmoving). Or pour your hoard of pennies, nickels, dimes, and quarters into a coin machine to restart that spinning wheel while putting greenbacks in your pocket.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Check Under the Sofa Cushion; the U.S. Economy Needs Your Coins appeared first on PaymentsJournal.

The pandemic has produced many losers and a few winners. In the payments world one of the biggest losers is cash. Despite multiple studies that contend that the odds of catching COVID-19 from paper currency is very small, it appears that consumers are avoiding cash and embracing card payments, particularly contactless payments.

The conventional wisdom is that consumers do not want to handle cash, or even touch a POS terminal, and are thus moving to contactless payments because, well, they are contactless. Perhaps in the age of COVID-19, a smart marketer will rebrand contactless as “no-touch” payments to highlight the fact that the buyer doesn’t have to touch cash or the terminal in order to pay for things.

For readers of this column this might not be “new news.” However, the New York Times published an article about contactless trends in Europe as a result of the COVID-19 outbreak. The article, Our Cash-Free Future Is Getting Closer, specifically cites the growth of contactless in Europe. There are many countries in Europe where cash makes up a significant proportion of all transactions, much higher than in the U.S. or Canada, for example. The contactless trend in Europe can be summed up in the following quote:

“We’re living through an amazing global social experiment that is forcing governments, businesses and consumers to rethink their operating models and norms for social interactions,” said Morten Jorgensen, director of RBR, based in London, a consulting firm specializing in banking technology, cards and payments.

“We have a world in which there is less contact,” he said. “People’s habits are changing as we speak.”

Contactless usage in Europe was also aided by issuers, acquirers, and governments working together to raise the contactless payment ceilings, that is the maximum amount of money a person can pay with a contactless card.

Limits as low as 20 euros, originally intended to prevent thieves from being able to buy large amounts with a stolen or hacked card, were raised to 50 euros or more in France and other countries during quarantine, enticing shoppers to increase the number and value of their purchases.

Will this all lead to the cashless economy that some predict? Not likely. As the article points out, there are many people who still need cash because they are not able to get payment cards. Think underbanked and unbanked consumers who do not currently have access to electronic payments. They still need cash to be able to function in the economy. Even in countries where being banked is legislated, cash is still an important part of the economy.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Europe’s Move Away from Cash appeared first on PaymentsJournal.

What are the odds on Las Vegas casinos going cashless? Looks like better than even right now if the COVID-19 health and safety precautions prevail. Gaming regulators and the industry itself has green-lighted looking into mobile apps and digital wallets, something that sports betting venues have successfully implemented. Casinos will find major savings if they go cashless by reducing the labor intensive cash counting and reconciliation. After all, slot machines stopped taking coins a long time ago. If considering an over-under wager for the amount of time it will take to start seeing digital betting in Vegas casinos—take the under.

The following Wall St. Journal article reports more on this topic:

The U.S. casino industry remains a bastion of cash in an increasingly cashless world, where high-security vaults storing millions of dollars have inspired heist movies and the living-large vibe of Las Vegas is ferried in bags bulging with currency.

But the coronavirus pandemic has generated concern over bills circulating among hundreds of hands on the casino floor, and that is pushing casinos toward cashless technology after years of discussion.

The Nevada Gaming Commission, which oversees casinos, on Thursday approved rule changes that clear the way for wider use of cashless wagering in casinos. The American Gaming Association, an industry trade group, this month gave state and tribal regulators a list of priorities for modernizing payment systems.

Cashless payments through mobile phones and digital wallets—paying for poker chips or slot-machine credits like a cup of coffee from Starbucks —would bring bricks-and-mortar casinos more in line with modern life. Fears over the spread of Covid-19 are leading to broader consumer adoption of mobile-phone payment systems such as ApplePay or Starbucks’ app to avoid contact at cash registers. 

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Vegas Casinos Betting On Cashless Gambling appeared first on PaymentsJournal.

Chalk this one up as another consequence of the pandemic.

The United States is apparently facing a shortage of coinage. During his testimony to congress yesterday about the overall state of the economy, Fed Chairman Jerome Powell was asked about the shortage of coins in the U.S. According to an article in the Wall Street Journal, U.S. Experiencing Coin Shortage Due to Coronavirus Pandemic, Powell Says, Powell was asked a direct question about the shortage of coins in the economy and he said:

“With the partial closure of the economy, the flow of coins through the economy has gotten all…it’s kind of stopped,” Mr. Powell said. “We are well aware of this and are working with the Mint and we are working with the reserve banks. And as the economy reopens, we are seeing coins begin to move around again.

With the closure of so many stores, and the rumors of cash being able to transmit the virus, people have not been spending paper money, and as a result, merchants haven’t been giving change. Furthermore, the pandemic negatively affected the way the Fed produces and distributes coins. As a result, banks were holding less coins.

Now as the economy begins to open up, merchants are looking for coins, and banks are having a difficult time keeping up with demand.

The shortage of coins does not mean there is a shortage of cash in the market.  As the article points out:

But demand for currency overall has surged: On an annual basis, currency in circulation has roughly doubled between February and May, according to Fed data. As of June 10, currency in circulation totaled just under $2 trillion.

Some Fed officials have said the surge in demand for cash isn’t surprising and mirrors other periods of stress, when households and others seek to hold more physical money in case of problems accessing banks or cash machines.

As state and local governments ease their restrictions on businesses and allow them to open up, people will start to spend the cash that they have held in safekeeping. Also, merchants that have been encouraging electronic payments will start allowing cash again. This will likely lead to a short-term increase in cash payments and a decrease in credit and debit card payments as people spend down the cash they have under the mattress.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Fed Charmain Powell, Have You Got Four Quarters for a Dollar? appeared first on PaymentsJournal.

In an Opinion piece in the Wall Street Journal, Coronavirus Made Me Give Up Cash (paywall), author Allan Ripp discusses his relationship with cash and how the threat of catching the COVID-19 virus inadvertently led him to rethink his need for cash.

While this is just one person’s story, and his personal set of circumstances, it does fit into a larger discussion about the future of cash. Let’s face it, despite entities like the WHO and others publically stating that the chances of catching the virus from cash are very low, many people are still very suspiciousof the currency and its ability to transfer COVID cooties. Many retail establishments are refusing to accept cash or, at a minimum strongly encouraging card use.

The pandemic has only fueled the ongoing discussion about where cash fits into today’s marketplace. Every new payments technology that has been introduced in the past 20 years has been accompanied by prognosticators claiming that this is the technology that will result in the death of the currency as we know it. Every time, they have underestimated the staying power of the greenback.

While cash usage has been suffering “cuts from a thousand knives.” Increasingly consumers are becoming more comfortable with debit cards and credit cards and the supporting technologies like contactless payments and mobile payments. Cash largely has been relegated to small transactions at places like convenience stores and fast food restaurants.

Then, along came COVID-19.

A recent post on BBVA’s website sums it all up very nicely.

“Cash usage has been on the decline for the better part of the last 25 to 30 years, dating back to the early 90s as popularity of debit cards became mainstream,” said BBVA USA Head of Retail Larry Franco. However, the trend started to accelerate significantly with the introduction of the iPhone and mobile banking and payment applications that made it easier to manage money and conduct cashless transactions. So, up to this point, there have been at least two meaningful inflection points that seem to have hastened the decline in cash usage. Now it seems as though we have another, and perhaps the most significant, accelerator: a global pandemic. ”

I tend to agree with Mr. Franco when he says that the pandemic is an accelerator the likes we have not seen before. Many people are trying to pay with contactless cards or using a universal wallet like Apple Pay or Google Pay to avoid touching cash and the POS terminal. Add that to the aforementioned issue of stores encouraging electronic payments, and it is evident that cash is being marginalized during the pandemic.

Will cash rebound when COVID-19 is behind us? Honestly, it is hard to say. If I were a betting man, I would say that some of the people forced to use cards will stick with card and some people will go back to their old cash habits. The actual size of these two groups is anyone’s guess.

Overview provided by Peter Reville, Director, Primary Research Services at Mercator Advisory Group.

The post COVID-19 Deals a Blow to Cash appeared first on PaymentsJournal.

In this article I thought I’d explore the world of payments and the recent activities aimed at tackling the Covid-19 crisis. I’m not focusing on the pre-existing technologies and products that can be deployed to help, but rather the actions and decisions taken since the outbreak of the pandemic. I’m sure that I have captured only a small subset of what is being done, but it gives a flavour of the way that the payments world is reacting to fight Covid-19.

Avoiding the use of Cash

Although there is no conclusive evidence that the use of cash is a factor in spreading the virus, most people and organisations believe that it is. Many shops will no longer accept cash at all.

I was buying groceries from a small shop recently that was not accepting cash, and to make matters worse their card terminal had failed: they were relying on the honesty of customers going home and making online bank transfers for the goods they purchased.

In the western world, value limits for contactless transactions have been raised to allow more purchases to be made using this technology. The increase to £45 in the UK seems somewhat conservative when you look at the new levels of $200 in Australia and $250 in Canada.

It’s also interesting that consumers are switching their purchases from credit to debit cards as they recognise the need to manage their finances in an environment where their income may soon be affected.

In Africa, a different approach is being taken. To encourage the use of mPesa for payments in Kenya, transaction fees have been waived for small purchases, hospital bills, sending money, and transfers between mobile money wallets and bank accounts. The transaction limit for mobile money has also been doubled. Similar actions have been taken by MTN in Zambia.

In the US, Walmart has introduced completely touch-free checkouts using their mobile app, which avoids the need for customers to touch the checkout screen to select their method of payment. In Florida cash is no longer accepted at road toll booths.

Cheques are still with us

Pakistan has taken steps to minimise person-to-person contact for people paying cheques in to their accounts. The payee can now present a cheque at the paying bank rather than having to go to their own branch: this will also speed up the payment from days to minutes.

Banks in Pakistan may also collect cheques from their customers, and customers will be able to drop cheques at drop boxes at their banks.

Merchant fees

To help merchants, Visa and Mastercard in the US are deferring changes to their fee structures.

In the US, Liquid Payments is offering their mobile based patient payments platform free for three months to healthcare providers to meet the increased demand for telehealth services.

Relief for consumers

In the US, banks are being encouraged by the government to provide support for card holders who will be experiencing difficulty in paying off their cards as a result of Covid-19 by eliminating ATM fees, overdraft fees and credit card late payment fees. Many banks are setting up hotlines for affected customers to seek assistance, and some are already offering deferred payments without penalty.

In the UK, the FCA is proposing guidance to banks expecting them to defer credit card payments for three months for consumers who are in financial difficulties as a result of Covid-19, although they are not requiring suspension of interest charges. The FCA is also requiring card issuers to review their charging rates to ensure they are in line with industry norms and do not penalise people on low incomes or with poor credit ratings. These measures are due to have come into effect on the 8^th April, following a consultation period.

Deferred changes

According to Bloomberg, Visa in the US may postpone a deadline for petrol stations to upgrade their fuel pumps to accept chip cards, which would be costly and require human resources that are no longer available to do the installations.

And PCI SSC (Payment Card Industry Security Standards Council) has extended the life of the PCI PTS POI v3.0 standard for 12 months because of the disruption to the supply chain caused by Covid-19 which would make it difficult to replace POI (Point-of-Interaction) terminals in time to meet later standards.

Staying Safe

A key weapon in the fight against Covid-19 is working from home. PCI have provided guidance in a blog called “Protecting Payments While Working Remotely” to provide best practice security for remote working.

One of the least pleasant sides of human nature that has emerged, is the desire of a few amoral criminals to rob us on the back of Covid-19. In the payments world, we are seeing various publications educating us about these thieves. For example, PCI have published a blog called “Beware of COVID-19 Online Scams and Threats,” and Proofpoint have published a blog “Coronavirus/COVID-19 Payment Lures on the Rise” which describes some credit card scams.

The post Payments Ecosystem Playing Its Part appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – North American PaymentInsights, U.S. – ATMs: No Fee for Me.

What Percentage of US Consumers Don’t Use ATMs… at All?

• 14% of US consumers don’t use to get cash at all.
• In contrast, 4% of US consumers use to get cash daily.
• The largest portion (22%) of US consumers use to get cash a few times a month.
• 13% of US consumers use to get cash weekly. 
• 27% of US consumers never use to deposit cash.
• 30% of US consumers never use to deposit checks.
• About 13% of US consumers use a few times a year to get cash, deposit cash, and deposit checks.

About Report

Mercator Advisory Group’s most recent consumer survey report, ATMs: No Fee for Me, from the 2019 Technology Survey of the bi-annual North American PaymentsInsights series, examines U.S. consumers’ current use of and perspective on ATMs.

The report, which is based on an online panel survey administered to 3,006 U.S. adults in November-December 2019, presents results from questions exploring how adults in the United States use ATMs for cash withdrawals, deposits, and other transaction types. It also presents data on their opinions about paying ATM fees and methods of authenticating users at the ATM.

The post What Percentage of US Consumers Don’t Use ATMs… at All? appeared first on PaymentsJournal.

The COVID-19 pandemic has brought unprecedented challenges to financial institutions, retail businesses, and consumers alike. Non-essential businesses have had to close. Many companies that remain open have had to alter their operations to comply with emergency regulations and address both employee and consumer pandemic-related concerns. Consumers have responded to directives to stay at home and practice social distancing. Those whose jobs are not facility dependent have been encouraged to work remotely. Collectively, these actions have accelerated the ongoing shift from physical to digital payments, shopping, and banking.

To explore the role of cash and ATMs as the retail and banking worlds shift from physical to digital, PaymentsJournal hosted a webinar titled Adapting to the New Normal, Consumer and Retail Changes in 2020. It featuredBrad Nolan, EVP Allpoint Solutions at Cardtronics, and Peter Reville, Director Primary Research Services at Mercator Advisory Group.

Recent Trends in Consumer Behavior

Even before the COVID-19 pandemic, the wealth gap in the U.S. was expanding. According to Pew, the share of wealth held by middle- and upper-income families grew from 60% in 1973 to nearly 80% in 2016. This gap will only continue to widen now that the unemployment rate has reached its highest level since the Great Depression, and is still climbing.

Consumer behavior is changing. Economic circumstances have contributed to the decision of many millennials to postpone starting a family. A greater focus on work-life balance has bolstered the gig economy and led to an increasing number of remote workers who seek flexibility and freedom. Heightened concerns about healthy living and the environment affect discretionary spending. The resale market has seen substantial growth in recent years as millennials and Gen Z consumers have demonstrated they are willing to rent rather than buy. They are renting everything from housing and furniture to tools, technology, sports equipment, clothing, and accessories.

Consumer Payment Trends

A 2020 Health of Cash Study (conducted in late 2019) found that 80% of consumers use cash every month and expect merchants to accept it. The top reasons for using cash are ease of use, security, privacy, and budgeting. Consumers want to choose how they pay, and they want cash to be one of the options available to them.

The global pandemic is likely to accelerate the adoption of digital payments as many reluctant people are now more willing to try it. A recent study by RTI showed that 30% had tried contactless payments because of COVID-19, and 70% of those who tried it said they are planning to continue to use it after the current crisis.

The pandemic and society’s response is likely to shift the balance of payments, as consumers integrate lifestyle changes and alter the decision calculus of how to pay in a wide variety of circumstances. Cash and digital payments will continue to be essential partners. While cash utilization as a percentage of payments is trending down, the number of payments is on the rise, including cash payments which continue to climb.

Retail/Bank Transformation

Retailers and banks are evolving quickly in response to changes in customer behavior. They are focusing on customer experience to develop brand loyalty and collecting data to provide more personalization. As expected, the retail and banking industries are steadily increasing online transactions.

Major retailers, including Bloomingdales, Macy’s, Banana Republic, and Urban Outfitters, are entering the rental market. Brick and mortar stores are shrinking their retail space and consolidating distribution. Self-service opportunities are gaining traction, from placing online orders for pick up or delivery to using ordering kiosks at fast-food restaurants.

Banks have been closing branches over the past decade to cut costs. These closures have hit small businesses in rural towns the hardest. While they can turn to digital banking to meet some of their needs, they cannot carry out cash transactions online.

ATMs

ATMs were in high demand long before the COVID-19 pandemic. According to a 2018 Mercator Advisory Group survey, 59% of consumers use ATMs at least once a month, and 77% say that avoiding ATM surcharges is an important factor when choosing a new bank. The majority of consumers most often use ATMs at or owned by their financial institutions, thus avoiding fees to access their money. However, younger consumers are more likely than their elders to pay a fee to use ATMs at non-branch or retail locations.

The current crisis has led to the temporary closure of many financial institution branches nationwide. Lack of branch access coupled with social distancing will create a higher demand for ATMs, with many of these new users likely to continue using these self-service kiosks in the future.

The Future of ATMs

Underbanked consumers generate considerably more transactions than their banked counterparts, despite having access to fewer ATM locations. Improved ATM distribution will help fulfill the needs of this population.

Small and medium-sized businesses are critical drivers for ATM expansion. SMBs need the ability to perform remotely many of the same transactions that branches typically handle. In addition, these organizations have specific bulk cash and coin needs.

Consumers want smarter ATMs that can do more. Cash is, and will continue to be, a desirable payment option, but people want choices. Transaction needs go beyond traditional deposits and cash withdrawals. Customers want to use ATMs to manage a variety of banking activities, including loan disbursements, utility payments, P2P transactions, and conversion of cash to digital funds and digital funds to cash.

For financial institutions, future ATMs can help shift many in-person tasks to self-service, potentially reducing capital and payroll needs while connecting more seamlessly to online and mobile banking paradigms. Financial institutions will manage these ATMs in a variety of ways, including tapping into a larger share of on-demand ATM services to expand infrastructure on shared networks.

Allpoint provides a surcharge-free network that meets the diverse needs of ATM users and financial institutions. As Allpoint expands network functionality to include cash and checks deposit as well as mobile cash access, consumers can conduct a broader range of banking transactions, fulfilling more and more of the traditional role of the branch but spread across thousands of diverse touchpoints closer to consumers’ homes and jobs.  Financial institutions can shift their focus to digital strategies that meet revolutionary changes in consumer behavior and needs.

For a recording of this webinar, please click the link below:

https://attendee.gotowebinar.com/recording/3766897556079142158

The post Will Cash Have a Role in an Increasingly Digital World? appeared first on PaymentsJournal.

Rellevate, LLC, a digital banking fintech company aimed at facilitating consumers’ access, movement, and use of their money-anytime, anywhere, has teamed with Cardtronics to provide surcharge-free cash access through Cardtronics’ Allpoint Network.

Rellevate customers can withdraw cash at over 55,000 Allpoint ATMs worldwide using their Rellevate Visa® Debit Card, avoiding costly ATM surcharge fees.

“Whether it’s digital banking, saving, paying bills, moving money, accessing earned pay between payroll cycles, or obtaining cash, our mission is to offer access to consumer financial services at fair, affordable prices,” said Stewart Stockdale, Chairman and CEO of Rellevate. “By offering convenient and worldwide   access to cash through its extensive Allpoint Network, Cardtronics makes an ideal partner in realizing that goal.”

Cardtronics’ Allpoint Network gives fintech innovator Rellevate convenient access to a physical infrastructure of secure, high-performing ATMs at top retail establishments including grocery and convenience stores, pharmacies, and big-box stores.

“By reinventing the way people manage and access money, virtual banking innovators like Rellevate are making transactions more seamless and user-friendly,” said Carter Hunt, Managing Director of North America for Cardtronics. “Providing convenient access to cash is an important part of that equation, and we are pleased to offer this service through our worldwide network.”

About Rellevate

Rellevate, LLC is a digital banking services company dedicated to empowering consumers through innovative banking and payment services that allow consumers to access and use their money anytime, anywhere. The company’s suite of financial services, offered primarily via employers, include digital banking, Visa® debit cards, Pay Any-Day, bill pay, and send money (www.rellevate.com).

About Cardtronics (CATM)

Cardtronics is the trusted leader in financial self-service, enabling cash transactions at approximately 285,000 ATMs across 10 countries in North America, Europe, Asia-Pacific, and Africa. Leveraging our unmatched scale, expertise, and innovation, top-tier merchants and businesses of all sizes use our ATM solutions to drive growth, in-store traffic, and retail transactions. Financial services providers rely on Cardtronics to deliver superior service at their ATMs, on Cardtronics ATMs where they place their brand, and through Cardtronics’ Allpoint Network, the world’s largest surcharge-free ATM network, with over 55,000 locations. As champions of cash, Cardtronics converts digital currency into physical cash, driving payments choice for businesses and consumers alike. To learn more about Cardtronics, visit www.cardtronics.com and follow us on LinkedIn and Twitter.

The post Rellevate Joins Cardtronics’ Allpoint Network To Provide ATM Access appeared first on PaymentsJournal.

It’s an understatement to say the coronavirus pandemic has triggered sea change  worldwide, including how and where people work, shop and pay for their purchases. In some areas, cash is being quarantined because of the fear it could contribute to the spread of COVID-19.

Reuters reported the U.S. Federal Reserve, as a precaution, has been quarantining dollars repatriated from Asia before sending them back into circulation. The central banks in China and Korea have ordered that currency notes be either disinfected with ultraviolet light or destroyed. Some financial institutions, at least, are taking steps to ensure that cash is sanitized.

Cash quarantines aside, anxiety over the spread of the virus has also prompted some businesses to refuse to accept cash as a payment, which means the unbanked have no other way to pay for their purchases.

According to Christian Hawkesby, Assistant Governor and GM Economics, Financial Markets & Banking at the Reserve Bank of New Zealand, “Retailers should use common sense when it comes to cash. Businesses are not obliged to accept cash, but declining it may end of disadvantaging people who rely on its use.”

So perhaps, instead of avoiding cash, it’s a good time to stock up on it like many are doing with toilet paper, canned goods and hand sanitizer – and to be wise about social distancing and hand hygiene, as the Center for Disease Control and Prevention (CDC), suggests.

Show me the (evidence of COVID-19-contaminated) money

CBS News has reported that some businesses and individuals have stopped using physical currency because of the sheer number of people who handle cash throughout  its lifetime. (Bills get traded constantly and stay in circulation from five to 15 years – and sometimes longer.)  However, there isn’t much evidence to suggest that handling cash puts a person more at risk of being infected by COVID-19 than any other payment method – digital and non-digital. It’s what’s done after cash is handled that matters.

A recent MIT Technology Review article stated, “For COVID-19, it appears that people become infected by inhaling particles someone else has coughed or sneezed into the air, or by contacting a virus particle with their hand and then touching their eyes, nose, or mouth.”

Again, hand hygiene is necessary as is staying away from crowds and people who’ve contracted COVID-19.

Banning cash isn’t the answer

If the use of cash is banned, what else should be banned with it? Although smartphones aren’t passed around like money, they harbor germs, too. And what about the mobile wallets found on smartphones? Think, too, of ATM machines and card machine pin-pads used by hundreds of people daily – they are suspect of carrying infection. Restaurant menus are handled by many, and it’s hard to know who has touched the items on shelves at grocery stores.

The truth is people are more likely to catch COVID-19 in a movie theater, restaurant or crowded grocery store.

“You’re more likely to pick up COVID-19 from people exposure than from the type of payment,” said Marilyn Roberts, a microbiologist at the university of Washington School of public health, in a recent MIT Technology Review report.

Exposure to the virus through inanimate objects aside, a Wall Street Journal article reported that recent online outages at financial companies like Robinhood, Vanguard and Fidelity have made some people skittish about their financial accounts. Therefore, I’ll reiterate what I said earlier: perhaps people should keep extra cash available, just in case, just in case.

Keep calm

In conclusion, one recent article, widely circulated in the United Kingdom, claimed the World Health Organization (WHO) advised against using cash. Since then, the organization issued the following statement, reported by MarketWatch, claiming it was mispresented by the media:

“We did NOT say that cash was transmitting coronavirus,” said WHO spokeswoman Fadela Chaib.

Payment methods of any form, although possible, are unlikely to transport coronavirus and with new rules being implemented across the globe around social distancing and self-isolation, retail businesses have much larger concerns. Further, precautions amid the coronavirus are not only practical but necessary. Panic about using cash is not.

The post Clearing Up the Role of Cash Amid the COVID-19 Pandemic appeared first on PaymentsJournal.

The coronavirus pandemic has brought about sweeping changes to our way of life. It has become the new normal for cash to take a backseat. With a cashless economy fast becoming the norm, physical currency is becoming increasingly obsolete. Practically every purchase made in recent times has been done through digital payments – from food delivery and online shopping to restaurant checks and contactless payments on public transport. It’s almost as if cash is no longer viable in our current landscape – but it’s still very much alive and kicking.

As another impact of COVID-19, some Chick-fil-A shops are going cashless. Medical reports have appeared indicating that currency bills can carry and retain the novel coronavirus.

Food store employees are already working under precarious conditions and don’t need one more thing to worry about regarding their safety, so QSR chains like Chick-fil-A may accelerate the shift to cashless payments.

One obstacle is that some cities and states currently prohibit stores from not accepting cash. This may be overlooked for now, but expect to see more food shops and other merchants encouraging customers to use contactless payments, especially via their mobile order and pay apps.

The following Business Insider article reports more on this topic:

Chick-fil-A is making moves to keep its workers and customers safe amid the coronavirus pandemic. 

Certain locations of the fast-food chain are going fully cashless or strongly encouraging that customers avoid that method for payment.

According to posts on Facebook from various Chick-fil-A locations in states including Florida, Indiana, Georgia, Virginia, and Maryland, stores are shifting toward cashless payment models to slow the spread of the virus. While some stores are simply encouraging the use of mobile or credit card payment, other stores are restricting the use of cash altogether. 

A store in Severna Park, Maryland, posted that on Monday that as of Tuesday, April 14, the store would “no longer be able to accommodate cash customers.” 

A Virginia Chick-fil-A posted on Monday that it was officially going cashless.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Chick-fil-A Preferring Cashless Customers During COVID-19 appeared first on PaymentsJournal.

Recently, I looked at the question of whether using cash presented more of a COVID-19 health risk than using contactless. There was no convincing evidence either way, but it’s clear that there’s a sentiment against handling cash and that both consumers and merchants favour a move to contactless and online.

The move away from cash is nothing new of course, and the writing has been on the wall for many years. But the news of its demise has been premature, as cash had been clinging on to its role in commercial life. The question of the day, though, is whether the temporary antipathy inspired by COVID-19 will translate into a longer-term effect, and what that might look like.

Of course, if there’s an accelerated desire to move away from cash, then it will likely impact other changes that are already underway within the payments industry. I am thinking particularly of the EU’s Strong Customer Authentication (SCA) requirements. SCA is already being implemented for online banking and is due to be implemented for purchases in 2020. Some consumers will see the attraction of enhanced security and so be more inclined to use their cards. But getting people to accept the need for security is a bit like getting kids to eat their vegetables – you know it’s good for them, but they don’t necessarily like it.

So, the key factor moving forward will depend on how frictionless the implementation of SCA is – implementers must meet certain requirements, but they can choose how they do that. The latest version of 3-D Secure (now called EMV 3DS 2.2) is designed to enable payment institutions to meet the requirements of SCA and has put a lot of thought into keeping the process frictionless and avoiding customer-terminated transactions. By providing a lot more information about the transaction and the cardholder to the issuer it allows distinctions to be made between low-risk transactions (such as buying a loaf of bread from the shop across the road) and high-risk transactions (purchasing a hi-tech TV in a country you’ve never been active in before). The low-risk transactions should go through transparently, while the high-risk transaction will require some kind of multi-factor authentication, most likely involving a mobile device.

If SCA for online banking is anything to go by, this will probably accelerate the use of mobile devices for payments – 3DS implementations will probably result in the mobile device being a lot more convenient to use than plastic. Here’s how my online banking works if I am using a PC:

• Go to the online banking website
• Enter my 10-digit user ID
• Enter digits of my PIN
• Enter characters of my password
• Wait for an authorisation code to be sent to my mobile device
• Enter the 6-digit authorisation code into the PC

Whereas, if I am using my mobile phone:

• Start the app
• Enter a 6-digit password

That’s it. Even if I’m already working at my PC, it’s easier to pick up the mobile to do online banking.

This brings me to another question that interests me – if there is a switch from cash to card or mobile, will the switch be to credit or debit accounts? The statistics and predictions are quite conclusive – the crown goes to debit. For example, UK Finance’s UK Card Payments 2018 report predicts that by 2027 each UK adult will make 5 transactions a month by credit card, but 28 by debit card (as opposed to 5 and 20 in 2017).

Personally, I’m a bit bemused by this preference for debit cards. I’m from the generation that grew up with credit cards. So, although I never used the (horribly expensive) credit capability, I got used to enjoying interest-free deferred payment, being able to check my statement before making payments, making a single consolidated payment, cardholder rewards, and protection against fraudulent, disputed, or failed transactions. The only time I use a debit card is to make ATM withdrawals.

But a younger colleague had a diametrically opposite view – she always used her debit card. For her it was far more important to always know the state of her finances without the possible surprise of a big bill at the end of the month.

So, the preference for debit probably has a generational effect, but I guess the biggest factor is the lower barrier to getting a debit card compared to getting a credit card.

What do I conclude from all this? There will probably be a move away from cash accelerated by COVID-19, which will typically be manifested as debit transactions using mobile devices.

The post Use of Cash After COVID-19 appeared first on PaymentsJournal.

There is a constant debate on whether global economies should continue to offer cash payments or go cashless by converting solely to digital. Critics say this move would disenfranchise unbanked, cash-dependent consumers and does not drive financial inclusion, while others claim that a failure to go cashless limits innovation in the fintech sector. But what if the best solution lied somewhere in the middle?

Cash and digital payments don’t have to be mutually exclusive; this is not a zero-sum game as the two payment options can exist together. According to new PPRO data, over half of US and UK consumers will stop the checkout process if it is too complicated or their preferred methods are not available. Consumers prefer having multiple payment options, whether it be using a bank transfer, a credit card, a mobile wallet or even cash. Payment flexibility is a crucial factor in offering a seamless checkout experience. Some shoppers never carry cash while others view cash as the only way they want – or are able – to pay.

The key is for merchants to offer a personalized experience for each and every consumer.

The Road Ahead for Cash

Despite a seemingly rapid shift towards digital payment methods, cash is not going anywhere. Many regions are tied to cash-based payments. For example, in Latin America, 21% of e-commerce transactions are completed by cash. Via cash vouchers, many consumers are able to access the global, online marketplace: at the checkout page, consumers are shown a barcode for their order. They take this barcode (either printed or on their mobile device) to a local convenience store or bank and pay in cash. At that point, the goods are shipped.

This local payment method is innovating how consumers pay, meeting their needs and ensuring financial inclusion. Removing cash vouchers would not only limit access to e-commerce but also eliminate a fourth of the addressable LATAM market for retailers. Further, 48% of LATAM consumers are unbanked, showcasing the need to offer various methods for payment.

Cash is often preferred for a plethora of reasons: It can be easier to use cash for smaller purchases, older consumers may be wary of digital payment methods, and avoiding credit can help shoppers stay within budget. This past year, Philadelphia recently became the first US city to propose a ban on cashless payments and the Central Bank of China made it illegal to reject cash payments. New York City has just become the fourth city in the US to follow suit. The Mercedes-Benz Stadium in Atlanta became the first US sports venue to go fully cashless. Although to ensure all consumers are included, kiosks were installed on each level of the stadium where cash can be loaded onto prepaid cards with no fees attached. Merchants must be able to provide multiple options to consumers or risk excluding part of the market.

Are Digital Payments Inclusive?

Financial inclusion is not just limited to offering cash payments. Each region has its own nuances that influence consumer payment preferences. Consumers want to pay with the payment methods they are comfortable with; a majority of online shoppers will abandon their cart and purchase items on another site if they aren’t offered their preferred way to pay. For US shoppers, this could mean all the major credit cards, but for EU consumers, this could be a bank transfer method like iDEAL.  

Local payment methods serve as the bridge to connect shoppers with merchants across the globe.

A great example of this is the rise of the mobile payment method M-Pesa in Kenya. According to PPRO research, more Kenyan consumers have a smartphone (60%) than a bank account (56%). Payment innovations have helped solve consumer needs and enable financial inclusion by turning a smartphone into a virtual bank account. Similarly, in southeast Asia, GrabPay, which started out as food delivery and on-demand taxi app, has evolved into a leading payment method used by 115 million consumers across the region. These sentiments resonate in the US as well;64% of millennials think they will use online-only banks exclusively in five year’s time.

Finding a Balance

Payment methods need to enhance the consumer shopping experience, and a combination of cash and digital payments is a way to do so. In some cases, the lines between cash and digital payments start to blur. In Argentina, Mexico and Brazil, cash-based payment methods like RapiPago, Oxxo and Boleto Bancario give many cash-dependent consumers a chance to shop online. Cash will continue to complement many digital payment methods, not restrict them.

The key is for merchants to understand the factors driving consumer behaviors around the world and offer the specific local payment methods their target customer prefers. In some cases, this is cash and others a digital method. Having a choice is what will not only drive inclusion but also increase sales around the globe. Innovation does not necessarily mean cashless, but rather the industry creating solutions to solve consumer needs.

The post Cashless or Classless: The Flaws in Today’s Payment Debate appeared first on PaymentsJournal.

One of the big questions among marketers, product people and others lately is, “How will the COVID-19 pandemic change consumer behavior?” In the payments world that morphs into questions about mobile banking with remote deposit capture, contactless payments and, also, cash.

In a recent article in Retail Trends, Will Covid-19 have a permanent impact on the usage of cash? the author rightfully notes that the demise of cash has long been predicted. 

The move away from cash is nothing new of course, and the writing has been on the wall for many years. But the news of its demise has been premature, as cash had been clinging on to its role in commercial life. The question of the day, though, is whether the temporary antipathy inspired by COVID-19 will translate into a longer-term effect, and what that might look like.

Talking about cash, let’s get the elephant out of the room.  Despite early news reports, the World Health Organization has come out, publicly and emphatically stated that chances of catching coronavirus from cash are very low. Regardless of what the WHO says, there still is an alarming number of Americans that are concerned about cash carrying the virus according to a recent study released by RTi Research. As the graph below shows one-third (32%) of Americans are very or extremely concerned about getting the virus from cash.

Perhaps as a result of the concerns around cash coupled, with the “shelter in place” life we have all adapted, further research from RTi Research, indicated that consumers are, indeed, using less cash and plan to do so in the future. According to RTi 30% of Americans say they are using less cash than they were two weeks ago and 28% say they are going to use less cash in the next 30 days. While the latter is only speculation, change in cash usage in some way is likely on the horizon.

The pandemic is significantly changing consumer behavior and the old way of doing things is being turned on its head.  Because of this, I think it is pretty safe to say that consumers are exploring new, cashless, ways to pay.  The unknown at this early stage is which new behaviors consumers will continue to use, and which old behaviors will they revert to. The answer will ultimately lie in the perceived value they get from the alternatives that have chosen (or been forced) to use compared to their pre-COVID-19 behaviors.

If I were asked to bet a meaningful some of money on this question, I say it will be two steps forward one step back.  Some will adopt new payment methods long-term and others will revert to the old ways like paying with cash once we come out of this pandemic. Ultimately, the death of cash will come from one thousand knives, the COVID-19 virus is a pretty big knife.

Stay safe.

Overview provided by Peter Reville, Director, Primary Research Services at Mercator Advisory Group.

The post The Fate of Cash in a post-COVID World appeared first on PaymentsJournal.

For years, electronic payments have been taking market share away from the old reliable – cash.  Now, we are at the point where people are starting to ask about the future of cash. This is not a new discussion, but it is one that is very relevant.

In a recent Forbes article, Is A Cashless Society Good For America?, the author explores the reality of a cash free America. He does a very good job of laying out the pros and cons of cash and cashless, noting that some municipalities are passing legislation that makes the acceptance of cash mandatory:

Even if a cashless society was good for America, there are legislations in place at this time to prevent that. Several states and cities have existing or proposed laws requiring merchants to accept cash. New Jersey, Massachusetts and Philadelphia have active rules banning cashless stores. Washington State, Chicago, New York City, and San Francisco are working on similar efforts.

The law in Massachusetts states that “no retail establishment offering goods and services for sale shall discriminate against a cash buyer by requiring the use of credit.” That discrimination may be one of the greatest barriers to eliminating cash.

Regardless of how one feels about the above regulations, the cold hard truth is that cash is becoming an also-ran to the likes of debit and credit transactions. Mercator’s Buyer PaymentsInsights study has shown that cash payments are most often made at locations where small ticket sizes are the norm, like fast food restaurants and convenience stores.

Shopping channels with traditionally larger ticket transactions are more likely to be paid with a debit or credit card. Then, of course, there is the growing trend towards e-commerce, which is essentially cash free.

We turned to the 2018 Federal Reserve Diary of Consumer Payment Choice data to support the insight that cash is for small transactions. As the chart below highlights, the average transaction size for cash is less than one-half of the transaction size for credit and for debit.

Let’s face it: cash is no longer king. The trend away from cash will continue as people become more comfortable with using cards, smartphones, and wearables to pay for small ticket items. It’s going to happen. Consumer behavior will ultimately determine the fate of cash in the U.S. and globally.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Does Cash Have a Future in the U.S.? appeared first on PaymentsJournal.

As we enter a new decade, 58% of small businesses in the UK anticipate a plateau, or for their business to struggle in the year ahead. Only 1 in 4 predict to see growth.  

A new report, which surveyed 1,000 small business owners and sole traders across the country has been carried out by financial technology experts, Takepayments Limited, unveiling a snapshot of the small business landscape in the UK. It uncovers key challenges for small businesses in 2020 and tips on how business owners can secure a more consistent cash flow.

Below the report unveils the five biggest reasons why SME’s are struggling to stay afloat in a digital era;

NEEDING TO CHASE LATE PAYMENTS  

Even if you are a business to consumer (B2C) company, the likelihood is you will still need to manage some partnerships and affiliations with suppliers etc. Perhaps you are providing a service or a product to another business and therefore, charging for the exchange. One worrying issue for small businesses that have to deal in a B2B scenario, is waiting for others to pay their invoices for the sale of your goods/service.

Whilst wanting to maintain a positive working relationship between your business and theirs, when people do not pay their invoice on time, it leaves you short-handed for that months revenue and cash flow can become tight.

46% of small businesses have admitted to consistently needing to chase late payments with over half of them claiming that late payments have a worrying impact on cash flow. 

THE UNCERTAINTY OF INVOICING 

As a small business, you do not have the luxury of sending all your money related tasks to the tax & finance department and will most likely have to do this yourself, unless you have someone externally handling all your businesses finance. 

For those running a small business, well over half  (63%) claim that they are “self-taught” about tax and invoicing. All whilst, 39% say that they aren’t confident using online banking for work. Struggling to invoice effectively can result in a much slower process of receiving money, especially if the invoice needs to be amended and sent back to the supplier or there are important details missing.

Therefore, it will come at no surprise that the better part of half (45%) of business owners say that finding funding to grow their business is holding it back.

LITTLE TO NO TECH SUPPORT 

Over half of SME’s have claimed that they have little to no tech support, and are having to figure things out for themselves as they go along. Unlike a larger corporate who have entire teams to solve all types of IT or development issues, they must press on and do what they can with limited knowledge.

With 47% having a lack in website creation and management skills, it is apparent that it is one of the key problems that is holding small business owners back in a digital era, where consumers expect to be able to find everything they need in the click of a finger. 

From issues with having poor WI-FI in their business location (39%) to struggling with online competition (45%), SME’s are now expected to be tech guru’s to stay in business. 

THE FEAR OF A CASHLESS SOCIETY 

Digital payment systems such as EPOS and pin machines are an expected method of payment to consumers now, with contactless limits getting higher and minimum spend becoming lower, there is a burden and expectation for small businesses to support the payment process of a becoming cashless society.

42% of SME’s said that turning into a cashless society will negatively impact their business. This majority comes from the 40% that feel l overwhelmed by digital payment systems such as EPOS and chip and pin machines. If there is little advice, training and aftercare in the setup, it can be a daunting task tracking your income from EPOS machines, over counting cold hard cash.

A LACK OF SOCIAL MEDIA MARKETING KNOWLEDGE

The report revealed that Facebook was the most preferred social media network to market a business. The popularity of social media such as Instagram and more image/video-led content, like TikTok, are very high engagement sites but must be utilised properly from a business perspective.

Nearly HALF (47%) of small business owners are struggling to do little if any social media marketing due to their lack of knowledge. Social media can be a cheap we to extend and gauge new audiences, however, with little knowledge small business owners are worried about keeping up on social media marketing and therefore, missing out on sales opportunities. 

From the results in the report, it will come at no surprise that the better part of half (45%) of business owners say that finding funding to grow their business is holding it back and they will struggle just to stay afloat.

Sandra Rowley, Head of Marketing at Takepayments Limited provides 5 tips for small businesses

Sandra also says, 

“Pricing structure and cash flow are both key to driving a business forward and yet for small businesses, many have had no or very little training. There are plenty of online courses available but, it’s not just training that can help. 

Technology such as Electronic Point of Sale (EPOS) systems can be beneficial in giving key insights real-time to business performance, saving time on accounts and getting a true reflection of what products and services achieve the best margin. 

Our study revealed that 49% of small businesses have seen a decrease in consumer spending and so implementing technology to improve your business could be a smart step to help overcome a variety of finance-related challenges.” Find out more about Small Business challenges for 2020 by reading the full Takepayments Limited report. https://www.takepayments.com/small-business-challenges/

The post Data Reveals: 5 Reasons Why SME’s Are Struggling to Stay in Business appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Small Business Mindsets and Banking Habits: Attitudes Matter.

Significant decline in small businesses using bank tellers:

• In 2017, 60% of small businesses deposited cash with bank tellers. In 2019, 50% did.
• In 2017, 56% of small businesses deposited checks with bank tellers. In 2019, 44% did.
• 58% of small businesses 10+ years old deposit cash with bank tellers. 38% of small businesses <5 years old do.
• 53% of small businesses 10+ years old deposit checks with bank tellers. 35% of small businesses <5 years old do.
• The converse is true of ATMs and age for CASH, but not for CHECKS:
• 41% small businesses <5 years old deposit cash at ATMs, 24% of SMBs >10+ years do.
• Young and old small businesses deposit checks at ATMs in almost the same rate (~24%).

About Report

Mercator Advisory Group’s most recent Primary Data report, Small Business Mindsets and Banking Habits: Attitudes Matter, based on the company’s annual Small Business PaymentsInsights survey conducted in spring 2019, reveals that 61% of small business are happy with the size of their business, yet 56% have active plans for growth. A majority (65%) also see the value in using social media as a business tool and see the value in cloud computing (62%). Further, 55% report that keeping up with new technology is “critical” to the success of their company.

When asked where they turn for advice in running their business, small businesses are most likely to report that they get advice from their bankers (59%) and their accountants (43%). Employees are a close third at 39%. Companies that have been in business the longest (10 or more years) are more likely to use multiple sources of advice than are newer companies. Along the same lines, larger companies are also more likely to get their advice from a number of different sources.

When asked about their primary financial institution, the vast majority of U.S. small businesses (85%) indicate they are satisfied with their primary institution’s dedication to small businesses. That said, a decrease in the use of the branch is apparent in this year’s survey. Last year 53% reported using their branch multiple times a year. In 2019 that number has fallen to 46%. This finding is supported by the decline in the use of tellers for depositing checks and cash (by 8 percentage points each).

Small Business Mindsets and Banking Habits: Attitudes Matter is the third of three reports summarizing the results of the 2019 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,002 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“This year we added some new questions to address the attitudes small businesses have about technology, how they see their business, and who the get advice from. We felt that there was a need to get more insights into who the people who run small businesses are and how they think about their business. With regard to banking, satisfaction remains high, but the reported use of branches seems to be falling,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group.

Companies mentioned in this research report are: Kabbage, Lending Club, OnDeck Capital, and Prosper.

The post Significant Decline in Small Businesses Using Bank Tellers: appeared first on PaymentsJournal.

The saying used to be “Cash is King”.  The operative phrase in that sentence is “used to be”. I think if you talk to those in the know, they’d say that cash is no longer on the throne. Maybe prince, or perhaps even duke, but no longer is it king.  In other words, it has its place, but it’s not at the top.

The Wall Street Journal published an article today that discusses the use of cash in today’s electronic payments environment. The article, Cash May Not Be King, but It’s Still Royalty discusses how people are still using cash to pay for things and cites the rising stock prices of Diebold Nixdorf and Cardtronics as examples of companies in the ATM space that are doing well.

Let’s face it: it is up against some serious competition.  The ubiquity of debit and credit card transactions increases every year.  Further, the companies that play in the electronic sandbox are working hard to increase the ubiquity of electronic payments.

Where does that leave cash? Well, for now, there is still a group of consumers who still rely on it as their primary payment mechanism. This could be attitudinal – “I just prefer cash” or “I don’t want to be tracked”, situational (think unbanked), or some other reason.

There is also a subset of people who have it in their mind that small ticket purchases should be paid in cash or that certain “sin” products, like tobacco and alcohol, should be paid for in cash.  However, as the article points out, small ticket purchases are starting to face some competition from other payment types:

In the most recent Federal Reserve survey of U.S. consumer payments, covering 2018, for the first time cash wasn’t the most common form of payment. It was surpassed by debit cards. Even a slim majority of payments in the survey under $10, long cash’s stronghold, were made by other methods.

For what it’s worth, this author can attest to the fact that his use of Apple Pay has moved virtually all of his small ticket purchases to a credit card loaded into his Apple Pay wallet.

The U.S. is not leading the way of the slow demise of cash; there has been much written about Sweden, Russia and India and their approaches to cash. Further, there is an interesting conversation to be had about the role cash plays in criminal enterprises.  Alas, all discussions for another day.

If we continue with the monarchy theme: King cash continues to be knocked down a peg or two with the advent of new ways to pay electronically. That said, it’s not moving to Vancouver anytime soon (sorry, lame Megxit joke).

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Cash is King – Of What? appeared first on PaymentsJournal.

New York City passed a law requiring that businesses accept cash for purchases and do not allow merchants the option to upcharge for the use of cash.  Merchants who have been testing cashless stores are often restaurants, cafes and other establishments selling lower value items.   Thankfully, lawmakers made this applicable to just in-store transactions and don’t require online purchases to have a cash option. 

The New York Times reported the following:

The City Council approved legislation on Thursday that prohibits stores, restaurants and other retail outlets from refusing to accept hard currency.

The measure puts New York at the forefront of a national movement to rein in so-called cashless businesses: New Jersey, Philadelphia and San Francisco all approved such bans last year, and several other cities are considering similar moves. Massachusetts has had a law requiring retailers to accept cash and credit since 1978.

Under the bill, businesses that refuse cash face fines of $1,000 for a first violation and $1,500 for each subsequent offense. Businesses with devices that convert cash to cards, like those found in many laundromats, are exempt under certain conditions, including a provision that there be no fee for such cards.

Proponents of the bill believe that not accepting cash will unfairly discriminate against those individuals who want to use cash or are cash users out of necessity.  I like to use cash on occasion and I appreciate having the choice of payment at the stores where I shop. 

But what about the needs of the small business owners that are robbed because it is known that they have cash on hand or funds are lifted by their own employees?  An article on this issue can be found here.  It doesn’t appear that an exception was made for these businesses, which thus creates discrimination of another sort. 

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post The Case for Payment Choice appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 ATM Benchmark Market Report.

5 ATM trends that look set to continue:

• There are approxomately 470,000 ATMs in the U.S.
• The U.S. has approximately 144 ATMs per 100K people – compared to 42 per 100K people worldwide
• The cost of an ATM withdrawl averages $4.72 in the U.S., and will continue to rise
• 77% of consumers report that they will “do anything” to avoid paying an ATM surcharge fee
• 36% of consumers report they’ve never paid an ATM surcharge fee
• Cardless ATMs are on the rise using NFC, passcodes, and QR technologies
• ATM supplier NCR notes that 90% of ATM orders have been for replacement machines – not new locations

About this report

Despite continued pressure from digital payment products, particularly person-to-person (P2P) applications like Zelle and Venmo that are used to pay back other individuals or to send a gift electronically, ATMs remain a fixture in the banking market. On the horizon is the growing threat of contactless cards, predicted to grow rapidly in the next two years, replacing small dollar purchases at the point-of-sale. A new research report from Mercator Advisory Group titled 2019 ATM Benchmark Market Report explores consumers’ trends in ATM use and other market developments.

“It may surprise some readers how strong the use of ATMs for cash withdrawals and other transactions activities continues to be in the face of digital payments. Consumer data supports the finding that individuals who have adopted newer payment technologies still rely on cash and ATMs for their day-to-day transactions. Despite the importance of ATMs, many financial institutions are handing over the operation of their ATM fleets to third parties to achieve reduced and more predictable maintenance expenses. As management and sometimes ownership of ATMs changes hands, the independent operators will be setting the tone and industry direction for ATMs,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 16 pages and 8 exhibits.

Companies mentioned in this report include: Avidia Bank, Bank of America, BMO Harris Bank, Cardtronics, Chase Bank, Fifth Third Bank, GasBuddy, McDonald’s, Payment Alliance International, PNC Bank, Salem Five Bank, and Wells Fargo Bank.

The post 5 ATM Trends That Look Set to Continue: appeared first on PaymentsJournal.

Consumers today are constantly on the move. Whether it be going to work, school or running errands, they have made it known that if services they seek aren’t convenient, they will likely find an alternative. This is especially true for in the world of digital payments.

We’re all aware that banking plays a key role in consumers’ lives, which is why banks need to adopt the mindset that they should be wherever their customers are. With the growth of digital channels, banks continuously have the opportunity to engage consumers globally, which makes their investment in digital initiatives that much more important.

Every consumer desires to have a simple and painless experience, and making payments is no exception. Banks play a key role as the issuers of payment credentials and the holders of consumer bank accounts and payments, whether in store or online, should result in guaranteed acceptance for legitimate consumers and offer a predictable and ubiquitous experience. During Cyber week alone, e-commerce sales reached $7.54 billion with mobile channels leading consumers’ payment preferences, according to Adobe Analytics. With transaction volumes of this magnitude, it is imperative that banks are able to quickly and intelligently authorize legitimate transactions, facilitate innovative payment experiences and mitigate online fraud.

In the past, criminals broke down the banks’ physical walls to steal money. Today, as consumers’ personal and financial data have become some of the most lucrative assets available in the market, cyber criminals have begun breaking down organization’s digital walls to acquire this information. To this end, mitigating the aftermath of these data breaches has become a top priority for financial institutions. Such mitigation techniques include diminishing the value of consumer personal data including payment card and account data, leveraging the banks omni-channel strategy and engaging consumers in real-time fraud mitigation.

By leveraging consumers’ personal mobile devices and providing real-time information on sensitive transactions, banks have the ability to build another line of defense, providing consumers with early warning signals that their account is being taken over or that a hacker is trying to do a malicious payment transaction, and giving them the ability to interject. Consumers know if they are logging into their bank account or making a purchase in real-time, so if they see something foreign, they can act quickly and provide vital and timely information that can help banks mitigate fraud.

Consumers are also seeking better insights into banking and payment transactions. Recent research shows that 64.5% of consumers want to authenticate the payments that leave their bank accounts. It is imperative that banks aim for digital payments that are accessible and straightforward, but also create a sense of security and trust that consumers’ assets are well protected.

As banks work to maintain their position in a highly competitive environment, they must embrace innovation. By offering alternative payment instruments to their consumers, protecting payment transactions and leveraging the strength of omni-channel strategies to engage consumers, they will reinforce the relevance of their brand. Doing anything less is a missed opportunity and one that new market entrants will seize.

The post Digital Payments: Cashless Isn’t Here Yet, but This Is How It Could Be appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 ATM Benchmark Market Report.

Six demographics of a frequent ATM user:

• Young adults aged 18-34 rely more on ATMs than older people
• Heavy ATM users tend to be employed full time
• Heavy ATM users are more likely to use their bank’s ATMs regardless of location
• Frequent ATM users are more likely to be interested in advanced ATM features
• Heavy ATM users are more likely to be from the south (42%)
• Heavy ATM users are more likely to live in a city (44%)

About this report

Despite continued pressure from digital payment products, particularly person-to-person (P2P) applications like Zelle and Venmo that are used to pay back other individuals or to send a gift electronically, ATMs remain a fixture in the banking market. On the horizon is the growing threat of contactless cards, predicted to grow rapidly in the next two years, replacing small dollar purchases at the point-of-sale. A new research report from Mercator Advisory Group titled 2019 ATM Benchmark Market Report explores consumers’ trends in ATM use and other market developments.

“It may surprise some readers how strong the use of ATMs for cash withdrawals and other transactions activities continues to be in the face of digital payments. Consumer data supports the finding that individuals who have adopted newer payment technologies still rely on cash and ATMs for their day-to-day transactions. Despite the importance of ATMs, many financial institutions are handing over the operation of their ATM fleets to third parties to achieve reduced and more predictable maintenance expenses. As management and sometimes ownership of ATMs changes hands, the independent operators will be setting the tone and industry direction for ATMs,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 16 pages and 8 exhibits.

Companies mentioned in this report include: Avidia Bank, Bank of America, BMO Harris Bank, Cardtronics, Chase Bank, Fifth Third Bank, GasBuddy, McDonald’s, Payment Alliance International, PNC Bank, Salem Five Bank, and Wells Fargo Bank.

The post Six Demographics of a Frequent ATM User appeared first on PaymentsJournal.

We frequently hear that cash is almost dead. This article is worth reading and provides a quick review of the demise of cash by country and suggests there are significant consequences when high tech solutions displace bearer instruments:

“In (government) money we trust?

We call banknotes and coins “cash,” but the term really refers to something more abstract: cash is essentially money that your government owes you. In the old days this was a literal debt. “I promise to pay the bearer on demand the sum of …” still appears on British banknotes, a notional guarantee that the Bank of England will hand over the same value in gold in exchange for your note. Today it represents the more abstract guarantee that you will always be able to use that note to pay for things.

The digits in your bank account, on the other hand, refer to what your bank owes you. When you go to an ATM, you are effectively converting the bank’s promise to pay into a government promise.

Most people would say they trust the government’s promise more, says Gabriel Söderberg, an economist at the Riksbank, the central bank of Sweden. Their bet—correct, in most countries—is that their government is much less likely to go bust.

That’s why it would be a problem if Sweden were to go completely “cashless,” Söderberg says. He and his colleagues fear that if people lose the option to convert their bank money to government money at will and use it to pay for whatever they need, they might start to lose trust in the whole money system. A further worry is that if the private sector is left to dominate digital payments, people who can’t or won’t use these systems could be shut out of the economy.

This is fast becoming more than just a thought experiment in Sweden. Nearly everyone there uses a mobile app called Swish to pay for things. Economists have estimated that retailers in Sweden could completely stop accepting cash by 2023. “

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Cash Is Almost Dead. MIT Measures the Trend by Country and Warns of Consequences. appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 ATM Benchmark Market Report.

Banks are counting on contactless cards to supplant cash in small dollar purchases:

• Despite the increased costs of issuing contactless cards, banks were on board in 2019
• Banks bet that consumers will find waving their card more convenient than cash
• Following the introduction of contactless cards in the U.K., cash transactions declined 16% from 2016-2017
• The impact will not be as dramatic in the U.S., where the rate of change and acceptence will be slower
• Currently, 59% of U.S. consumers visit the ATM monthly for cash
• 26% of U.S. consumers visit ATMs exclusively for cash withdrawal

About this report

Despite continued pressure from digital payment products, particularly person-to-person (P2P) applications like Zelle and Venmo that are used to pay back other individuals or to send a gift electronically, ATMs remain a fixture in the banking market. On the horizon is the growing threat of contactless cards, predicted to grow rapidly in the next two years, replacing small dollar purchases at the point-of-sale. A new research report from Mercator Advisory Group titled 2019 ATM Benchmark Market Report explores consumers’ trends in ATM use and other market developments.

“It may surprise some readers how strong the use of ATMs for cash withdrawals and other transactions activities continues to be in the face of digital payments. Consumer data supports the finding that individuals who have adopted newer payment technologies still rely on cash and ATMs for their day-to-day transactions. Despite the importance of ATMs, many financial institutions are handing over the operation of their ATM fleets to third parties to achieve reduced and more predictable maintenance expenses. As management and sometimes ownership of ATMs changes hands, the independent operators will be setting the tone and industry direction for ATMs,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 16 pages and 8 exhibits.

Companies mentioned in this report include: Avidia Bank, Bank of America, BMO Harris Bank, Cardtronics, Chase Bank, Fifth Third Bank, GasBuddy, McDonald’s, Payment Alliance International, PNC Bank, Salem Five Bank, and Wells Fargo Bank.

The post Banks Are Counting on Contactless Cards to Supplant Cash in Small Dollar Purchases: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 ATM Benchmark Market Report.

Person-to-Person payment apps are eroding cash use:

• 73% of U.S. consumers used cash as a gift in 2019
• Zelle & Venmo combined to transfer over $181 billion in 2018
• Combined, Mercator predicts P2P apps to transfer over $205 billion in 2019
• By dollar volume, Zelle is almost twice the size of Venmo with $119 billion in transactions
• P2P transactions might encroach on cash in auto payments (34% use cash for)
• P2P transactions might also impact cash’s use in food & personal care (34%)
• 24% of consumers use cash to pay for medical, education and personal services as well

About this report

Despite continued pressure from digital payment products, particularly person-to-person (P2P) applications like Zelle and Venmo that are used to pay back other individuals or to send a gift electronically, ATMs remain a fixture in the banking market. On the horizon is the growing threat of contactless cards, predicted to grow rapidly in the next two years, replacing small dollar purchases at the point-of-sale. A new research report from Mercator Advisory Group titled 2019 ATM Benchmark Market Report explores consumers’ trends in ATM use and other market developments.

“It may surprise some readers how strong the use of ATMs for cash withdrawals and other transactions activities continues to be in the face of digital payments. Consumer data supports the finding that individuals who have adopted newer payment technologies still rely on cash and ATMs for their day-to-day transactions. Despite the importance of ATMs, many financial institutions are handing over the operation of their ATM fleets to third parties to achieve reduced and more predictable maintenance expenses. As management and sometimes ownership of ATMs changes hands, the independent operators will be setting the tone and industry direction for ATMs,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 16 pages and 8 exhibits.

Companies mentioned in this report include: Avidia Bank, Bank of America, BMO Harris Bank, Cardtronics, Chase Bank, Fifth Third Bank, GasBuddy, McDonald’s, Payment Alliance International, PNC Bank, Salem Five Bank, and Wells Fargo Bank.

The post Person-To-Person Payment Apps Are Eroding Cash Use: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 ATM Benchmark Market Report.

Mobile apps are one of three new challenges impacting cash use:

• 60% of U.S. consumers used their mobile device to pay for goods in 2019
• In 2018, only 48% of U.S. consumers had used a mobile device to pay for goods
• 39% of U.S. consumers have used a retail-specific mobile app for payments in 2019
• In the U.S., Starbucks is the most popular retailer mobile app: 22% of consumers used it in 2019
• McDonalds (14%) and Walmart Pay (13%) are the 2nd and 3rd most popular retailer mobile apps
• 11% of consumers used Dunkin Donuts, Burger King, or Subways’s mobile app in 2019
• 5% of U.S. consumers used Gulf Pay or ExxonMobil’s app in 2019

About this report

Despite continued pressure from digital payment products, particularly person-to-person (P2P) applications like Zelle and Venmo that are used to pay back other individuals or to send a gift electronically, ATMs remain a fixture in the banking market. On the horizon is the growing threat of contactless cards, predicted to grow rapidly in the next two years, replacing small dollar purchases at the point-of-sale. A new research report from Mercator Advisory Group titled 2019 ATM Benchmark Market Report explores consumers’ trends in ATM use and other market developments.

“It may surprise some readers how strong the use of ATMs for cash withdrawals and other transactions activities continues to be in the face of digital payments. Consumer data supports the finding that individuals who have adopted newer payment technologies still rely on cash and ATMs for their day-to-day transactions. Despite the importance of ATMs, many financial institutions are handing over the operation of their ATM fleets to third parties to achieve reduced and more predictable maintenance expenses. As management and sometimes ownership of ATMs changes hands, the independent operators will be setting the tone and industry direction for ATMs,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 16 pages and 8 exhibits.

Companies mentioned in this report include: Avidia Bank, Bank of America, BMO Harris Bank, Cardtronics, Chase Bank, Fifth Third Bank, GasBuddy, McDonald’s, Payment Alliance International, PNC Bank, Salem Five Bank, and Wells Fargo Bank.

The post Mobile Apps Are One of Three New Challenges Impacting Cash Use: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 ATM Benchmark Market Report.

Cash use has not changed in the U.S.

• Over the past 12 months, 70% of consumers rate their use of cash as ‘stayed the same’
• Over the past 12 months, 15% of consumers claim to use more cash & 15% of consumers claim to use less
• Cash is used for 49% of payments under $10
• Cash is used for 35% of transactions conducted in person
• The IMF reports that US cash use is average compared to other large developed economies
• The U.S. has seen a slow decline in total cash transactions over the last two years, but not dramatic
• The resilience of cash is notable given the recent rise in alternatives

About this report

Despite continued pressure from digital payment products, particularly person-to-person (P2P) applications like Zelle and Venmo that are used to pay back other individuals or to send a gift electronically, ATMs remain a fixture in the banking market. On the horizon is the growing threat of contactless cards, predicted to grow rapidly in the next two years, replacing small dollar purchases at the point-of-sale. A new research report from Mercator Advisory Group titled 2019 ATM Benchmark Market Report explores consumers’ trends in ATM use and other market developments.

“It may surprise some readers how strong the use of ATMs for cash withdrawals and other transactions activities continues to be in the face of digital payments. Consumer data supports the finding that individuals who have adopted newer payment technologies still rely on cash and ATMs for their day-to-day transactions. Despite the importance of ATMs, many financial institutions are handing over the operation of their ATM fleets to third parties to achieve reduced and more predictable maintenance expenses. As management and sometimes ownership of ATMs changes hands, the independent operators will be setting the tone and industry direction for ATMs,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 16 pages and 8 exhibits.

Companies mentioned in this report include: Avidia Bank, Bank of America, BMO Harris Bank, Cardtronics, Chase Bank, Fifth Third Bank, GasBuddy, McDonald’s, Payment Alliance International, PNC Bank, Salem Five Bank, and Wells Fargo Bank.

The post Cash Use Has Not Changed in the U.S. appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 U.S. PaymentsInsights – Credit Cards: Still the Card of Choice.

Cash back is still the dominant reward program, but others are gaining popularity:

• 64% of consumers have a cash back card rewards program in 2019
• Cash back rewards enrollment has been consistent over the last 3 years
• But there were notable increases in enrollment for:
  travel discounts, free travel, hotel points, pay with rewards points
• Points for ‘non-travel’ rewards increased from 13% to 17% in 2019
• Cash back dropped in ‘most valued’ from 53% in 2018 to 46% in 2019
• In 2019, rewards program members reported earning about $100 more than last year
• 10% of consumers reported earning between $1K-2K in rewards in 2019, compared to 6% last year

About this report

Mercator Advisory Group’s most recent consumer survey report, Credit Cards: Still the Card of Choice, from the bi-annual North American PaymentsInsights series, reveals that the credit card is U.S. consumers’ preferred method of payment both online and offline.

When shopping in stores, 43% of U.S. consumers prefer to use credit/charge cards, followed by 32% who prefer to use debit and 17% who opt for cash. Further, these findings are on par with last year’s results.

Compared to last year’s survey, more consumers report that merchants are trying to influence their method of paying. For example, this year 59% report that they have seen signs posed by merchants stating credit card minimums, up from 52% in 2018. Also, 46% report stores offering discounts for cash, a result that is up from 40% in 2018.

Consumers are reporting more fraud on their credit cards this year compared to last. In 2019 about 3 in 10 (31%) reported some kind of fraud on their credit cards compared to 24% who did so last year.

With regard to credit card rewards, cash back is still the most common reward earned by U.S. cardholders. Currently, about two-thirds of cardholders (64%) are getting cash back from at least one issuer of the credit cards they hold. Non-travel related points are the second most common reward, which 4 in 10 cardholders report receiving. These findings are consistent with the findings Mercator reported last year.

Credit Cards: Still the Card of Choice, the latest report from Mercator Advisory Group’s Primary Data Service, is based on a sample of 3,002 U.S. adults surveyed in the annual online Payments survey of Mercator’s North American PaymentsInsights series, conducted in June 2019.

The study highlights consumers’ use of credit cards, relative to other payment types, the use of credit card controls, reward programs, new account opening, among other topics.

“The credit card space in the U.S. continues to be dynamic. We see no erosion in consumers’ preference to use their credit cards when shopping. It is still the top-of-wallet payment choice. This report explores some of the key aspects of the credit card business and brings the consumers’ view of the payments world to light,” stated the author of the report, Peter Reville, director of Primary Data Services at Mercator Advisory Group, which includes the North American PaymentsInsights series.

Companies mentioned in the survey results shown include: Acima Credit Affirm, Avant, Bread, Klarna, Lending Club, Prosper, SoFi, and Upstart.

The post Cash Back Is Still the Dominant Reward Program, but Others Are Gaining Popularity appeared first on PaymentsJournal.

With the rising number of cashless payment options available, such as digital wallets, wearables, and mobile pay apps for every kind of purchase, it may seem that the United States is well on its way to becoming a cashless society. 

This is somewhat true, in that cashless transactions are rising in popularity each year. According to Square, fewer and fewer Americans are using cash—even for their smallest purchases. While 46% of purchases under $20 were paid in cash in 2015, just 37% were paid in cash in 2019.

On top of that, the Federal Reserve has reported that over 80% of transactions are through cashless options like credit and debit cards, digital wallets, and wearables, among other payment methods. This makes sense, as cashless payment types are simple to use and often more convenient than having to withdraw cash from an account.

But will the United States go as far as becoming a completely cashless society? Probably not anytime soon— and here’s why.

A cashless society would be exclusionary

While most Americans do have cashless options like credit and debit cards, this simply isn’t the case for everyone. In 2018, the Federal Reserve estimated that there were 55 million unbanked or underbanked Americans, accounting for 22% of households.

A cashless society would mean that the millions of underbanked and unbanked U.S. residents would struggle to find ways to pay for even the most basic goods and services. In that way, a cashless society would be inherently classist.

Furthermore, the hardships of a cashless society would disproportionately impact people and communities of color. A 2017 Federal Deposit Insurance Corporation found that 16.9% of black households and 14% of Hispanic households were unbanked in 2017, compared to just 3% of white households.

Pushback against the trend towards a cashless society 

Some cities and states have taken active steps to be inclusive of those without access to other payment options. For example, Philadelphia became the first city in the nation to pass a law banning cashless stores and restaurants in February 2019.

Others have since followed suit, with New Jersey and San Francisco passing similar measures prohibiting cashless businesses in March and May, respectively. New York City is set to vote on its own bill in the upcoming year.

Additionally, companies like Amazon have made efforts to accommodate cash-using customers. Amazon Paycode, which was launched in the U.S. in September, allows customers to purchase items on Amazon online then pay in cash at Western Union.

Cashless has its perks, too— new ways it’s expanding

The rise in popularity of cashless payment methods are indicative, however, of the perks that they bring. Many consumers don’t carry cash anymore, and paying with a card, through an app, or with a wearable enhances the customer experience by maximizing convenience. Therefore, even if a cashless society isn’t quite on the horizon, people can still expect an increase in the cashless payment types available.

The Salvation Army’s decision to accept mobile donations is a great example of a recently adopted cashless solution that benefits consumers by making donating more convenient. The 2019 holiday season was the first that individuals could use their phones to donate to the Salvation Army’s annual red kettle campaign. To do so, consumers simply scan a QR code with a smartphone at the site of the red kettle, then submit a donation using Apple or Google Pay.

Another relatively new cashless initiative is Amazon Go brick-and-mortar convenience stores, which use cutting-edge technology and cameras to offer customers a seamless shopping experience. Customers can simply walk in to an Amazon Go store, pick out the items they want to purchase, and leave. As they exit, the purchase is automatically charged to their Amazon Go account.

The first Amazon Go store opened for business in January 2018, and there are now 20 established and announced locations in Seattle, Chicago, San Francisco, and New York City. To accommodate the cashless business ban within the city, Amazon Go locations in San Francisco also accept cash through an attendant who checks out customers without the app. 

Expect more cashless options, but don’t say goodbye to cash

Though it is highly unlikely that the United States will become a fully cashless society anytime soon, people can still expect cashless options to expand as new payment technologies and solutions are created. This will allow the trend toward cashless to continue, while ensuring that those without alternative payments methods are not forced to jump through hoops to make purchases.

The post New Decade, New Ways to Pay: Will the 2020s Bring a Cashless Society? appeared first on PaymentsJournal.

Cash has gone M.I.A. Central Banks around the world are printing money but they aren’t all that sure what happens to it after it leaves the printer. I read a recent article in the Wall Street Journal: The World’s Cash Is Disappearing. Bankers Aren’t Sure Where It Went. It’s written by David Winning and James Glynn and highlights a global problem: nobody is quite sure where all the cash is going.

As a payments geek who often talks about the electronic replacement of paper money, this intrigues me. As the article mentions, some of the money leaves the country to support other economies, and of course—we’ve all seen the movies—some of it gets tied up in illicit activities. Even still, that cannot account for all of it. As the article notes:

Banks are issuing more notes than ever and yet they seem to be disappearing off the face of the earth. Central banks don’t know where they have gone, or why, and are playing detective, trying to crack the same mystery.

The puzzle is especially perplexing since societies and companies are going cashless, given the boom in payments by cards and cellphone apps.

People are hoarding cash. Whether it’s the distrust in the local or federal government, the global economy, or a loathing of the banking system, nobody really knows. That said, thinking about all the reasons and ways for people hoarding cash is sort of fun.

While this all makes good happy hour talk, there is a real cause for concern. Governments need to print more money to make up for money going out of circulation. They are throwing more money into a seemingly leaky bucket, but what happens when the leak stops and someone puts all the metaphorical water back in the bucket? Inflation. Too much currency in the system will drive up prices. 

I guess this is further proof that there is a lot to do in the “war on cash.”  Or another way to look at it is not as many people are as on board with the cashless society as we think. Nevertheless, it gives us payments people something to think about over the weekend.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Check your Mattress – Central Banks Can’t Find the Cash appeared first on PaymentsJournal.

Cash is no longer king in Canada.  It’s been demoted to prince or maybe duke.

Canada continues to evolve into a sophisticated payments market.  An article in Mobile Payments Today cites a Payments Canada report that says cash payments have decreased 40% in the past five years. I can’t say that I am all that surprised. The article states:

Electronic payments accounted for 73% of total payments volume and 59% of total payments value. The report also revealed that contactless payments grew 30% year-over-year in 2018 with a total of 4.1 billion contactless payments (card and mobile) worth C$129.9 billion at point-of-sale.

Debit, often viewed as a convenient substitute for cash, represented almost 60% of volume of these contactless payments. In fact, debit card use overtook cash for the first time in recent years, the report said. 

Meanwhile, credit card use has accelerated dramatically with a 52% increase in transaction volume over the last five years. Canada currently ranks second with highest volume use of credit cards per capita in the world after South Korea, according to the research.

Our recent PaymentsInsights Canada report  supports many of the findings in the article. 

As the graph below demonstrates, about seven in 10 currently use a credit card and six in 10 use a debit card, which is about 10 percentage points higher than what was reported for the same time period in the U.S. 

The differences between credit and debit mentioned in the report may be generational.  The graph below shows that younger Canadian consumers prefer debit when shopping in-store, while credit preference increases with age.

One question comes to mind as I look at these data: is Canada a harbinger for the U.S.?  They were much faster to embrace payment technologies like chip and NFC. Will the U.S. adoption rate of these solutions increase digital transactions overall at the expense of cash? Many think so, but it remains to be seen.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

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Woodrow Wilson established the Federal Reserve Bank (the Fed) in 1913 when he signed the Federal Reserve Act. The Fed conducts the United States’ monetary policy, regulates and supervises banks and many financial institutions, and maintains the stability of the economic systems in the country. It also plays a significant role in payments systems.

The Fed also provides a wide range of analytic, data, and educational content, drawing from its central role in financial functions.

The recently published 2018 Diary of Consumer Payment Choice, published in December 2019, presents a study, the fifth in a series, which surveys consumers on their preference for payment instruments in their daily life.

One finding had to do with the number of transactions an average household would have monthly and then illustrates which financial instrument settled the sale.  Cash, for instance, accounted for 31.6% of transactions for purchases. Debit cards held a 31.2% share, with credit cards close behind at 27.5% then check at 2.3% and electronic payment form at 1.8%

There is a lot of data behind those distributions, such as the number of large versus small transactions, and the demographic of the user, but for now, let’s work with the data.

In my household, we are far off from the numbers. Cash usage would be shallow at no more than 3%, probably mostly for tips and newspaper transactions under $5.00. For debit, the number would likely be no more than 7%, while credit card would be 85% because I generate every reward point possible. My average family cashback is more than 2% of all consumer spending, skewed by rewards-rich cards like American Express Blue Preferred, Chase Freedom, and Discover It. 

Checks would be meager, maybe 2% for family gifts not sent via PayPal. The rest would fall into the electronic category, which would be about 3%.

The Fed’s numbers are the Fed’s numbers, so I would use them in a report or industry estimate. If you are reading this, it shows you have an interest in payments, so your numbers will likely skew further than the Fed’s forecasts for cash and checks.

Try the same exercise on your personal household experience. Use less cash? Prefer Debit over Credit, or vice versa because of the points?

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Payment Instrument Trends: How Does Your Household Stack Up Against the Fed Survey? appeared first on PaymentsJournal.

These days, it seems like credit card processors that offer cash discount programs are popping up left and right. What’s less common is cash discount programs that are card-brand compliant. In fact, many of the current cash discount programs are actually surcharge programs in disguise.

Cash discounting confused enough people that Visa itself issued a bulletin to acquirers in October of 2018 outlining compliant vs. non-compliant cash discount programs.

In this article, I’ll go over cash discounting vs. surcharging and cite Visa’s bulletin to provide clarity on the rules surrounding compliant cash discounts.

Cash Discount or Surcharge?

At the most basic, a cash discount is when a customer pays less than the shelf or menu price because they pay with cash. For example, if the shelf price is $10 and a merchant offers a 3% cash discount, the customer will pay $9.70.

A surcharge is when a customer pays more than the shelf or menu price because they pay with a credit card. For that $10 item with a 3% surcharge, the customer will pay $10.30.

Any tinkering with these scenarios doesn’t change the end result. A program in which merchants add a “service fee” or a “non-cash adjustment” that is immediately removed for cash customers is not a discount, as the customer did not pay less than the shelf or menu price. That is, there was no actual discount.

For example, if the shelf price is $10 and the merchant adds a 3% “non-cash adjustment fee,” the price goes to $10.30. The customer chooses to pay with cash, so the merchant removes the fee, dropping the item back to the original $10. No discount on the shelf price occurred. Instead, the customer simply wasn’t surcharged. “Not being surcharged” is not the same thing as “receiving a discount.”

What Visa Said

This issue of customers not receiving a discount is at the heart of the bulletin Visa issued. Visa explicitly stated that, “Models that encourage merchants to add a fee on top of the normal price of the items being purchased then give an immediate discount of that fee at the register if the customer pays with cash or debit card are NOT compliant with the Visa Rules…”

The bulletin goes on to state that posting two prices, one for cash and one for cards, is an acceptable method. The card brand highlights gas stations as an example of merchants than often employ dual price tags.

However, posting cash prices and charging a “service fee” that is immediately removed for cash customers is not a discount and programs that use that model are not compliant.

Does the distinction really matter?

It does, for three reasons.

1. Adding a fee makes it a surcharge program. Surcharge programs are prohibited in a handful of states (including Colorado, Connecticut, Kansas, Maine, Massachusetts, and Oklahoma) which means improperly implementing a surcharge in those states could land merchants in legal trouble.
2. Debit cards cannot be surcharged, in any state. Merchants that don’t remove the surcharge fee for debit cards can face fines or other repercussions.
3. Engaging in a non-compliant cash discount program could bring repercussions from the card brands.

At the time of writing, Visa has not publicly fined or punished acquirers for non-compliant cash discount programs. However, it does have the right to do so. Should Visa decide to take action against non-compliant programs, it could leave processors and merchants facing fines and loss of merchant accounts.

It’s not worth the risk. Instead, merchants can implement compliant cash discount programs or elect to surcharge.

Compliant Cash Discount Programs

Cash discount programs needn’t be complicated. A merchant must post the credit price on shelves and menus (or utilize dual pricing, showing both the cash and credit prices) and then offer a discount from that price for customers that pay with cash.

When considering a cash discount program, merchants should look for programs that require posting credit prices and offering a discount at the register on that price. On the other hand, if merchants want to add a fee at the register, they should look for surcharge programs.

Spotting a Non-Compliant Cash Discount Program

Despite the confusion, it’s fairly easy to spot non-compliant cash discount programs. They are identified by:

• Requiring that a merchant post “cash” prices on shelves and menus
• Adding a “service fee,” “non-cash discount” or other fee at the register
• Immediately removing that fee for cash-paying customers

Regardless of what a processor calls the program, if it meets the criteria above, it’s not a compliant cash discount program.

Ellen Cunningham is the Marketing Manager for CardFellow.com, independent experts in credit card processing dedicated to helping merchants find the right fit for their business. She is an authority on subsets of merchant services, including cash discounts and surcharges, chargebacks, B2B processing, and more. Her insight and articles can be found in the CardFellow blog as well as in publications across a variety of industries.

The post Compliant Cash Discount Programs and Surcharge Programs appeared first on PaymentsJournal.

Self-service kiosks are being installed at more Quick Service Restaurants (QSRs) catering to hungry, in-a-hurry customers not wanting to stand in line at the counter. McDonald’s has been rapidly installing them in many stores. But Big Mac lovers are discovering that the kiosks do not accept cash.

Orders placed at the kiosk can be paid there by plastic only. Cash customers can place a kiosk order and then pay at the counter. So while the stores do accept cash, customers must deal with any lines at the counter, thus defeating the convenience of self-ordering at the kiosk. McDonald’s reports that it is testing kiosks that accept cash, but this does not appear to be a quick fix or one that will be cheap for franchise operators. Stay tuned.

A FastCasual.net article, excerpted below, discusses more on the topic:

McDonald’s, which has pioneered the use of self-order kiosks, has discovered that a large chunk of its customers can’t use the kiosks — which are now in about 9,000 domestic locations — because they pay in cash, according to a Bloomberg report.

A recent test reveals kiosks may need to be replaced or retrofitted to accommodate cash transactions, according to Bloomberg. About 6.5% — or 8.4 million — U.S. households have no bank account or credit or debit card, preventing them from paying at the kiosks.

The company confirmed to Bloomberg in an email that it is testing kiosks that take cash in a “small handful of U.S. restaurants.”

Cash users can place orders on the machines, but still need to pay at the cash register, and cannot skip the line like card payers.

The kiosks became a focus of recently departed Chief Executive Officer Steve Easterbrook after being introduced in 2015. Easterbrook said in July that 40% of in-store customers used one in major European markets and Australia.

Restaurant owners have paid as much as $750,000 for the kiosks and other store improvements, the report noted.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post McDonald’s Self-Order Kiosks Need A Cash Upgrade appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Small Business Payments Acceptance: More Payment Options Creeping In.

• US small businesses don’t know whether cash use is up or down
• A third of small businesses claim cash use is up, a third down, a third say its the same
• 77% of small businesses recognize that cash is more expensive to tender than card
• 35% of small businesses claim that cash is an “increasingly important” part of sales, 65% disagree
• US small businesses estimate that 33% of sales are cash sales
• US small businesses estimate that card payments total over 50% of sales
• Checks account for 30% of small business transactions, 9.5% “other”

About the report

Mercator Advisory Group’s most recent Insight Summary Report, Small Business Payments Acceptance: More Payment Options Creeping In, based on the company’s annual Small Business Payments and Banking Survey conducted in spring 2019, reveals that more small businesses are selling online (59%) than are selling in a physical store (47%). However, the bulk of share of sales is coming from in-store sales rather than online sales. Further, about one-third of small businesses (35%) report that they are selling via a mobile app. Small businesses are more likely to report that their preferred method of payment is from the card networks rather than cash or any other method. The primary reason for preferring a certain kind of payment is the ease of handling (65%); only 4 in 10 mention lower cost.

Small businesses are mainly getting merchant services from their primary bank (70%). A similar proportion are getting merchant services from a single provider. Many third-party providers offer smaller merchants ancillary services they need aside from core processing services, and many businesses are migrating to third-party providers for online and mobile services, often designed for their business verticals.

Payments Acceptance: More Payment Options Creeping In is the second of three reports summarizing the results of the 2019 Small Business Payments and Banking Survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,002 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

The survey contained questions on current business sentiment, payment acceptance services, business-to-business (B2B) payments, and banking depository and loan services. Forthcoming companion reports summarize the survey’s findings on business-to-business payments and business banking services.
“There is a lot going on in the small business space when it comes to accepting payments, and the options available to merchants can be daunting. There is a great opportunity for companies that can understand the needs of small businesses and help them navigate the uncertainties of the ever-changing payments space,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group.

Companies mentioned are: Alibaba, American Express, Apple, Chase, China UnionPay, Clover, Diebold, Discover, First Data , Google, Ingenico, LevelUp, Mastercard, Micros, NCR, PayPal, PayPal, Revel, Samsung, Shopify, Shopkeep, Square, Stripe, Verifone, Visa, and WeChat

The post US Small Businesses Don’t Know Whether Cash Use Is up or Down appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Small Business Payments Acceptance: More Payment Options Creeping In.

What percent of small businesses accept cash?

• 70% of small businesses accept cash
• 93% of small businesses accept Visa
• Only 63% of small businesses accept checks
• Alipay & UnionPay are accepted by 40% of small businesses
• 28% of small businesses accept cryptocurrency
• For the most part there is little difference between male and female small business owners regarding payment methods accepted

About the report

Mercator Advisory Group’s most recent Insight Summary Report, Small Business Payments Acceptance: More Payment Options Creeping In, based on the company’s annual Small Business Payments and Banking Survey conducted in spring 2019, reveals that more small businesses are selling online (59%) than are selling in a physical store (47%). However, the bulk of share of sales is coming from in-store sales rather than online sales. Further, about one-third of small businesses (35%) report that they are selling via a mobile app. Small businesses are more likely to report that their preferred method of payment is from the card networks rather than cash or any other method. The primary reason for preferring a certain kind of payment is the ease of handling (65%); only 4 in 10 mention lower cost.

Small businesses are mainly getting merchant services from their primary bank (70%). A similar proportion are getting merchant services from a single provider. Many third-party providers offer smaller merchants ancillary services they need aside from core processing services, and many businesses are migrating to third-party providers for online and mobile services, often designed for their business verticals.

Payments Acceptance: More Payment Options Creeping In is the second of three reports summarizing the results of the 2019 Small Business Payments and Banking Survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,002 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

The survey contained questions on current business sentiment, payment acceptance services, business-to-business (B2B) payments, and banking depository and loan services. Forthcoming companion reports summarize the survey’s findings on business-to-business payments and business banking services.
“There is a lot going on in the small business space when it comes to accepting payments, and the options available to merchants can be daunting. There is a great opportunity for companies that can understand the needs of small businesses and help them navigate the uncertainties of the ever-changing payments space,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group.

Companies mentioned are: Alibaba, American Express, Apple, Chase, China UnionPay, Clover, Diebold, Discover, First Data , Google, Ingenico, LevelUp, Mastercard, Micros, NCR, PayPal, PayPal, Revel, Samsung, Shopify, Shopkeep, Square, Stripe, Verifone, Visa, and WeChat

The post What Percent of Small Businesses Accept Cash? appeared first on PaymentsJournal.

These are all popular axioms we hear in the payments world.  Depending on who you talk to, all of these can be true.

Lowcards.com recently published an article, 82% of Americans Still Carry Cash, which cites a J.D. Power Pulse Survey finding that the majority of consumers still use cash and that stores should be required to accept cash.

When asked if they carry cash, 82% of respondents said they normally have cash on hand, and 25% said they usually have at least $50 in cash. Surprisingly, cash was more popular than card payments: 67% of participants said they had used cash in the last week, while 61% said they had used a debit card and 54% used a credit card. Only 20% of consumers said they used a mobile wallet to make a purchase.

According to the Fed 2018 Findings from the Diary of Consumer Payment Choice, cash makes up roughly one in three transactions in the U.S. This article found that the bulk of cash transactions are for low ticket items.

Mercator’s own findings back up this insight. This spring, in our Buyer Insights PaymentsTracker (formerly Customer Merchant Experience Survey) we asked 3,000 U.S. consumers the payment methods they use most often at a variety of merchant locations and, as the graph below indicates, cash is strongest at those locations that traditionally have low dollar volume transactions.

It is important to note that there are still consumers whose primary method of payment is cash. Often, these individuals feel it is the best way for them to manage their money. Further, there are also people who operate outside of the traditional banking system for whom credit and debit may not be an option.

Another factor at play is illustrated in the graph above: Some consumers change their payment choice based upon the type of merchant they are shopping at. For some shoppers, the type of merchant, or even specific store, dictates what they take out of their wallet.

Cashs may be losing popularity, but news of its death is exaggerated.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Cash Is King. Cash Is Dead. There’s a War on Cash. appeared first on PaymentsJournal.

There is no doubt that technological innovations have changed the payments landscape. Digital payment options have shifted how we pay for many day-to-day purchases, large and small, packing wallets with plastic and smartphones with apps that enable digital payments in person and online.

In such an environment, one might conclude that cash is losing its place in the payments mix. It’s not.

While the rise of digital payments has been steady, from early credit cards to debit cards to app-based mobile options, physical cash remains popular. In fact, a closer look at consumer trends reveals that the competition between physical and digital payment options is not zero-sum; cash and cards can and do coexist.

The state of cash

Over the past few years, the use of cash has not changed significantly in the U.S. In 2018, 81% of respondents reported using cash “as often, or more often, than in 2017,” according to the 2018 Health of Cash report by Cardtronics. The same report found that 28% of respondents listed cash as their preferred payment method, making it the second most popular method, behind debit cards at 37%.

Debit cards may be popular, but the use of cash remains more common. Data from the Federal Reserve’s Diary of Consumer Payment Choice reveals that cash was used in 30% of all transactions in 2017, making it “the most frequently used payment instrument.”

The continued use of cash is also reflected in data on ATM usage. In 2018, six in 10 people (59%) reported withdrawing money from an ATM monthly or more frequently, according to the Mercator Advisory Group’s report ATM Banking: It’s Not Just About Cash Withdrawal Anymore. This rate remains unchanged from a few years ago, as Mercator found that six in 10 people used an ATM at least monthly in 2016, showing that ATM usage remains stable.

Strikingly, even millennials are withdrawing cash at high rates. The same Mercator report found that 53% of people aged 18 to 34 reported at least monthly ATM usage. This age group is also the most willing to pay an ATM surcharge in order to use a convenient machine. Young adults are also more willing to try new features such as alternative authentication methods including the use of biometric data, the report found.  With young people relying on ATMs to withdraw cash at least a few times a month, and displaying an eagerness to embrace new ATM features, cash is clearly alive and well.

But why cash?

Although there are numerous alternatives to paper money, the Cardtronics report found that 73% of consumers still use cash regularly, indicating there’s something about the method that people find attractive.

Part of the explanation is that cash is viewed as a quick payment method.

This becomes apparent when one looks at where cash remains popular. Consumers report that cash is their preferred payment method in both convenience stores and fast food restaurants—two retail segments premised on speedy transactions—according to the Mercator Advisory Group report 2019 Customer Merchant Experience: Offline Shopping is not Dead.

“Consumers often use cash for smaller ticket purchases since they find it to be convenient,” said Peter Reville, director of Primary Research Services at Mercator Advisory Group and author of the report.

Another factor that explains the prevalence of physical wallets is the high volume of shopping within brick-and-mortar stores. In fact, while online shopping has increased in recent years, shopping in physical stores is still the most common channel used, according to the Mercator report.

Since not all stores support digital payment methods—such as Apple Pay or Google Wallet—and not all stores, especially convenience stores, accept card payments for small orders, cash remains a reliable payment method.

People also find cash to be a great way to learn fiscal responsibility. When using a credit card, the amount one spends is more abstract, while with cash, it’s a different story. When consumers pay by cash, the amount they’re spending is more concrete. They often have to count out the amount of money, hand it over to the cashier, and, unless they’ve paid the exact amount, they then receive change back from the cashier. Such a process makes people more aware of their spending habits.

The Cardtronics report noted that 70% of people reported they “waste less money when spending cash,” and 61% of people reported using cash specifically to help them stay on budget. Moreover, slightly under half of people think “cash is the best payment method for teaching financial responsibility.” In addition to being a convenient payment method, cash is also viewed as an educational tool.

Then there’s the fact that the widespread acceptance of cash enables a larger segment of society to participate in the economy. “There is about 6% of the U.S. population that is underbanked and for whom card options are limited,” said Reville. He explained that many local governments are barring merchants from not accepting cash because it may hurt low income individuals who are without alternative payment methods.

Finally, one reason that cash remains so popular is simple inertia: “some people have been using cash for a long time and see no need to change,” explained Reville.

The future of cash: coexistence in payments

Based on its popularity, cash is not going to become obsolete any time soon; people simply like cash too much for it to go away. The Cardtronics report found that 83% of people “would miss cash if it went away altogether,” a testament to paper money’s appeal.

“Cash will continue to be used in the future,” said Reville. “There is a core group of people who value cash over other payment vehicles.”

As a result, the future of payments is one of plurality. According to the Cardtronics report, 92% of people like having the ability to use a variety of payment methods. This is because they want payment choice. The desire for choice stems from the fact that people’s preferred payment method varies based on the circumstances of the transaction.

The value of the transaction, for example, can influence the preferred payment method. People tend to use cards for larger amounts but cash for smaller ones. The channel of the transaction matters, too. People will keep using cards and digital wallets on online purchases, while cash will remain popular for in-store transactions, especially in convenient stores or fast food establishments. And as fears grow over data breaches and personal data being compromised, cash will offer a secure alternative.

Instead of being replaced entirely, cash will continue to complement emerging payment methods. Don’t plan on throwing out your physical wallet any time soon.

The post Cash and Digital Payment Methods Can Coexist appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report — Payment Cards and B2B Payments: Riding a Wave of Positivity.

What percentage of small business owners express concern over cash flow?

• 46% of small business owners express at lease some concern over cash flow
• The highest proportion, 38%, cite concerns ‘one or two times a year’
• Only about 7% of small business owners express concerns about cash flow every month
• Overall, small businesses are optimistic about revenue growth – 73% expect to grow
• The highest projected growth is for those small businesses with 50-99 employees: 87%
• Small business owners seem content with their lines of credit. Desire does not outpace availability
• About one-quarter of small businesses have a loan with an alternative lender

About the report

Mercator Advisory Group’s new Insight Summary Report, Payment Cards and B2B Payments: Riding a Wave of Positivity, reveals that U.S. small businesses are largely positive about the prospects for the future of their respective firms with regard to revenues, profitability, and employment. The report is the first of three from Mercator’s annual Small Business Payments and Banking Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,002 U.S. small businesses fielded in March and April 2019.

The survey’s charts show the primary payment methods used by type, and they reveal attitudes toward cash flow and line of credit. The findings include small businesses’ criteria for choosing a new credit card for the business, which differ by size of firm and indicate the average number of cards held per company.

The post What Percentage of Small Business Owners Express Concern over Cash Flow? appeared first on PaymentsJournal.

The cash versus cashless debate has been well-argued for years now, with many people putting their eggs in one basket or the other: either making the case for a completely cashless society or arguing why physical currency is still valuable. How do cash and digital fit together?

While you probably carry less cash than you used to, you might be surprised to learn that cash continues to be widely used in America, representing more transactions then electronic, credit, debit or checks at 31%[1]. On the other end of the spectrum, one in five Americans believe payments will be completely cashless in their lifetime2.

Ready to go cashless?

There is a strong convenience and business argument for going cashless. However, when you look past America’s borders, you quickly realize that any conversations about a “cashless future” are out of touch with the realities of our global economy.

Data from the World Bank shows that small retailers transact $19 trillion in cash a year[2]: nearly one-fourth of global gross domestic product or GDP. And that’s not just in poor neighborhoods or low-income countries. In Europe, according to the global security company G4S, an estimated 79 per cent of all point-of-sale transactions were conducted in cash, which was actually up from 60% in 2016[3].

Moreover, there are currently around 1.7 billion adults globally without access to a bank account, according also to the World Bank[4]. This is especially true in developing countries.

An argument for financial inclusion

In the U.S., where the number of unbanked pales in comparison at 8.4 million, estimates still show that another 24.3 million are “underbanked” [5]. These are people with a bank account but no credit: people who are unable to afford fees or high interest rates linked to products for low-income borrowers, or those who live in communities or neighbourhoods that do not have bank branches.

The U.S. also has an aging population with seniors who may not have access to intricate mobile phones or feel comfortable with apps and contactless terminals. Not to mention the large rural population without access to reliable broadband.

Uniting digital, cash, physical worlds

It’s no secret that globalization is breaking down barriers that previously impeded the movement of people and money. As families become spread across the globe, it’s crucial for companies to provide innovative means for families to remain connected.

Today more than 40 million people live in the U.S. who were born outside of the country[6]. Many send money back home to help their family pay for anything from food and education to medical expenses and crisis relief. In fact, according to the Pew Research Centre, there was over USD $148 billion sent from America to other countries in 2017[7].

As physical barriers are broken, consumer expectations have similarly shifted. We now live in an age where speed, convenience and trust are paramount. People want to quickly send money to friends and family around the globe with minimal effort. They want a more personalized approach, more ways to send money to unlock potential, and more ways to grow their businesses.

Therefore, those in the financial industry need the digital know-how to unlock new global markets, expand access to their products and services, and create new choices and more opportunities for people.

Consumers want options – they always have and always will – so it’s incumbent on our industry to continue to work together to develop technology and close the gap, allowing for easier and more convenient movement of money globally. Similar to our recent collaborations with TD Bank in Canada, and Dollar General this past year, we need more alliances between established companies that utilize each other’s expertise to meet customers’ growing needs.

Let’s embrace the complexity of a world where cash and digital payments coexist far into the future and create inclusive innovation that offers consumers solutions regardless of where they live on the financial-services spectrum.

[1]  Eric Rosenbaum, “The cashless society myth: PayPal, Square, and bitcoin have not stopped cash from being a growth business,” August 2018.

[2]World Bank, “Small retailers transact $19 trillion in cash annually, new World Economic Forum and World Bank Group study shows”, press release, June 27, 2016.

[3] G4S, “World Cash Report 2018”, report.

[4] World Bank, “Financial Inclusion on the Rise, But Gaps Remain, Global Findex Database Shows”, press release, April 19, 2018.

[5] Federal Deposit Insurance Corporation, “FDIC National Survey of Unbanked and Underbanked Households,” 2017”, May 2016.

[6] Pew Research Centre, “Key findings about U.S. immigrants”, June 17, 2019.

[7] Pew Research Center, “Remittance flows worldwide in 2017”, April 3, 2019.

The post Bridging the Cash and Digital Worlds appeared first on PaymentsJournal.

It always feels nice to have a pocket full of British currency in my wallet. It is more majestic than the U.S. dollar, and with Queen Elizabeth’s royal image, it just seems extraordinary even if it is made on polymer rather than paper.

The BBC reports today that Britons are keeping those notes in their wallets longer; debit and credit cards are displacing cash aggressively.

• Cash accounted for just over £1 in every £5 spent with UK shops.
• Debit cards were the most popular, but falling cash use pushed notes and coins down to third place, the British Retail Consortium (BRC) said.
• Credit and charge cards accounted for £82bn, or 22%, of retail sales last year – outstripping cash (£78bn) for the first time, according to the BRC, which has been running its payments survey for 20 years. Spending on debit cards totalled £216bn.

As to why I’m glad I didn’t say this:

• Andrew Cregan, policy adviser at the BRC, said that falling cash use and growth of online shopping were both factors in the shift.
• He echoed concerns that any move to a totally cashless society could leave millions of people in the lurch. Without cash, it would be harder to leave tips or give to the homeless.
• Vulnerable people, such as those with physical or mental health problems, who find it hard to use digital services, people who have been bankrupt, or those who use cash as a lifeline when in difficult or abusive relationships, could also be severely affected.

As to carrying U.S. dollars, I’m a credit guy and prefer my cards.  Somewhere in my desk, I have a change jar and know that there are three bills in my wallet. I don’t leave home without my favorite American Express, Discover, Mastercard, and Visa.

The article in BBC leads in with the topic of record-low-cash usage but ends with a discourse on merchant fees. A bit sneaky for the British Retail Consortium, but the numbers are notable.

• The BRC argued that rising costs faced by retailers to process card payments could push up prices.
• The average cost faced by a retailer for a debit card transaction was 6.23p, rising to 18.19p for credit or charge cards, compared with 1.66p for cash, the BRC said.
• Mr Cregan said about a third of the cost on cards was the so-called scheme fee charged by card companies such as Visa and Mastercard, and that cost had been rising sharply.
• “Without action [from government], we will see businesses put under further pressure and it will be consumers who are forced to pay the price,”

Just the same, it is nice to have a few bucks in your pocket, either way. Dollars, Euros, or Pounds.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Losing Pounds In London: Payment Card Usage Overrides Cash appeared first on PaymentsJournal.

Many of us in the payments world have heard about the imminent demise of cash. But to borrow a quote from Monty Python and the Holy Grail, “I’m not dead yet”

If cash could talk I think it would say something very similar. For years, pundits and prognosticators have been sounding the death knell for cash. Unfortunately for them, the American consumer hasn’t been listening.

A recent article in CPA Practice Advisor refers to a study done by creditcard.com that shows that consumers still like to use cash – particularly for small ticket transactions:

Nearly half of U.S. adults (49%) say cash is king for purchases under $10, according to a new CreditCards.com report. Even among rewards credit cardholders, 43% say cash is their go-to payment method while 31% favor debit and a mere 26% prefer credit. 

The biggest reason rewards credit cardholders prefer to pay with cash or debit over credit: it’s easier or quicker (40%). Other popular reasons to use cash or debit for small purchases include concerns about credit card debt (24%), stores having credit card minimums or fees for small purchases (14%), no incentive to (11%) or it’s rude (5%).

Our most recent Customer Merchant Experience Report: Payments, ATMs, and Prepaid: Cash Still Has Its Place backs up this finding. In the report, we find that consumers are still using cash for all types of purchases. Most notably, they are using cash at merchants where small transactions are typical.

Further, when we ask consumers their preferred method of payment across all retail types, cash comes in second behind credit cards.

As the CPA Practice Advisor article points out, there are a host of reasons people still use cash. These reasons can be summed up into one catchall – old habits die hard.  For most people, the choice of payment method is made long before they walk into the store. Whether it is ticket size, or some of the other reasons articulated above, people with continue to choose the payment method currently in use unless a compelling reason motivates them to move on to a new way to pay.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post The Use Of Cash: “I’m Not Dead Yet” appeared first on PaymentsJournal.

As the world continues to move away from cash, the behavior of the Scandinavian consumer provides cues to the future of payments. Scandinavia, comprised of Denmark, Norway and Sweden, is seeing an explosion in mobile payments, continued dominance of card payments, and the rapid decline of cash usage.

Market Leader in Eliminating Cash: Sweden 

In 1661, Sweden became the first country in Europe to introduce bank notes,¹ and is also likely to be the first country in Europe to stop accepting cash. Sweden is the epicenter for the death of cash, with only 1% of the total value of payments in Sweden made in cash in 2016. ² Businesses and banks are reacting to the preferences of consumers and merchants, and it is now common for businesses in Sweden to not accept cash.

There are multiple benefits of going cashless, including:

• Saving Time: Employees at the IKEA store in Gavle, Sweden reported spending 15% of their time handling, counting and storing money, even though shoppers used cash in less than 1% of transactions. ³
• Saving Revenue: Businesses incur high risk and cost when handling cash. According to the Visa Cashless Cities report, “Businesses lose an equivalent of 4% of their revenues per month due to theft, counterfeit money, and cash register ”⁴
• Safety: Worker and business safety is higher when companies go cashless. Additionally, going cashless is also safer for banks. Swedish banks have seen a drop in robberies by 99% between 2008 –
  2017.⁵

Strength of Card Payments 

The dramatic growth of mobile payments has not dampened Scandinavia’s appetite for card payments. Per capita, Scandinavians have the highest usage of card payments globally with Norway leading the pack at 475 card payments per average consumer each year.⁶ The card schemes have built an incredible infrastructure of acceptance and trust, which enables Scandinavians to use their cards within the region and abroad. Moreover, the card schemes are moving beyond swiping and dipping cards to contactless pay.

Contactless Pay 

Contactless pay enables a consumer to make a payment by waving a card or device in front of a card reader. Contactless pay is secure, convenient and enables the consumer to quickly complete the transaction. Contactless pay is in its infancy, but as more merchants enable this payment method and consumers learn about it, usage of contactless pay will exponentially grow. Contactless pay will fare the best in quick-low dollar transactions, including transit. Merchants will embrace it on a wider scale considering its acceptance rate is 10% higher than the traditional magnetic swipe.⁷ Contactless pay is not unique to Scandinavia, yet Scandinavians will likely be quick to embrace this payment method. In 2018, Norwegians utilised Contactless pay for 4.5% of transactions at physical terminals; however, this will likely scale to over 50% with three years.

Mobile Payments Explosion 

Across Scandinavia, three popular domestic schemes are leading mobile growth: Vipps in Norway, Swish in Sweden, and Mobile Pay in Denmark. In 2018 alone, Norway’s Vipps users conducted 141 million mobile payments totaling 67 billion Norwegian Kroner which represented a 55% annual growth.⁹ Scandinavia’s mobile payment schemes are experiencing a network effect where the increased number of scheme users, increases the value of the scheme. Vipps’ market penetration is at 75% ¹⁰, Mobile Pay is at 90% ¹¹ and Swish is at 69%.¹²

Governmental Policy 

Scandinavians have naturally embraced electronic payments, but for many jurisdictions the biggest driving force towards a cashless society is governmental policy. Cash intensive businesses pose a higher risk for tax evasion and risk of money laundering. Many governments have enacted cash restrictions to reduce the likelihood of illicit activity. This has pushed more consumers to embrace electronic payment methods.

The payment trends in Scandinavia will not be carbon copied across the world. There will be nuances including some jurisdictions drive towards embracing alternative payment methods. However, the general rule is that we are moving towards a cashless society.

1 https://www.riksbank.se/en-gb/about-the-riksbank/history/1600-1699/first-banknotes-in-europe/

2 “Why Sweden is close to becoming a cashless society,” https://www.bbc.co.uk/news/business-41095004

3 https://www.nytimes.com/2018/11/21/business/sweden-cashless-society.html

4 “Cashless Cities,” https://usa.visa.com/dam/VCOM/global/visa-everywhere/documents/visa-cashless-cities-report.pdf

5 “Swedish banks have seen a drop in robberies by 99% between 2008 – 2017”,  https://www.nytimes.com/2018/11/21/business/sweden-cashless-society.html

6 https://static.norges-bank.no/contentassets/4716368f47354bd8a3a0c392a4dd59b6/nb_papers_1_19.pdf? v=05/22/2019111121&ft=.pdf

7 https://usa.visa.com/run-your-business/small-business-tools/payment-technology/contactless-payments.ht ml

8 https://static.norges-bank.no/contentassets/4716368f47354bd8a3a0c392a4dd59b6/nb_papers_1_19.pdf? v=05/22/2019111121&ft=.pdf

9 https://static.norges-bank.no/contentassets/4716368f47354bd8a3a0c392a4dd59b6/nb_papers_1_19.pdf? v=05/22/2019111121&ft=.pdf

10 https://www.independent.ie/business/world/norwegians-stop-using-cash-as-vipps-payment-app-thrives-38 161720.html

11 https://www.mobilepay.fi/mobilepaymedia/e92e628d49674e5c9c25734b55578c24.ashx

12 https://insights.nordea.com/en/innovation/the-benefits-of-swish-for-businesses-in-sweden/

The post The Future of Payments is found in Scandinavia appeared first on PaymentsJournal.

Several states and municipalities in the U.S. have passed legislation that requires retail stores to accept cash.  Proponents say retailers should be required to accept the official currency of the land. It also allows those individuals who conduct their financial lives mostly through cash, who are often lower-income, to be able to shop in any physical store.

Who would want to be identified with trying to discriminate against cash users? Apparently legislators on both sides of the aisle in the state of Massachusetts. They have introduced legislation in the House and Senate that would reverse laws created in the 1970’s that required storefronts to accept cash and has been the inspiration for similar legislation recently in other locations.

DigitalTransactions had this to say:

A hearing is set for today on two bills pending in the Massachusetts Legislature that would repeal the state’s decades-old ban on cashless stores.

If passed, the bipartisan legislation, which is drawing fire from the ATM industry, would put Massachusetts at odds with efforts this year in a number of cities and states that have banned or proposed bans on stores prohibiting cash payments. With the growth of Amazon.com Inc.’s Amazon Go stores and other cashless retailers and sports and entertainment venues, opponents fear such establishments discriminate against cash-dependent consumers who don’t have credit or debit cards or mobile-payment apps.

The little-noticed Massachusetts bills both were introduced in January. Each would repeal Section 10A of Chapter 255 of the state’s general code, which reads: “No retail establishment offering goods and services for sale shall discriminate against a cash buyer by requiring the use of credit by a buyer in order to purchase such goods and services. All such retail establishments must accept legal tender when offered as payment by the buyer.” 

Perhaps this legislation is hoping to pave the way for more Amazon Go stores or other cashier-less stores in their districts.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post ‘Bucking’ the Trend, MA State Legislature Considers Allowing Stores to Refuse Cash appeared first on PaymentsJournal.

Efforts to ban cashless retail are gaining momentum across the nation. Earlier this year, Philadelphia became the first major city to ban cashless retail stores in an effort to protect consumer access to the marketplace. New Jersey, San Francisco, Massachusetts, and other cities and states quickly followed suit. In total there are 11 bills currently approved or making their way through the legislative process, according to the ATM Industry Association (ATMIA).

Although a ban on cashless retail is not an issue that has been well explored by legislators at the federal level, the subject has recently been brought up by members of Congress with ATMIA. And two bills have been introduced at the federal level.

As state and city governments explore solutions that encourage economic growth without imposing hardship or discrimination on citizens that rely on cash, the issue of going cashless vs. banning cashless stores is expected to gain momentum.

Understanding the Inherent Discrimination of Cashless Retail 

Statistics show cash payments account for approximately one-third of all transactions in the U.S. and cash is the preferred method of payment for over a quarter of the population. With roughly 80 million Americans reliant on physical tender for their day-to-day needs, recent innovations in digital payment technology could negatively impact unbanked and low-income consumers.

According to the Pew Research Center, at least 10 percent of Americans still do not use the internet. Numbers are much higher among certain groups when factors like age, location, education, computer literacy and socioeconomic status are considered. Therefore, a substantial portion of the population – and consumer base – does not have a computer or smart phone to access their bank accounts electronically. Others are not associated with a financial institution for a variety of reasons, such as lack of sufficient identification, distrust of the banking system, or are struggling under debt.

Encouraging an environment in which consumer choice is limited and shoppers are segregated by their ability to maneuver a digital landscape is discriminatory on many levels – giving the overall impression that merchants who refuse cash wish to be more exclusive with who they serve.

Economic Resilience & Security Challenges

Our current infrastructure isn’t suited to operate solely on cashless transactions. IT failures caused by storms, power outages or emergency conditions, can cause widespread disruption – leaving merchants unable to process transactions for hours or weeks depending on the severity of the situation. In these situations, cash becomes paramount as it is the only payment method for business and the only accessible tender for consumers.

Cybercrime is another area for concern, with U.S. businesses losing $2.7 billion collectively to various types of fraud in 2018, according the FBI’s Annual Internet Crime Report. Increasingly common data breaches put consumer information at risk leaving them vulnerable to identity theft, extortion schemes and targeted phishing emails to name a few. Consumers with low digital literacy are especially susceptible to cybercrime. Even with IT security budgets and employee security training on the rise, hackers pose a distinct threat to economic stability – for merchants and consumers alike.

Moving Forward

The trend toward digital payments and cashless retail is expected to continue over the next decade. However, with cybercrime on the rise, increasingly higher fees for merchants to accept credit and debit cards, and a substantial portion of the population unbanked or underbanked, regulations to protect cash usage are becoming more important to protect consumer choice.

For merchants wishing to get ahead of the trend to protect cash before it is mandated, the answer may be as simple as offering a cash discount program ‒ which allows a merchant to offer customers a reduced price when paying with cash. Not only does a cash discount program not discriminate against cash users, it also offers business owners relief from fees associated with accepting credit and debit cards, protects against cybercrime and allows merchants to differentiate their business from the competition.

About Samir Kadi — Samir Kadi is the CEO of MTech Distributors, LLC. Specializing in solutions for merchants, MTech provides ATMs, merchants services and everything related to payments that a merchant needs to grow their business, increase revenue and surpass customer expectations. A graduate of City University of New York-College of Staten Island and successful entrepreneur, he also owns TECHataClick and ATM Routes for Sale. Connect with Samir via email or on LinkedIn.

The post Why Lawmakers are Protecting Cash Usage appeared first on PaymentsJournal.

Cash seems to be one of those things that you either hate it and want to see eradicated, an opinion expressed by the CEO of Bank of America, or you love it for its utility and refusal to go away despite having been declared dead many, many times. A recent Fed report on consumers’ payment choice suggests that although declining in use, cash is far from being replaced by digital payment options.

An opinion piece in PaymentsSource argues that it is useless to fight for the eradication of cash, but rather consider ways to use technology to make it more efficient such as cash recycling, a technology that hasn’t caught on in the U.S. as it has in other countries:

For banks and financial institutions, the wave of the future is using technology to optimize, not eliminate, their cash-handling processes.

Stories about cashless merchants like Sweetgreen (salad restaurants), Bluestone Lane (coffee shops) and Amazon Go (convenience stores) imply that the transition to a cashless society is well underway, but according to studies from the Federal Reserve Bank of San Francisco, “cash continues to be the most frequently used payment instrument, representing 30% of all transactions and 55% of transactions under $10.”

Self-service deposit capabilities offer the greatest opportunity for financial institutions to evolve their cash management offerings. Traditionally, merchants deposit their cash at a bank branch or using a night drop box. Bank employees must count and validate the cash, then update the business’s account accordingly. Automating the business deposit process at the ATM saves the merchant time and gets the money into their account faster. On the banking side, upgrading equipment to include ATM technology that can accept—and recycle—merchant deposits opens the door to significant gains in efficiency.

Cash recycling enables banks to support merchants’ cash needs while optimizing their own operations. On average, deposits account for more than half of banks’ cash-handling activities. By automating deposits, banks can significantly reduce their workloads and expenses. In a system with a closed cash cycle, deposits from the bank’s business customers replenish the ATMs, supplying the cash that will be dispensed for withdrawals. Simply put: Merchants fill the ATM, consumers empty the ATM and the cycle repeats. Countries that have successfully adopted cash recycling include Japan, Germany, Turkey and Belgium, but adoption rates remain significantly lower in the U.K., U.S. and Brazil.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Optimizing Cash with Recycling Technology appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – ATM Banking: It’s Not Just About Cash Withdrawal Anymore.

• Has consumers’ use of cash increased or decreased over the past 12 months?
• Trick Question! Over the last 12 months:
  • 15% of consumers report using more cash
  • 15% of consumers report using less cash
  • 70% of consumers report ‘stayed the same’
• Check use has declined slightly:
  • 9% report more check
  • 22% report less checks
  • 69% report the same level
• Consumers who withdraw cash at an ATM do so an average of 43 times a year.
• Consumers performed other ATM activity (beside withdrawal) 36 times a year.
• Light ATM users are much less likely to use an in-store ATM (26%) than heavy ATM users (42%).
• Young consumers (age 18-34) are more likely to use in-store ATMs (41%) than 35-64 year olds (27%) or older consumers (18%).

About this report

Mercator Advisory Group’s most recent Insight Summary Report, ATM Banking: It’s Not Just About Cash Withdrawal Anymore, reveals that U.S. customers are increasingly relying on ATMs to fulfill their banking needs. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

The post Has Consumers’ Use of Cash Increased or Decreased over the Last 12 Months? appeared first on PaymentsJournal.

The Cash Product Office of the Federal Reserve Bank has published its 2019 Findings from the Diary of Consumer Payment Choice. This annual report tracks U.S. consumers’ payment preferences and found this year that debit cards are used most frequently, followed by, you guessed it, cash. Although, there was a decline in the number of cash transactions from 2017 to 2018, its dominance in small value transactions and its preference with younger and older generations continues to hold true.  From the report:

Of all the cash payments reported, 80 percent were for payments below $25.  The combination of these two factors illustrates why cash continues to be a popular payment instrument.  However, the share of cash payments has been declining.  The 2018 Diary represents the first year cash was not used for the majority of transactions under $10.  In 2017, 56 percent of payments under $10 were conducted using cash while data from the 2018 Diary show that share declined to 49 percent, through cash was used more than twice as often as debit cards at 23%.

There are a lot of other interesting payment trends which you can find in the full report here.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post The Way We Spend appeared first on PaymentsJournal.

Today, Consumers use cash in 77% of all transactions worldwide[1], and growth rates of cash in circulation are predicted to continue. Developing countries in Asia and Latin America have extremely high cash usage, with upwards of 90% of transactions being conducted in cash in some regions. In fact, even banked populations in those developing countries tend to voluntarily choose to convert digital forms of money into cash as quickly as possible. Across the globe, cash is still the leading payment method at point of sale[2].

The bottom line is that cash is a mainstay as a form of payment across the globe.

The ATM remains the only channel that provides cash access anytime, anywhere, at a lower cost—and it’s increasingly mobile-friendly, API-integrated and capable of facilitating the movement of cash between the physical and digital worlds. Your self-service strategy should therefore be focused on maximizing the channel to take advantage of its huge potential. 

Old-School Strategy No. 1: Position ATMs as Secondary to the Branch

What to Do Instead: Position ATMs “as the Branch” by Automating All Cash Processes

FIs are constantly pressured to optimize the cost of their physical footprints. Branch size and location, placement of ATMs, where to open and where to close locations all impact the business model.

Self-service is a key asset FIs have in their strategy to achieve a “right-sizing” approach as the branch model evolves.

ATMs enable transaction migration, extend transaction sets for consumers and automate cash processes, making them an integral tool “in the branch.” However, the modern ATM goes beyond this function and can now act “as the branch,” with FIs using this physical asset as an extension of their distribution strategy; as a market entry position to introduce the brand and provide flexible access to financial services and cash without building a full branch, as an extension to services offered in a branch outside of normal branch hours, or, as a leave-behind strategy for markets and locations where branches are no longer viable.

Strategically, the ATM is a vital tool for enhancing brand perception, providing access to financial services and extending the digital capabilities of a financial institution by bridging the physical and digital worlds.

Old-School Strategy No. 2: Focus on Scale and Accessibility

What to do Instead: Focus on Seamless Journeys

As FIs have built their fleet network over the decades, the focus has been on providing easy access to banking touchpoints. A modern self-service strategy must go beyond simply providing access—it should offer a tailored, targeted experience that differentiates between various consumers.

This “journey thinking,” along with leveraging Big Data, has been identified as a top priority by FIs around the globe.

Researchers paint a similar picture: in the latest Retail Banking Trend Report, the same two topics where ranked first and second. Interestingly in 2018, Journey thinking was No. 1 and in 2019 Big Data has top priority.

Self-service is a critical touchpoint in various journeys: 

Consumer journeys

• Consumers are used to controlling their own journeys in their digital world today; leveraging apps on the mobile device and engaging with a variety of providers.
• Enhancing and managing consumers’ end-to-end journeys are key to FIs remaining relevant in the eyes of the consumer.
• Banks must remove challenges and friction along every step of the journey, and anticipate consumers’ needs by “knowing,” “showing” and “wowing” them at each stage. 

Small & Medium Business Journeys

• SMBs are an important client base for FIs—in many cases, their business is still extremely cash heavy and they have a strong desire for cash services.
• In many countries SMBs account for about 70% of all cash-in transactions within the branch.
• Frictionless cash-based journeys for this segment are important, and, when migrated fully to self-service, can help reduce cash-related costs and create a closed-loop recycling environment that moves cash-in money through the system more efficiently. 

Staff Journeys:

• Today, focus is often on the consumer and on improving their experience through data.
• Bank staff need the same context when engaging with consumers.
• The transformation and improvement of staff journeys goes hand-in-hand with improving consumer journeys: When it’s easier for a staff member to serve a customer, everyone’s experience is better. 

Old-School Strategy No. 3: When it Comes to CIT, Just “Set it and Forget it”

What to do Instead: Carefully Evaluate Areas Where the Cash Cycle Can be Optimized

The prevalence of cash begs the question, if cash is so heavily used across the majority of the world, how effectively are consumers able to connect and access their money? Ironically, the cost per cash transaction increases when the total number of cash transactions decrease. The handling of cash holds multiple costs including transport, handling and interest charges on ‘inactive’ cash. Cash handling therefore remains costly if not managed correctly. Modern, data-driven approaches to cash management can dramatically transform the cost to operate a fleet.

The world has changed—and so has self-service. Modern ATM fleets can be a valuable component of an FI’s digital strategy, as long as the right pieces are in place to enable such a modern experience. DN Series™ ATMs from Diebold Nixdorf were designed to meet the needs of today’s consumers and prepare FIs for the future of connected commerce. From advanced security features to optional recycling capabilities, integrated software and AI-driven service, discover why FIs around the world are using DN Series to offer their consumers an unsurpassed experience every time, everywhere.

Learn more at DieboldNixdorf.com/DNseries.

About the Author

Jerome Amara VP  Systems banking, EurAsia

Started with Diebold Nixdorf in 2000. Previously, from 2014, Jerome had been Vice President Systems for Europe, Middle East and Africa. Jerome has held various senior positions in Sales, Business development and portfolio management in EMEA and Asia Pacific. Prior to his return to Europe in 2016, he served as Vice President Sales, Asia Pacific from 2014-2016 and Vice President Sales and Marketing & MD South East Asia from 2013 till 2014.

[1] “Global payments: Expansive growth, targeted opportunities,” McKinsey, 2018

[2] “Global Payments Report,” Worldpay, 2018

The post Three Old-School Self-Service Strategies to Give Up—and What to Do Instead appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – ATM Banking: It’s Not Just About Cash Withdrawal Anymore.

• There appears to be a moderate interest in new types of ATMs with increased functionality
• When asked: ATMs can be equipped to handle many types of transactions. How interested would you be in using an ATM for the following tasks? Below are the common responses:
• Withdraw cash in more specific denominations with 59% of respondents
• Increase your daily limit for cash withdrawal with 38% of respondents
• Receiving special retail offers with 37% of respondents

About this report

Mercator Advisory Group’s most recent Insight Summary Report, ATM Banking: It’s Not Just About Cash Withdrawal Anymore, reveals that U.S. customers are increasingly relying on ATMs to fulfill their banking needs. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

Among many insights uncovered, the survey found consumers are more than four times as likely to use their own bank’s ATM (94%) as other banks’ ATMs (22%) or ATMs than are not bank branded (19%). Furthermore, heavy users of ATMs are less dedicated to their own bank’s ATM and more apt to use ATMs that do not belong to their bank. The same is true of younger consumers, reflecting their strong presence among the heavy users of ATMs.

The survey also found that consumers are more likely to choose going to a teller when depositing higher-denomination checks (e.g., $1,000) than to deposit them in an ATM. Checks of smaller denomination (e.g., $50) are more apt to be deposited via an ATM. Additionally, the report shows that 14% of Americans say they will not withdraw cash at an ATM and 31% will not conduct any other type of transaction at an ATM.

“There is an opportunity for financial institutions to deepen their relationship with their customers by expanding the capabilities of their ATMs. Younger consumers rely more on ATMs and use more of their features. As such, this group should be kept in mind during any discussions of or planning for new functionality,” stated the author of the report, Peter Reville, Director of Primary Data Services at Mercator Advisory Group including the CustomerMonitor Survey Series.

The post What You Need to Know about ATM Usage PT. 3 appeared first on PaymentsJournal.

As the world progressively goes digital it seems that a cashless society is right around the corner. The popularity of online payment services is growing fast and so is their diversity as more businesses enter this already competitive market.

However, the prospect of a cashless society is not seen universally in positive terms. No matter how popular digital payments are, billions of people still rely on cash. Should the trend towards a cashless society continue these people would struggle to adjust.

And yet so many people already greatly benefit from the international money transfer services which exist today. But will their need outweigh that of those who remain in the habit of using a cash-based system which has been around for centuries?

Online Payment Solutions are Taking the World by Storm

One of the most important factors which heralds the approach of the cashless society is the rise of online payment solutions. Their number is legion and is getting bigger by the day. They range from mobile apps to cryptocurrency to e-wallets to international money transfer companies, and more. Each of these options has its own advantages and one also shouldn’t forget banks and other “traditional” financial institutions which are offering their own brand of online money transfers.

It should be noted that various all-purpose online systems are getting more recognition today. They are easy to use and transfers through them are secure, cheap and, above all, fast. They are so fast, in fact, that banks and credit unions are struggling to keep up. Much lower or completely absent transfer fees along with mid-market foreign currency exchange rates seal the deal.

And it is this last factor which carries such significance for international money transfers, which are essential in this age of economic globalization. Making and receiving payments from abroad is now a necessity for many businesses and high currency exchange rates prevent many companies from going global. International money transfer companies, n the other hand, provide a solution to this problem by offering rates which are as close to mid-market as possible.

As a result of this incredible opportunity the demand for the services provided by such companies continues to grow. This in turn boosts the industry as new businesses emerge to meet that demand. Moving closer to going cashless is one of the knock-on effects of these business’ popularity because they make one of the cash uses as good as obsolete. This method of online money transfers is superior to services such as Western Union, which largely deal with cash.

And what is even more important is that these online transfer companies discourage withdrawing funds from accounts to minimize losses on fees. In today’s digital world a business can easily conclude the majority of its transactions whilst avoiding cash completely.

The change in the number of cashless transactions seems to indicate that becoming fully digital is imminent. From six out of ten just a decade ago cash transactions are now only three out of ten, in the UK at least (Forbes). The situation is similar for all Western countries and Sweden, in particular, seems to be in the lead amongst those embracing a cashless future. And yet despite the fact that you can even tip room service with your debit card in some places, cash has not been completely discarded anywhere.

In many African countries today people completely rely on online money transfers for survival. They don’t even bother with bank accounts as the banking system in that part of the world is not well-developed. But a great number of people can easily get an account with an online money transfer platform and manage their balances using a rather simple mobile phone. Considering that remittances are the number one source of GDP for some African economies, it seems that these countries will also be up there with the pioneers of the cashless global society.

Will the World Go Cashless Anytime Soon?

The world definitely seems to be moving in this direction with digital transactions increasing exponentially by the year. B2B transactions are well on the way to being paperless, so an entirely cashless society is not much more of a stretch.

However, economic experts such as Kenneth Rogoff recommend dispensing with a large number of cash transactions without going completely cashless. The simple truth of the matter is that there are many people who still rely on cash and thus facilitating its abolition would be unfair to them. Indeed it might put their very survival in jeopardy.

Of course a cashless world would have its advantages. Digital payments are more secure and make criminal activity such as money laundering much more difficult. However, they are not universally available.

This situation has been changing and the appearance of new online money transfer businesses which compete for a share of this lucrative market is evidence of this. The reach of these services increases and so does their availability. But they are still some way from being able to cater for the needs of the entire world’s population.

One also needs to remember that even Internet coverage is not yet reaching the entirety of the planet, and thus some people are unable to use digital forms of payment by default. Making it possible and easy for everyone to access the Web and to use it for making and receiving payments is another thing that would have to be accomplished in order to create a global cashless society.

One might argue that achieving this is conceivable in some places already, and it is true that the technology exists for such a thing to happen. However, those three out of ten transactions still persist and it seems they won’t completely disappear anytime soon.

Cash is easy, familiar and, in some ways, safer than digital methods of dealing with money as cybercrime becomes increasingly sophisticated. Of course, cash isn’t perfect and is indeed inconvenient for B2B transactions today.

But will it disappear?

It may do so in the future, but that won’t be for at least another decade. And if the dreaded predictions about the global economic crash of 2020 come true, the matter of the cashless society will be moved further down the list of priorities for the global community.

Bio: Kate Bregovic is a wife, mother, freelance writer, and fitness enthusiast. She covers many topics – from business management trends to fitness regimes. When she’s not writing, she’s planning outdoor activities for her family, cooking, or working out at the gym.  Follow her on Facebook: https://www.facebook.com/mrs.kate.bregovic

The post On the Road to Being Cashless: The Demand for Online Payments Systems Grows appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – ATM Banking: It’s Not Just About Cash Withdrawal Anymore. Watch part 1 of “What You Need to Know About ATM Usage” here.

• Consumers are more than four times as likely to use their own bank’s ATMs (94%) than other banks’ ATMs (22%) or ATMs that are not bank branded (19%).
• Age also impacts ATM use for withdrawing cash. Nearly one-third (31%) of those aged 65+ “never” use an ATM to withdraw cash, compared to 4% of 18- to 34-year-olds. These results are similar for ATM activities other than getting cash.
• About 4 in 10 (43%) report that they have asked for cash back when shopping in the past six months.
• Among those people who have asked for cash back while shopping, when given the choice of cash back or ATM, preference for cash back (41%) is slightly higher than preference for withdrawing cash at an ATM (34%). Another one-quarter have no preference.

About this report

Mercator Advisory Group’s most recent Insight Summary Report, ATM Banking: It’s Not Just About Cash Withdrawal Anymore, reveals that U.S. customers are increasingly relying on ATMs to fulfill their banking needs. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

Among many insights uncovered, the survey found consumers are more than four times as likely to use their own bank’s ATM (94%) as other banks’ ATMs (22%) or ATMs than are not bank branded (19%). Furthermore, heavy users of ATMs are less dedicated to their own bank’s ATM and more apt to use ATMs that do not belong to their bank. The same is true of younger consumers, reflecting their strong presence among the heavy users of ATMs.

The survey also found that consumers are more likely to choose going to a teller when depositing higher-denomination checks (e.g., $1,000) than to deposit them in an ATM. Checks of smaller denomination (e.g., $50) are more apt to be deposited via an ATM. Additionally, the report shows that 14% of Americans say they will not withdraw cash at an ATM and 31% will not conduct any other type of transaction at an ATM.

“There is an opportunity for financial institutions to deepen their relationship with their customers by expanding the capabilities of their ATMs. Younger consumers rely more on ATMs and use more of their features. As such, this group should be kept in mind during any discussions of or planning for new functionality,” stated the author of the report, Peter Reville, Director of Primary Data Services at Mercator Advisory Group including the CustomerMonitor Survey Series.

The post What You Need to Know About ATM Usage PT.2 appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – ATM Banking: It’s Not Just About Cash Withdrawal Anymore.

• Consumers report that their use of cash and checks is essentially unchanged over the past 12 months (about 70% unchanged for both). About one-third of Americans (31%) use the ATM for cash withdrawal only.
• Six in 10 (59%) withdraw cash from an ATM monthly or more. Only one-quarter (26%) use ATMs for anything else monthly or more.
• Among those who ask for cash back when shopping, many prefer that method to obtain cash to going to an ATM, while one-quarter have no preference.
• The size of the deposit has an impact on the method people would choose to deposit a check. A higher-value check is more likely to be deposited in person.
• Consumers who shy away from depositing checks or cash at ATMs prefer the personal touch of teller deposit and distrust ATMs.

About this report

Mercator Advisory Group’s most recent Insight Summary Report, ATM Banking: It’s Not Just About Cash Withdrawal Anymore, reveals that U.S. customers are increasingly relying on ATMs to fulfill their banking needs. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

Among many insights uncovered, the survey found consumers are more than four times as likely to use their own bank’s ATM (94%) as other banks’ ATMs (22%) or ATMs than are not bank branded (19%). Furthermore, heavy users of ATMs are less dedicated to their own bank’s ATM and more apt to use ATMs that do not belong to their bank. The same is true of younger consumers, reflecting their strong presence among the heavy users of ATMs.

The survey also found that consumers are more likely to choose going to a teller when depositing higher-denomination checks (e.g., $1,000) than to deposit them in an ATM. Checks of smaller denomination (e.g., $50) are more apt to be deposited via an ATM. Additionally, the report shows that 14% of Americans say they will not withdraw cash at an ATM and 31% will not conduct any other type of transaction at an ATM.

“There is an opportunity for financial institutions to deepen their relationship with their customers by expanding the capabilities of their ATMs. Younger consumers rely more on ATMs and use more of their features. As such, this group should be kept in mind during any discussions of or planning for new functionality,” stated the author of the report, Peter Reville, Director of Primary Data Services at Mercator Advisory Group including the CustomerMonitor Survey Series.

The post What You Need to Know about ATM Usage appeared first on PaymentsJournal.

Cybercriminals always follow the money, and corporate finance is a potential honey pot for them, given the potential to divert payments to their own accounts. Last year, a WEX Worldwide survey found that 52% of organizations admitted to being victims of payments fraud. Today, many CFOs alongside CIOs are implementing payment hubs to protect corporate cash through better payment controls.   

While inefficient payment processes inhibit supply chains, cash flow and profitability, they also create a ripe opportunity for fraudsters. Payment hubs have emerged as the preferred solution of many treasury and finance leaders to combat fraud. Not only do payment hubs help fight against the increasing threat of fraudulent attacks and cybercrime, they have the potential to provide global visibility into payments to ensure consistency and compliance. Additionally, payment hubs can optimize cash and improve overall working capital.  

So why are CFOs, CIOs and CISOs demanding that payment hubs be implemented? Here are several benefits organizations gain from integrating a payments hub within their finance function: 

Standardization eliminates unauthorized payments

It is quite common for global organizations to have different payment procedures by country or business unit, even if a single ERP has been implemented globally. Yet internal and external fraudsters prey on inconsistency in the way payments are managed. Payment hubs support digitization of payment policies while enforcing payment controls (e.g., payment approval scenarios, extra layers of authentication, remote and absentee approval procedures, and restrictions on payment modifications). 

Screening for internal and external compliance 

As payments continue to diversify across multiple channels (e.g., wires, ACH, checks, real-time payments, non-bank channels), organizations cannot solely rely on finance and treasury staff to scan every payment in real-time or count on banks to be the last line of defense. Corporates can be fined for violating sanctions lists such as OFAC. At the same time, payment screening should also detect payment anomalies and payments that violate internal policies (e.g., those that that take place outside of an organization’s “approved” countries, payments to a recently modified bank account, or even an odd payment amount). Process automation through complex algorithms and/or machine learning in a payments hub offers increased protection.    

Payment hubs reduce the cost of managing payments

For CIOs who manage ERP implementations, the intricacies of ERP-to-bank connectivity, payment format transformation, executing payment controls, and delivering middleware to support manual payments is a complex exercise. This responsibility increases in difficulty as banks move to API connectivity while SWIFT mandates global transition to XML ISO20022 formats. Fortunately, payments hub technology manages every aspect of payments compliance and bank connectivity, enabling CIOs to manage a modern payments infrastructure at a fraction of the cost (typically saving $1 Million +). Payment hubs also allow CFOs to optimize banking services as they scale to meet the liquidity needs of a growing organization.   

Increased visibility to payment activity 

Although organizations continue to stockpile cash, boards are demanding that CFOs minimize cash used for working capital so that more liquidity can be directed to higher yield investments, strategic projects, and shareholder returns. Cash visibility is critical to meeting the CFO’s KPIs and payment hubs enable real-time visibility into all payment activity. Without these centralized views, corporate treasurers estimate end of day cash positions for their bosses, leaving idle cash in bank accounts yielding dismal returns, and robbing the CFO of the opportunity to maximize the return on cash. Management and the board demand visibility and only a payments hub can complete the picture. 

A centralized payments hub is a vital risk management tool to protect the organization’s cash flow by strengthening payment controls. Return on investment is quick while maximizing the value of ERP solutions to streamline connectivity and compliance for the CIO and CFO.  

The post As Fraudsters Target Corporate Cash, CIOs Demand Grows for Payment Hubs appeared first on PaymentsJournal.

There’s more than one way for financial institutions to scale, and digital innovations are often a critical component of a winning formula, whether the goal is to achieve ubiquity or simply to dominate in the bank’s home market.

But growing into the future may first require FIs to look into the past. Even the most innovative digital channels and strategies still rely on ATMs because cash and cash access remain desirable – in some cases, even necessary – for many consumers.

And it’s not just about dispensing cash: increasingly, consumers want their ATMs to do more so they can go to the bank branch less and less. This desire spells opportunity for FIs.

It’s in that context that Brad Nolan, EVP Allpoint solutions at Cardtronics, and Sarah Grotta, director of debit and alternative products advisory service at Mercator, joined forces on a recent Mercator webinar to discuss how FIs can leverage retail ATM networks to reshape deposit strategies, thus driving ATMs into their next iteration.

The power of cash

Some payments professionals and visionaries talk about eradicating cash, but Grotta says that’s a “fruitless” strategy.

“In the U.S.,” Grotta said, “ATMs are a critical banking channel, and cash remains a critical payment type. As new payment methods and types are added, banks and merchants must also continue to support the old ones.”

Look no further than Amazon Go, a brick-and-mortar store built on the very concept of the death of cash – now announcing that its stores will be accepting good old paper and pennies.

Cash is favored on a situational basis, Nolan said. People like it for small transactions. They like it because it’s convenient, frictionless, safe, private, and accepted everywhere. They like it (or at least, millennials do) because physical dollar bills are easier to budget.

Consumers have made their affinity for cash very clear, and cities like Philadelphia – even entire states, like Massachusetts – are now mandating that merchants must accept cash.

Convenience

Mobile and online banking, NFC, and digital payments are often viewed as more convenient than cash, but in reality, that is not the case across the board. There are boxes that these fast and techy new solutions simply do not check. For example, they are typically not available to the unbanked.

Not being able to pay for anything is decidedly not convenient.

There was a time when consumers banked with the FI that had a branch around the corner, but location is becoming less relevant and the meaning of convenience has changed. At the end of the day, no matter how many boxes new payment options check off, consumers still want payment choice. That is the new convenience. Digital is part of that choice, but only part.

That means access to cash is core to banking, Nolan said, while research from Novantas showed that “branch near me” – once the ultimate mark of banking convenience – has dropped to priority number three and falling among those polled. Mobile and online functions now rank first, while access to surcharge-free ATMs comes in second.

Creating cash access is good for the bottom line

Nolan points out that consumers like variety but still use cash regularly, despite having more options. That means that providing access to cash delivers free value for issuers.

A recent case study with Novantas clearly showed the power of combining a surcharge-free ATM network like Cardtronics’ Allpoint and a branding partner to create cash access and thus bolster customer attraction, engagement and retention.

In terms of growth and experience, Cardtronics and Novantas found that a large surcharge-free network provides marketing value that attracts new customers to a bank, while multi-channel engagement drove higher retention and stickier balances.

In terms of efficiency, they found that, perhaps unsurprisingly, more customers transacted with off-premise ATMs when the option was available. This moved those customers off the bank’s teller line and saved the bank money. FIs saw 7.3 percent fewer teller transactions and 11.5 percent fewer teller FTEs when banks leveraged the large, surcharge-free Allpoint network. That’s significant because tellers can cost banks $200,000 to $350,000 per branch, per year.

It means the convenience of cash access isn’t just a win for the consumer, but for the FI as well, and for the retailer as a driver of foot traffic.

The future of ATMs

Banks can’t ignore that consumers want and need cash. With ATM volumes expected to rise over the next four to five years, here’s what Nolan and Grotta say FIs need to be thinking about.

1. Deposits are peeling off the teller line and into ATM channels. Consumers are looking to deposit cash at ATMs, not just checks – many can do that already on their mobile devices. The ability to accept cash and checks will be advantageous for FIs and would unlock new capabilities such as bill pay and check cashing, which could potentially catalyze much-needed branch transformation and help level the playing field.
2. A simple cash-dispense ATM can help banks maintain a presence in markets where a branch is no longer viable, but it doesn’t fill the void left by an uprooted bank. To continue to serve cardholders effectively as the branch footprint shrinks, ATM deposit functionality is key with advanced function deposit ATMs offering many of the same services performed at the teller line.
3. At the same time, an ATM can suffice in markets where a branch would fail. And where an ATM might fail, digital services may still be of value to consumers. Banks used to feel that they needed to provide the same experience and brand feel at every branch. They are now realizing that differentiation is okay; platform and model should be determined based on market needs.

What these three points have in common, is that they demonstrate banks no longer have to play by legacy rules to succeed – indeed, if they hope to win, they can’t.

For example, by going digital/cardless, future ATMs could create cash access for customers who don’t carry a debit card or find themselves in an emergency situation without their card but still need money. Applications like the one that allows Allpoint users to query ATMs from their phones, then walk up to retrieve their money, will become more widespread, as will acceptance of these new technologies and experiences.

Banks, notes Nolan, are looking to expand into new regions for the first time in years, even decades. And they’ve been talking about “branch transformation” for just as long. The ATM lets FIs expand and optimize at the same time, while freeing them from the constraints of building identical branches across heterogeneous markets.

Whatever is coming, cash access is sure to play a critical role in the transformation. As banks get their feet under them in this new, hybrid, cash-and-digital world, it’s not just about closing branches in favor of mobile solutions or ATMs – it’s about changing behavior within them.

The post ATMs: From Cash Dispenser to True Automated Teller appeared first on PaymentsJournal.

Small business owners are always looking for new and exciting ways to grow their businesses.

Staying on top of the latest trends, the top of the line software and technologies, or marketing ideas, is the only way to grow and expand your business, or get left behind.

For those that want to jump on new opportunities have access to fast funding is key!

Many small business owners are wary of merchant cash advances, due to higher interest rates, and unclear funding and approval processes.

“Merchant Cash Advances are perfect for small business owners that need fast funding without the hassle of a bank loan. Merchant Cash Advances are asset-based loans that are perfect for small business that wants to use their future sales today.” – Loren Howard, Prime Plus Mortgages, Arizona Hard Money Loans. 

Merchant cash advances do offer benefits to small business owners that cannot get traditional loans for their businesses.

No Credit Checks

Most banks and credit unions require good or excellent credit scores in order to fund any small business loans, and for those that have scores under 700, getting a traditional loan for your business can seem impossible.

With a merchant cash advance bad credit won’t get in the way of whether you can get an advance, which is a big benefit for many small business owners.

Unlike banks and credit unions, merchant cash advances do not require a credit check in order to apply!

A merchant cash advance is an advance on the credit card sales of your small business. That means that you can get an upfront sum of cash in exchange for a slice of your future credit and debit card sales. There are no credit checks as it is based on the capital of your business, unlike traditional loans that are based on your credit or personal assets.

Merchant cash advances aren’t your standard small business loan, so you don’t have to offer collateral or your credit history in exchange for the loan.

While raising your credit score can take time, with a merchant cash advance you can fund your business quickly.

There’s no risk to your personal assets, you simply use a small portion of your future sales to secure the cash you need today!

This is perfect for small business owners who have bad credit, as they can get approved for a loan quickly and a less.

Small business owners looking to get a loan fast without the hassle love that merchant cash advances don’t need their credit scores in order to fund their businesses.

Fast Funding

Only 1 in 5 small businesses get approved for business loans.

For small businesses in need of cash now, waiting 2-3 weeks is just out of the question.

Merchant Cash Advances makes it easy to get the funding you need, with funding in as little as 24 hours. Traditional loans can take anywhere between 2-3 weeks to approve to small business due to credit checks. Merchant cash advances can fund small business within 2-3 days at most.

That means that with a merchant cash advance you can be approved the same day, and not waiting to jump on new opportunities.

It also means that for small business owners, such as construction companies or retail stores, you can have cash in hand to fund business ventures quickly, such as restocking or purchasing new equipment. There are many costs for small business owners, and being able to cover these costs quickly can be a lifesaver.

Fast funding is essential for small businesses to take on new opportunities to build your business.

Industry Funding

In their first year, 30% of small businesses may fail or change ownership, according to a study conducted by Cornell University.

Many restaurants find it hard to fund their business, and getting someone to ever look at their business may be a struggle. Meeting with banks can be very time consuming, and chances are, might get your business funded.

Thankfully, Merchant cash advances make funding a business in many niche industries easy.

Medical offices may have to wait for payments for insurance companies, auto shops need to restock parts, and retail stores and salons need to stay on top of trends in order to keep their doors open.

All of these businesses need working capital in order to stay and business, and a merchant cash advance makes funding their business easy.

With proof of sales, you can be funded for your business now, and use your future revenue now!

Easy Ways To Pay

Merchant Cash Advances are easy to pay. Depending on your merchant cash lender, you could make daily, weekly, or monthly payments.

Unlike traditional loans which are a flat monthly fee, a merchant cash advance loan is based on a percentage of your debit and credit transactions.

Which means how much you pay varies on how much you made!

If you have a great month and have lots of revenue you can pay off a large sum of your loan, and if you had a bad month, they will only take a small percentage which won’t impact how you do business.

Depending on your lender, they can even set daily auto-payments, which will pay off your loan faster than ever!

This calculator makes it easy to determine what type of small business loan would be best for your business.

Summary:

Merchant Cash Advances are great for small businesses who need cash in order to restock, buy new software and technology, and any other plethora of situations small businesses face.

While there are many different types of small business loans, determining the best loan for your business can be tricky.

There are many benefits for using a merchant cash advance for your small business, but most small businesses love these 4 perks:

1. Fast Funding: Merchant cash advances can fund in as little as 24 hours, much better than the 2-3 week waiting period from most banks.
2. No Credit Checks: You don’t need a perfect credit score in order to get a loan for your small business, and a merchant cash advance only uses your business revenue to fund your loan!
3. Industry Funding: Merchant cash advances understand the nuances of different industries, so you can get fast funding for your niche business easily.
4. Easy Way To Pay: Daily, Weekly, And Monthly auto-payments are available! Merchant cash advances can be much more flexible than a traditional loan.

Have You ever used a merchant cash advance?

BIO:

Catherine Way graduated from Michigan State University with her Bachelor’s of Advertising with a specialization in Graphic Design. She works as a freelance content creator for many facets of real estate, commercial, residential, and mortgage industries.  She spends her free time finding new ways to talk to people, through writing, designing, dancing, and more. You can see her latest creations here.

The post 4 Benefits Of Merchant Cash Advances appeared first on PaymentsJournal.

Today there are a multitude of ways to pay – cash, check, credit card, debit card, mobile and online, which is convenient for the younger, tech-savvy generations. However, integrating complex payment technology that requires an overhaul of existing hardware and software can challenge a business owner’s ability to keep their business viable.

One of the most common complaints of small retailers like convenience stores, bars and single location restaurants is the high cost of accepting credit and debit cards. Card processing fees can cut into already thin margins for many business owners.

A recent settlement on a long-running court case in New York regarding surcharging could be a game changer for merchants who have been shouldering the burden of credit card processing fees. According to a Newsday article, the settlement will allow New York retailers to pass surcharge fees on to consumers as long as the additional amount is disclosed in monetary terms. California, Florida and Texas are among other states that have overturned surcharge bans, allowing retailers to share or pass on the burden of using plastic. While surcharge fees are controversial, cash discount programs are legal in all 50 states.

Demystifying the Cash Discount

Surcharge fees are often confused with cash discounts, creating uncertainty as to the application and legality of cash discount programs. The 2010 Dodd-Frank Law, in the Durbin Amendment, states that businesses are permitted to offer a discount to customers as an incentive for customers to pay by alternative methods. The distinction is best explained through the posted price of an item or service. According to a Visa representative, “merchants can provide a lower price for cash acceptance… However, merchants are not permitted to post a price for cash and then charge a higher price for cards.”

With a cash discount program, merchants can give customers the option to pay a discounted price when they pay with cash. This eliminates the storewide service charge and reduces costs for both the customer and business owner.

Better for Business, Better for Customers

Once the difference is understood, it is hard to dispute the benefits of a cash discount program for both retailers and their customers. Benefits include:

• Reduced Fees. The most obvious benefit is reducing or eliminating fees associated with credit cards usage. Merchants are able to reduce processing fees that cut into their profit margins and consumers avoid credit interest rates on small purchases.
• Simplicity. A discount program is easier for employees and customers alike to understand. Since all items in the store are priced with a built-in service fee that is deducted if consumers pay with cash, pricing disputes, interest rates, processing fees, chargebacks and other complicated accounting items can be drastically reduced for all parties.
• Less Debt. Merchants are able to retain more profit and reduce credit card charge offs. Consumers are also less likely to rack up significant credit card debt if offered a discounted cash option.

With so many types of payment options, credit card processing can be a challenge for businesses with smaller budgets. Retailers who are looking to reduce fees that cut into their profit margin can take advantage of cash discount programs, while offering customers more affordable pricing.

About the Author

Samir Kadi is the CEO of MTech Distributors, LLC. Specializing in solutions for merchants, MTech provides ATMs, merchants services and everything related to payments that a merchant needs to grow their business, increase revenue and surpass customer expectations. A graduate of City University of New York-College of Staten Island and successful entrepreneur, he also owns TECHataClick and ATM Routes for Sale. Connect with Samir via email or on LinkedIn.

The post How Merchants Can Boost Business with a Cash Discount Program appeared first on PaymentsJournal.

A cashless store that accepts cash—no, this is not a typo. That would be giant, French sporting goods retailer Decathlon that opened its first US store in California. Teaming with Boston developer NewStore, Decathlon provides an iPhone-based payment interface for in-store shoppers. While the store is billed as cashless, there are self-service kiosks that convert cash to gift cards. This system is one way that retailers can be in compliance in cities or states that do not allow cashless merchants.

A Retail Customer Experience article discusses more on this topic which is excerpted below.

Amid a growing and controversial trend of cashless retail stores in the U.S., Decathlon, the France-based company that touts itself as the world’s largest sporting goods retailer, has opened its first location in the U.S. using an iPhone-based transaction model.

The company, which has more than 1,500 stores in 49 countries, has opened a 47,000 square-foot experiential store in Emeryville, California, following a year-long period during which it operated a retail laboratory in San Francisco exploring consumer preferences in merchandising and checkout and testing using state-of-the-art logistics technologies.

Decathlon worked with Boston-based NewStore, which provided its omnichannel-as-a-service technology, to transform the retail experience for Decathlon customers and offer them a range of sporting goods and athletic apparel purchasing options that provide greater speed, convenience and profitability than many legacy retail methods.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Decathlon Sports Opens Cashless US Store With IPhone Payment Interface appeared first on PaymentsJournal.

As expected, Amazon Go threw open its doors to its first New York City store making it the only one on the East Coast for now. But in a major change for the mobile self-checkout chain, cash is now accepted as a payment method. Given recent regulatory action in some cities and states banning cashless merchants, Amazon has been thinking through how to manage this given that total self-service and payment is the store’s hallmark. Most likely, practically all of the customers will be using its mobile pay app, as Amazon Go’s target market wants immediacy and convenience. So this changes the playbook for Amazon Go stores as they accommodate those customers not choosing to use plastic.

A CNBC article discusses more on this topic which is excerpted below.

• Amazon is opening up its twelfth cashier-less convenience store location in the U.S.
• Amazon Go opens to the public at Brookfield Place in downtown New York on Tuesday.
• The cashier-free store will also start accepting cash, Amazon said, after the company faced some backlash over “discrimination” concerns.

Amazon is finally bringing its cashier-less convenience store to New York. And it will also mark the first time this type of store, called Amazon Go, accepts cash.

While there still won’t be cash registers in the store, shoppers will have the option to use paper money or coins by having a store employee come to them with a mobile device to help them check out and pay, the company said.

Otherwise, Amazon Go shoppers are able to simply walk in and out of the store’s turnstiles, scanning the Amazon app, to purchase items.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Amazon Go Store Opens With Cash Payment Option In NYC appeared first on PaymentsJournal.

Cash is holding strong as a consumer payment instrument. According to the Federal Reserve 2018 Diary of Consumer Payment Choice, cash was the most used payment type among US consumers—representing 36% of all payments. Cash is easy to use, safe to use, private, and generally accepted everywhere. As Mercator Advisory Group’s Director of Debit & Alternative Products Sara Grotta explains, the decline in cash use will be very gradual – and ATM usage will mirror a slow pace of change.

Sarah continues, ‘ATMs are a central element of the evolution moving more banking transactions to self-service, a movement that also includes online and mobile technology. Strategies for the branch network and the ATM network are often managed in concert. ATMs are responsible for removing some of the foot traffic from branches, but they can also be a key component for customer retention when a financial institution closes a branch office, replacing it with ATMs with enhanced services.’

Retail-based ATM Channel

Financial Institutions are turning toward ATMs to increase deposit rate amid closures in retail branch locations. According to Brad Nolan, EVP of Allpoint Solutions at Cardtronics, ATMs offer a channel to extend banking access to customers while pulling mundane high-cost transactions out of the branch. What banks need to leverage is what Nolan calls the “on-ATM” culture in reference to strong consumer demand for on-demand cash. Who wants to travel ‘all the way’ to the bank to get cash? FI’s can harness this “on-ATM” culture if they place ATM’s in convenient locations where their customers need cash: premium retail locations

But what about the digital channel? For FI’s concerned with digital demand, cardless ATMs, which allow consumers to withdraw cash on an ATM via a secure smartphone app, offer the ability to engage customers through the app instead of the wallet. Looking to solutions such as Allpoint+ that provide surcharge-free ATM’s in premium retail locations or Allpoint Mobile Cash, that harness the smartphone app for a mobile cash solution, FI’s have an option.

In an upcoming webinar titled “Leveraging Retail ATM Networks to Reshape Deposit Strategies” Brad Nolan, EVP for Allpoint Solutions at Cardtronics will join Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group to discuss retail-based, surcharge-free deposit ATMs as a channel for FI’s and the drivers for such a channel from the consumer and the FI point of view. The following topics will be covered in the webinar:

Join Us Thursday, Apr 25, 2019, 2:00 PM – 3:00 PM EST

• The place of cash in the payments economy
• Consumer drivers for cash
• Ways to empower cash access
• Benefits of cash access to issuers

REGISTER

The post Cash Is Resilient, so Are ATM’s appeared first on PaymentsJournal.

We recently reviewed the fintech investment landscape in a report focusing on trends associated with the corporate banking space. In addition to pointing out the ongoing generally frenetic activity globally (including M&A, PE and VC funding), we also discussed how attention has turned to products and services targeted to businesses. In this referenced article appearing in Forbes we see yet another one of these investments, this one involving a mature Silicon Valley startup Bill.com. The company provides services to automate payables and receivables operations, with particular focus on the SME segments.

‘The investment in the Palo Alto, Calif.-based fintech was led by Franklin Templeton at a valuation of more than $1 billion. Mastercard, Fidelity Investments Canada ULC, Kayne Anderson Rudnick, Temasek, Cross Creek, and FLEETCOR also participated in the fundraising round…Bill.com serves the small and medium-sized marketplace with its Payment Management Platform which automates the payments process. The company has three million members, managing more than $60 billion a year.’

The announcement also points to a strategic partnership with Mastercard. Although we have no details at this point, we assume at the very least that this will involve the use of virtual cards in a more STP process, since Bill.com has clients on both the paying and receiving end of the cash cycle. Mastercard continues its product and investment focus into the B2B arena where lots of paper processes and payments will be replaced by digital solutions in the coming five years

‘The investment in Bill.com comes at a time when small businesses are in the spotlight. With traditional financial services companies looking for new avenues of growth they’re turning their attention to small businesses. At the same time, fintechs are going after those businesses, raising a lot of capital along the way.  Take Brex, the provider of a credit card for startups, as one example. In January it raised $125 million in venture funding, propelling the company into unicorn status with a $1.1 billion valuation.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

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More cities and other municipalities are banning retailers from banning cash. Since a percentage of the population still operates in a cash-only environment, and many but not all, are low-income individuals, banning cash is the equivalent of banning this segment of society from these establishments. From a recent Fed study, here’s the break out of payment types:

An article in Bloomberg highlights this, but also points out that preserving the option of using cash is not deterring the growth of electronic payments.

Even as some U.S. cities seek to protect low-income consumers by barring stores and restaurants from shunning physical currency, digital payments are building acceptance around the world. A Citigroup Inc. index that measures the readiness of 84 countries to adopt electronic payments has increased 5.5 percent in the past five years, the bank said in a report this week. 

“It’s a tale of two different philosophies. The situation on the ground inside the United States is very different than the situation” abroad, Jeff Sloan, chief executive officer of payments processor Global Payments Inc., said in an interview. “Most governments outside the United States are really focused on digitization.” 

The movement away from cash has proven a boon for payments companies. Mastercard Inc. shares have gained 38 percent in the past year, and Visa Inc.is up 32 percent, compared with a 15 percent increase in the S&P 500 Information Technology Index. The payments networks are each up more than 1,000 percent over the past decade, more than double the information tech index and triple the S&P 500.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Transactions Grow, Yet Cash Still Preferred appeared first on PaymentsJournal.

More businesses are shifting to the best practices in electronic payments because manual payment methods have become flawed. Manual payment methods are not only costly but also time-consuming, labor-intensive, error-prone, and inefficient. Unfortunately, in spite of these shortcomings, many businesses still use manual payment methods to process their invoices. There are numerous compelling reasons for companies to embrace electronic payment methods and discard traditional ones.

Manual Payment Methods and their flaws

Manual payment methods have many demerits making them unfavorable for many companies. Processing a transaction manually is 44% more costly than processing it electronically, not forgetting the labor required, the time consumed, and inefficiency created. Numerous challenges hinder companies from implementing electronic payment solutions. Among the most common ones include costs, integration with existing accounting systems, and vendor acceptance.

Electronic Payments Solutions and their Benefits

Innovative companies use numerous of these best practices in electronic payments methods. The common ones are ACH, virtual card, and wire transfers. ACH is an abbreviation for Automated Clearing House. It is a low-cost, fast, convenient, safe, and reliable payment solution. Many organizations use ACH for its incredibly low cost, especially when compared to traditional payment modes like checks. ACH payments are secure with multiple levels of fraud protection. Also, they facilitate transparency, audits, and spend visibility.

Virtual cards are revolutionary electronic payment solutions that are secure and flexible. They are ideal for post-invoice payments conducted through the internet, mail order, or phone. Virtual cards have positive outcomes for greater security and control. Also, they can be configured to meet unique organizational needs.

If you want to send or receive money quickly, wire transfer may be the perfect remedy. Wire transfer is an electronic payment solution that is safe, reliable, and instantaneous. It is relatively fast, and funds transfer takes less than a day for local transfers and few days for international transfers. Wire transfers are safer than traditional payment methods such as checks. A check can bounce or take numerous days to clear while a wire transfer is immediate and you don’t have to wait for the cash to clear.

Benefits of Electronic Payment Methods as the current

• Cut costs: Electronic payment solutions eliminate paper-based invoicing that is costly. Businesses that process more payments electronically record massive cost savings on paper and postage. They attain additionally cost savings from reduced transaction costs and dynamic discounting. E-payments help companies pay their invoices on time, take advantage of early payment discounts and avoid late payment fines. In the long run, businesses save hundreds of dollars in transaction costs.
• Increase speed and convenience: Electronic payments are fast and convenient unlike traditional payment methods like cash and checks. You don’t have to visit a financial institution and queue for long to wait for your chance to transact. Businesses can transact anywhere any time of the day. Also, you don’t have to wait for several days for a check to clear to access funds. E-payments are low risk, unlike cash payments.
• Improve efficiency and boost profit : Accounting professionals do not need to spend hundreds of hours and intense effort processing payments manually. They can divert their effort and time to other core activities in an organization to increase profitability.
• Prevent fraud: E-payments reduce incidences of accidental payments, double payments, and overpayments that affect a company’s finances negatively. Electronic payment solutions have features to detect fraudulent activities in AP.
• Create meaningful business-supplier relationships: Electronic payment solutions are fast, secure and suppliers receive their monies promptly. Businesses and suppliers do not have to handle paperwork manually, which saves both parties time and effort. A professional and long-term relationship develops with each party keeping their end of the agreement.

There are many compelling reasons for organizations to abandon manual payment methods and implement e-payment solutions. The best practices in electronic payments ensure safe, convenient, reliable, and safe vendor payments. They help businesses attain cost and time savings and operational efficiency. Do not be left behind in this accounting revolution; implement electronic payment systems and enjoy their enormous benefits.

The post iPayables Breaks Down The Best Practices in Electronic Payments appeared first on PaymentsJournal.

1. Added security

Almost one-third of consumers and business owners agree that new technology will lead to safer payments with 31% of business owners admitting they feel safer using new payment tech, as it means they have less cash on their premises.

 “To the consumer, the main demands of any payment process are that it needs to be simple, multi-channel (laptop, phone, tablet, etc.) fast, and yet secure. It is therefore up to the payment industry to determine how new technology can help meet the needs and demands of consumers and business customers.” says Howard Berg, SVP of Banking and Payment at Gemalto.

2. Extra consumers 

With the growth of app-based payments via services like Apple Pay, it seems natural that customers will one day do away with passwords, cards and PINs altogether – helping to ease payment use and eliminate identity theft.

Unlocking your smart device with touch ID will one day become synonymous with making direct fingerprint payments. Laura Rettie, personal finance expert at money.co.uk says “there have already been trials of linking biometrics to pay for goods so we can’t be far off rolling out a system that links our finances to our physical features.”

3. Increased efficiency

According to our research, cards aren’t going anywhere fast. In the short-term it’s set to continue to grow as our choice way to pay. But how much longer will we be using plastic for?

Whilst the number of card transactions will reach 47 million by 2020, the average spend per card transaction will decrease to £24.91 (down from £33.12 in 2017) hinting at an increase in other payment methods that alleviate the hassle of our current payment methods.

4. Environmentally friendly 

While only 6% of Brits would embrace new payment methods solely in order to cut down plastic use, the environmental benefits a cashless society would be transparent.

“Shopping online these days is so easy with ways to store your card details so you don’t have to dig them out each time you want to pay for something. It’s only a matter of years before we won’t need to carry wallets.” says Laura Rettie, personal finance expert at money.co.uk

5. Keep up with competitors 

“Whilst a cashless society is on the horizon, the study highlights how Brits are still wary of being completely cashless, as many businesses still rely on cash as their main payment method. Those who adopt new payment methods such as fingerprint scanning and voice ID will surely surpass future competition.” says Guy Moreve, Chief Marketing Officer at Paymentsense.

Image 1. Screen shot from Paymentsense’s Future of Payments report.

Guy Moreve, Chief Marketing Officer at Paymentsense, says:

“As a society, it’s clear that new payment methods will evolve as consumer demands shift towards improved security and ease of use when making a transaction. Our survey highlights not only what advances Brits want to see in payment technology, but how businesses will need to adapt to these changing consumer demands.

Whilst a cashless society is on the horizon, the study highlights how Brits are still wary of being completely cashless, as many businesses still rely on cash as their main payment method. Those who adopt new payment methods such as fingerprint scanning and voice ID will surely surpass future competition.”

The full report can be found at https://www.paymentsense.com/uk/future-of-payments/

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Recently U.S. state legislatures have been taking up the cause to require the acceptance of cash in retail locations. Why? Because 1) cash is legal tender and there is an expectation of ubiquitous acceptance and 2) there is a segment of society that operates in a financial system that relies heavily on cash. Not allowing people to pay in cash is viewed as discriminatory towards the unbanked and underbanked. Massachusetts has such a law requiring cash acceptance and others are considering it.

The UK which has been taking efforts through a variety of initiatives including their Faster Payments platform to eliminate cash is now taking an about-face and considering the implication of reaching a cashless society on those that transaction nearly exclusively in cash. Not surprisingly, the Link ATM network produced a report regarding the availability of cash access. More on that report here.

An article in Finextra goes so far as to call the decline of ATM access for cash a crisis in the U.K.:

UK banks and regulators are being urged to act to prevent the country from “sleepwalking” into a cashless society, in a hard-hitting report prepared by former financial ombudsman Natalie Ceeney.

The Access to Cash review prepared on behalf of the Link ATM network, concludes that digital payments don’t yet work for everyone and around eight million adults (17% of the population) would struggle to cope in a cashless society.

The publication of the report follows a mid-February plea from the UK’s Treasury Committee for urgent action to prevent the “collapse of access to cash” as ATM numbers drop and bank branches disappear from the high street. 

Nicky Morgan MP, chair of the Treasury Select Committee says that tinkering around the edges to preserve the status quo will not work.

“It’s clear that something more fundamental is needed,” she says. “This report sets an expectation that the Government, the regulators and industry will respond with a plan of action. I support this approach and consider that it would be highly negligent for those parties not to provide a considered response”.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Putting the Brakes on a Cashless Society appeared first on PaymentsJournal.

When Chase wants to move markets it can. According to yesterday’s investor meeting, the dominant player in retail banking booked 8 million accounts in 2018, has 40 million active credit card holders and processed 9 billion transactions.  Indeed, if you live in the U.S. and have good credit, it is likely you have at least one account with Chase. I personally have 3 Chase cards and like each one for different reasons, whether it is the cool metal card, the everyday bonuses of Freedom, or my cherished Amazon Visa.

Consistant with my thought that one Chase account is not enough are the drivers they see in multiple account holders and people who use reward points. The report states that multi-card redeemers generate 2X revenueand have 4X spend.

So when you are already so deep into the American household budget, how do you build for future growth?  “My Chase Plan” was positioned as the next growth opportunity. It resembles American Express’ Plan It, Pay It program in many ways. As a consumer, you can isolate a particular purchase and set it on different payment terms than your routine account. For example were I do buy a $4,000 Viking refrigerator, with My Chase Plan, I could flag that purchase for installment payments and there would be a shadow account to track the payments, which will typically be on an installment payment schedule rather than a revolving term. It is nice because I could decide in advance to pay that refrigerator off in 12 months with accelerated payments, rather than the typical 1/36 revolving term.

The O-Wow! for Chase is big enough to keep their marketeers busy for a while. They size  non-Chase card usage by Chase cardholders at $250 billion. There is a certain brilliance to this strategy.  The largest card issuer in the US indicates that their current cardholders transact elsewhere with a quarter of a trillion dollars in spend, and they want to get deeper.

Chase ties this together with their digital customer engagement positioning:

• My Chase Loan enables customers to access their existing lines
• Chase Offers provides merchant rewards to customers and customer activity to merchants
• Credit Journey adds stickiness to the site
• The promise to bring scale to U.S. contactless payments

Bloomberg this morning added

• The tool allows card customers to select from past purchases of more than $500 and choose to finance them over a longer period with monthly fees instead of being charged interest.
• The bank will also introduce “My Chase Loans,” which allows targeted card customers to borrow against unused credit-card lines. Clients can use the Chase mobile app to select a loan amount to be transferred into their checking accounts.

The strategy is epoch. Chase can remold the card business with its installment play. Running in competition to Amex will cause other top issuers to address the installment market. And for Chase, it shows real forward thinking in aiming at the few non-Chase customers in the U.S. Market.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Installment Lending: Chase Takes Credit Cards One Step Further appeared first on PaymentsJournal.

Cash is resilient. Through decades of plastic-based and digital payment innovations, this tried-and-true tender has proven its staying power. However, it’s safe to say that the way consumers view cash and want to use it is very much evolving.

Today’s consumers want access, freedom, and choice. They want control. The financial institutions and service providers who give it to them will be the ones to own the market.

According to Brad Nolan, EVP for Allpoint Solutions at Cardtronics, that’s why financial services providers are increasingly looking to retail ATMs to support cash-out and cash-in activity. Some are even looking to the point of sale as an avenue for providing these services – but let’s not get ahead of ourselves. Nolan says that’s still a long way away.

Much nearer at hand is the demand for ATMs to do more. Here’s why Nolan says it’s time for financial institutions and service providers to hop on the train  – and there’s still time to do so before it pulls out of the station.

Market Dynamics

During his 20 years with JP Morgan Chase, Nolan gained long-term and bird’s-eye views of marketplace trends that have pointed him toward the conclusion that it’s time for a new generation of ATMs. But he’s not just leaning on his own anecdotal evidence.

The Federal Reserve’s 2016 Diary of Consumer Payments showed that cash was still the most-used payment instrument, representing 31 percent of all payments – and 60 percent of small-dollar purchases (under $10) as well as 45 percent of payments from low-income households. All told, the world paid more than $18 trillion in cash that year.

Sorry, what was that about cash being dead?

Far from it, cash is alive and kicking – and the demand for convenient cash is substantial. The number of consumers retrieving cash from an ATM other than their banks’ ATM doubled from 2012 to 2017. Rather, Nolan observes, it’s teller transactions that are falling as a result of a growing reliance on ATMs.

“Many think of digital and ATM cash as being in direct competition,” Nolan said. “The reality here is ATMs were the first digital channel and still play an important role in helping consumers convert digital funds to physical cash in hand.”

Even as cash payments share the spotlight with newer digital options, Nolan said ATM transaction volumes are still projected to grow over the next four to five years. It is no less important today than in years past for financial institutions to provide the cash consumers demand. There is still time for financial institutions to join the on-demand cash movement – or as he calls it, “on-ATM” – utilizing a modern ATM strategy to compete for cash-hungry customers.

Benefits of a Retail Deposit Channel

Why do consumers bank where they bank? Most would say, “Convenience” – they have an account with the financial institution around the corner from their home or work.

However, this notion that convenience is defined by branch location falls apart when you ask the consumer if they ever actually go into the branch. Today’s consumer has redefined convenience, says Nolan. They’re looking for two things: a killer mobile app, and free and convenient access to cash via ATMs. Digital defines the way consumers interact with their finances, and the ATM is the connection point with those digital finances to a physical world. As consumers reprioritize their needs, Nolan says banks should realize that cash access is imperative to customer acquisition and retention and is, in fact, a critical underpinning of a digital banking strategy.

Giving the customer what they want can drive overall business efficiencies, says Nolan. Imagine that

The specific numbers, of course, will vary bank by bank, but for this example, that plays out to a reduction of 657 tellers and $25 million in teller expense savings. It also produces customer growth rates of around 70,000 incremental customers, with a $40 million marketing value increase. In total, Bank X would realize $65 million in overall value purely by creating free and convenient access to cash.

Case Study: Growing Consumer Trust in the ATM

Nolan shared the following real-life example.

A financial institution recently enabled deposit capabilities at its ATMs with a mass merchant retailer in four different markets. In each market, the number of deposits increased steadily each month after the change was made. Perhaps more significantly, the dollar amounts of the deposits also increased.

Furthermore, the number of cash deposits exceeded the number of check deposits, and the total number of deposits outnumbered cash withdrawals. That is, customers were putting more money into the ATM than they were taking out. If that’s not a sign of demand, what is?

“Consumers are gaining trust in the ATM and making deposits,” Nolan concluded – and “when it comes to deposits, customers have to trust that it’s going to get into their account, and get there on time.”

Whereas those same consumers used to get in their car and roll up to the drive-through ATM – or even get out of their car and wait in line in the branch lobby – to ensure that their deposit made it into their account, and did so on time, they are now entrusting the same task to a machine located in the store where they are already shopping, no special bank trip required.

Winning the Trust Game

There is, however, a limit to human trust, which is why Nolan says you won’t see point-of-sale clerks processing cash deposits anytime soon. On top of that, he doesn’t anticipate that financial institutions will ever get behind point of sale as part of their deposit retention strategies because there’s no potential for branding.

An ATM, conversely, can convey the brand experience of a given financial institution by leveraging familiar colors and logos – even at multi-bank utility ATMs. Nolan says that will be a key component of creating consumer trust in a utility ATM – and trust will be required to move into the “on-ATM” future.

In conclusion, Nolan says, the top financial organizations in the “on-ATM” game will enable consumers to take cash out, put cash in, and convert physical cash-in-hand back to digital, either in the form of a traditional deposit or as a bill payment, a P2P transfer, or an account top-up – and they will do all this not just from their own branded ATMs, but from multi-bank utility ATMs that better serve their customers by making cash access easy, convenient, and free.

The post “On-ATM” – The Rising Culture of On-Demand Cash appeared first on PaymentsJournal.

In today’s world, no one likes to wait for anything – least of all their money. Whether it’s an employee waiting for payday, a friend waiting for an acquaintance to complete their Venmo request, or a customer waiting for their refund after returning a product. Money is time and time is money! Small businesses face these struggles every day. Their livelihood often depends on receiving payments promptly in order to run their business and manage cash flow to make all ends meet.

In fact, for small business owners and entrepreneurs, the lag between what we consider “getting paid” – such as seeing a customer swipe their card or paying an invoice – and having that money finally hit a small business’ bank account can be an excruciating wait. According to QuickBooks’ recent global survey of small business owners in the U.S., UK, Canada, Australia and India, nearly two thirds (66 percent) of small business owners report that the time it takes money to process after receiving payment has the largest impact on their company’s cash flow. This is compared to not getting paid by customers or clients within the terms of the payment (34 percent).

The journey of a small business or self-employed professional doesn’t usually follow a predictable path. Businesses try to accomplish new tasks, tackle new projects and attempt to make progress on unknown and unpredictable circumstances daily. Knowing this, it’s absolutely crucial for the payments industry to embrace faster funding in order to help small businesses – and by extension the larger global economy – thrive. And this is what is seen in the data presented by QuickBooks. For many small businesses and self-employed individuals who struggle with cash flow, the problem isn’t that they don’t have funds in the pipeline, it’s that they don’t have the funds readily available when they need them to cover real-time expenses. The research found that on average, U.S. small businesses have $53,399 in outstanding receivables!

So how can the payments industry help combat this problem and fully embrace faster funding? Two key components include next day credit card deposits and enabling faster settlement on Automatic Clearing Houses (ACH) payments.

Next Day Credit Card Deposits

Typically, when a small business gets paid via credit card it takes up to three business days for the payment to post to their bank account. During this time, the product or service has already been given to the customer, and overhead expenses such as payroll, inventory or rent may come up. This cash flow delay limits their ability to stay competitive and restricts the opportunity to re-invest back in their business. By providing next day deposit on all credit card transactions, the payments industry will give small businesses access to funds they desperately need right away, while helping them with one of the biggest pain points they face: managing cash flow.

ACH

Another important way small businesses get paid is through ACH bank transfers – making up over $5.6B in payments volume each quarter. Typically, these transactions take even longer than traditional credit card transactions – sometimes up to seven business days for the money to post to a small business’ account. As with credit card payments, this lag time can cause massive cash flow issues for small businesses.

With a rich history in Payments and operation of over $40B in payments volume, QuickBooks is at the forefront of change. We recently unveiled next day deposits for both credit card and ACH transactions, in which if a payment is processed by 3 p.m. PT, the funds will be in the customer’s account by the next business day. For those payments processed after 3 p.m. PT, the funds will be available the following business day – still a vast improvement when compared to the week-long waiting period that many small businesses typically face. This is made possible by fundamentally improving risk and transactional monitoring systems and leveraging the power of our ecosystem and machine learning to gather a rich perspective on fraud and bad actor behavior.

Cash flow is the lifeblood of small businesses, and those small businesses are the lifeblood of the economy – responsible for 70 percent of new jobs created and accounting for 99.9 percent of all businesses in the United States. Faster funding is just one way we in the payments industry can contribute and tip the scales in their favor so they can prosper.

My hope is that, similar to the work we are doing at Intuit, all of us in the payments industry can embrace faster funding and bring innovation that helps small businesses effectively manage their cash and succeed.

The post Why the Payments Industry Needs to Embrace Faster Funding for Small Businesses appeared first on PaymentsJournal.

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The following is an article based on a conversation between Brian Bailey, EVP and Managing Director, North America and Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group. To listen to the full conversation please press play on the audio player.

If you thought cash was on its deathbed, think again. Although there are those who would hasten its demise, and although the gamut of newer payments and form factors is growing ever wider, a study by Cardtronics shows that cash isn’t going anywhere – not even among younger demographics that are often painted in broad strokes as “digital only.”

Cardtronics’ fourth annual Health of Cash study reveals some surprising truths about millennials and their use of cash, as well as the overall role and importance of cash in the US economy.

According to the study, “The growing digital payment landscape reflects a natural evolution of technology, not the elimination of cash. In fact, cash is the durable foundation of America’s digital economy.”

So don’t hang that “Cash Not Accepted” sign in the window just yet! Brian Bailey, EVP and Managing Director, North America, walks us through the study to show exactly when and why consumers are likely to rely on cash.

Situation

Cash remains the most-cited way to pay in brick-and-mortar locations over debit and digital payments. It also remains a staple for situations like paying a babysitter, tipping a waiter, or buying a snack.

This year’s study highlighted three key moments when consumers are likeliest to reach for cash.

1. When paying each other: more than 70 percent of respondents said cash was their preferred means of paying back a friend or family member.
2. When being paid by each other: nearly 65 percent of respondents said that, given a choice, they would most prefer to receive money from a friend or family member in the form of cash.
3. When completing small, everyday purchases: 60 percent of consumers say they’d prefer to pay cash when making in-store purchases of under $10, and 56 percent would still use cash if the purchase rang up between $20 and $30.

Overall, cash does trail debit as the most preferred method of payment, topping the list for 28 percent of respondents compared to debit’s 37 percent. However, just because cash is not first, doesn’t mean it’s last. Bailey said the coexistence of cash and debit is important in the digital ecosystem.

Universality

Cash does not discriminate. It creates financial inclusion for everyone regardless of age, the ability to have a bank account, or economic background.

Consumers see cash as a payment method they can count on anytime, anywhere. It’s accepted everywhere, or so they believe – and they experience frustration when discovering they cannot use it to pay somewhere. So if you’re a small merchant thinking about eliminating cash, think again! Bailey says the anti-cash mentality is most harmful to small merchant businesses. Some lawmakers are even contemplating regulation requiring merchants to accept cash.

Bailey notes that cash can also be a useful tool for budgeting and for teaching children to budget. Just look at the way cash usage spikes during any financial recession, he said. Sixty-one percent of respondents said using cash helped them manage personal finances. Therefore, the value of cash for financial education purposes should not be overlooked in a world which Bailey says is losing some of its ability to instill this understanding.

Finally, said Bailey, consumers feel they can count on cash in extreme circumstances. Consider the recent disruption of payment networks that was seen in the U.K. marketplace, or the aftermath of hurricanes, flooding, and other natural disasters. In these situations, said Bailey, cash still works, and consumers feel most confident putting their trust in the good old-fashioned dollar.

Security

The payments industry is constantly abuzz with word of the latest security measures available for digital payments. Encryption, tokenization, authentication: All good and valuable endeavors, but when asked which payment forms could be described as safe and secure, cash was chosen by 90 percent and 80 percent of respondents respectively, significantly higher than other payment types, with half of respondents indicating cash was the most safe and 42 percent saying cash was the most secure.

Consumers like the anonymity that cash affords, Bailey explains. Digital transactions leave a trail that today’s savvy consumer finds unappealing – not because they are doing anything nefarious, but simply because they do not want to leave a big, red arrow pointing fraudsters toward their financial assets, whether those assets be credit card data or a personal checking and savings account.

Stereotypes

Don’t believe everything you’ve read on the internet about millennials. As a matter of fact, they are not killing cash, but remain some of its greatest proponents. The study found that the vast majority of millennials always try to keep cash on hand, outpacing other segments – even as they lead the charge on digital payments.

Bailey says growing up during the Great Recession played a big role in shaping the habits of millennial consumers – which, he notes, comprise nearly a quarter of the total US population. Personal consumer debt was at an all-time high as millennials were coming of age. As a result, many of them hold onto cash as a means of managing their personal economy.

Millennials aren’t the only ones defying expectations. It may be tempting to rely on demographic stereotypes to understand consumer activity, but compare the stereotypes to true consumer activity, and Bailey says you’ll find that whether old or young, urban, suburban, or rural, consumers all want the same thing: Payments options and variety.

“Freedom and choice [are] a core part of the American way of life,” says Bailey, “and choice of payments is, in fact, no different.”

Conclusion

Digital payment trends are ultimately about form factors, not about supplanting the good old dollar bill, says Bailey. The innovation we’ve seen with mobile wallets, tap to pay, and digital person-to-person (P2P) products isn’t slowing down, but neither is cash going away. Rather, it will continue to form the basis for future innovations, just as traditional debit and credit cards support so many mobile app-based payment methods today.

“For all those reasons,” Bailey concludes, “we think that the coexistence with digital payments is critical, but cash is critical to the economy and it maintains a really important role within a diverse payment mix.”

To download a copy of the 2018 Health of Cash Study and to learn more, visit the Cardtronics’ website at http://www.cardtronics.com/landing/HealthOfCash2018.aspx

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The post Cardtronics Study Shows Cash Is Alive And Kicking appeared first on PaymentsJournal.

Katy Gibson in PaymentsSource is worried that the US is falling behind other nations in becoming cashless (when did that become a goal?):

“Cashless technology has evolved to simplify business operations while simultaneously satisfying consumer demands.

Beyond eliminating the exchange of coins and paper bills, contactless payments shorten transaction times, eliminate inaccuracies, create retrievable records and remove the threat of counterfeit money.

Economies across the globe are adopting cashless technology through innovative payment apps and digital services. The U.S. market, however, is lagging behind.

• According to the 2017 World Payments Report, non-cash transactions increased by almost 11 percent in recent years. Countries like Sweden are paving the way to making cashless societies a reality. Only 19 percent of Swedish payments are now made using cash.
• In 2015, more than half of the Swedish population was using Swish, a mobile payment app that allows safe, free and instant digital transactions. This trend has also been observed in Kenya, where a mobile transfer service, M-Pesa, is used by more than 30 million people for international transfers, loans and health provision.
• The U.S. is far from universally adopting cashless technology. According to the 2018 Global Cash Report, cash represents 32 percent of all payment transactions in North America. Cash remains a reliable source of payment in the U.S., dominating small-value transactions.
• In the absence of centralized regulatory systems like those of certain European nations, vendors resist implementing digital payments, due to fees from credit card issuers. Additionally, digital tools are not ubiquitous to everyone — marginalized populations such as the elderly face higher barriers in the access and adoption of new technology due to lack of knowledge and privacy concerns.”

Not mentioned in this article are the systemic and societal differences that also shape the deployment and use of electronic payments. The US payments infrastructure is hundreds of times larger and has far more participants that any European country. European countries tend to have banking operated by the government or available to all. The US banks are profit driven and our society has a not insignificant number of underbanked and unbanked. How these people will replace their cash with fancy new electronic contactless devices is a question as is who will bear the cost.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Is a Cashless Society Really Our Goal? appeared first on PaymentsJournal.

This article in CUInsight by Lorraine Ranalli starts with a confession; she is a “cash whisperer” who makes a case for cash. I am also a cash whisperer and believe cash delivers value to our society. The case Lorraine makes for cash is the societal cost associated with card fraud:

“In a society that appears to be rapidly moving away from cash, every now and then a small voice emerges making the case for cash. Being a cash whisperer, I tend to take heed to such arguments, with an open mind, of course. From the practical “you never know when you may happen upon a truck stop that only accepts cash” to the hysterical “the grid could collapse causing panic and pandemonium,” and every argument in between, there are plenty of reasons for physical currency to remain in circulation.

Spend a few moments observing the checkout at any retail outlet or the traffic in and out of a financial institution’s physical branch and it will be clear, however, that the amount of paper cash being exchanged has been reduced. Heck, have an impromptu lunch with a group of friends or coworkers and notice how few carry cash. Restaurants and retailers are responding to the trend by offering online preordering options and making it easier for consumers to swipe a debit or credit card at the register.

Financial institutions and credit card companies will not be happy with the case for cash that I’m about to divulge.

The flurry of activity around charge cards is a boon for the credit card industry and for FIs. Unfortunately, it is also a boon for thieves, a fact about which FIs are well aware and equipped to handle. Consumers are becoming more and more accustomed to the process, too. Rare is the occasion when a clerk requests identification from a cardholder, and frequent are the occasions when cardholders’ accounts are compromised.

Fraud prevention is set up to recognize, report or question, and then halt unusual activity. In most cases, the cardholder is not held responsible for fraudulent purchases. In cases where the charges can be stopped, the retailer takes the hit for the fraud. In other cases, the FI or card issuer eats the loss. Or do they? 

Actually, all consumers take the fall for fraudulent credit card activity.

Let’s unravel the scenario. Credit card companies charge retailers for the ability to take credit. As the card companies’ cost to do business increases, so too do their fees. Most retailers pay the fees or risk losing customers. As retailers’ cost of doing business increases, so too do their prices.

Online retail aside, the solution is yet another case for cash. By increasing the use of cash at checkout, we drive down the opportunity for credit card fraud. Yes, what is old is new again. The solution is not favored by credit card companies for obvious reasons, and it is unpopular among some consumers and retailers.

You can read the full CUInsight article here

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Are You a Secret Cash Whisperer? appeared first on PaymentsJournal.

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Data for this episode of Truth In Data provided by – The Federal Reserve Payments Study: 2018 Annual Supplement

About this report

This Federal Reserve Payments Study (FRPS) brief updates data on core noncash payment
types and systems that support everyday payments by U.S. consumers and businesses. The
data show faster growth in electronic payments from 2016 to 2017 compared with previous
years. Remote payments continued to grow as a share of general-purpose card payments, and
the value of in-person chip-authenticated general-purpose card payments exceeded the value
of those without chip-authentication for the first time. Meanwhile, partial data from large
banks indicate the number of check payments and cash withdrawals from automated teller
machines (ATMs) continued to decline.

The post What Is the Trend with Large-Institution ATM Withdrawals? appeared first on PaymentsJournal.

The subject of cash flow has sort of an adjustable lever that variably aligns with the size and segments of business, but can also include other factors such as geographic market, general economic growth trends and so forth.  So, for example, a Fortune 500 like ExxonMobil might think in terms of retained earnings available to buy back stock, while a mid-market firm like Pacesetter Steel Service might think in terms of free cash flow to offset the cost of capital if expanding the firm or investing in technology for operations. When you slide down to the small business segment, the very smallest will often be thinking of cash flow in terms of keeping the lights on. This piece, posted in ITProPortal, discusses SMB issues with managing late payments (particularly in the UK but generally applicable), and why business owners should be using available tech to help solve the problem.

‘Many business owners across the United Kingdom are reporting that getting paid late is more of a concern to them than the country leaving the European Union. Late payment is the problem that just won’t go away for small and medium-sized businesses (SMBs)…..Eight out of ten SMB bosses fear they may not be able to cover their own work-related bills because of being paid late by customers, according to our recent research. More than half have had to dip into personal savings or use emergency finance to pay their company expenses as a result. Yet, far too few realise that changing up your tech stack could in fact be the cure to this all-too-common headache.’

We tend to agree that supply is out in front of demand (we certainly see that in the U.S.) for cloud-based procure-to-pay solutions, either point (e-invoices, payables, etc) or comprehensive, but also see a clear trend for accelerated adoption in the coming several years. Latest gen tech allowing for easier delivery of invoices, e-payments options, remittance data matching and end-to-end convergence, is already available.  At a very high level, sluggish adoption is often a matter distracted business owners, for whom the industry needs to make things very easy, after which they might find very grateful and loyal customers.  According to the article, at the very least, reduced stress plays a role.

‘Summer is the worst time of year for getting paid, two-thirds of businesses say. In fact, almost half of SMB owners only take between one and two weeks of holiday a year because they’re too worried about payments to allow themselves time away from the business. One in ten has no vacation at all, our findings suggest….It’s no wonder that 41 per cent believe late-paying customers are having more of a negative effect on their operation – and mental health – than Britain’s imminent divorce from the European Union.’

The piece goes on to discuss various companies and technology solutions that can and should put small businesses in control of their cash flow destinies, a matter of survival for many. Since more or less a universal problem, with new solutions popping up all the time, worth a quick read.

‘Healthy cash flow, a reliable salary, paying staff on time, taking regular holidays and having funds available to invest in the business for future growth. All of these things can be achieved by embracing the advances that payment technologies bring. Brexit may be beyond the control of British businesses, but how and when they get paid certainly is.’

Overview by Steve Murphy, Director, Commerical and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Is Technology the Solution for the Small Business Late Payment Problem? appeared first on PaymentsJournal.

The U.S. is often characterized (chastised?) as not moving towards a cash-less environment fast enough. These comments are often made by providers of digital payment services, I’ve noticed. But in comparison to Japan, the U.S. is far ahead in its use of cash-less payments.  Wired published an article on the interesting cultural reasons why this tech-obsessed nation hangs onto cash:

Money is cultural, especially in Japan, where a tradition called otoshidama requires that children get small amounts of cash on New Year’s Day in adorable little envelopes called pochi bukuro. “We used to look forward so much to getting those envelopes,” Mihoko Sayurai, a researcher at the Center for Global Communications at the International University of Japan, told me. Cash feels safer and more secure, she added. For gifts marking ceremonies and celebrations, Japanese people routinely turn in their old bills for fresh, unfolded new ones.

Moving away from cash doesn’t necessarily speed up commerce, since Japanese retailers are crazy good at counting change. “We trust our shopkeepers to give us accurate change,” Sayurai said. (Sayurai went to graduate school in the US, and she made it clear to me that she doesn’t think much of American shopkeepers’ cash-counting abilities.) “It’s much faster to pay with cash than wait for a card transaction,” International University of Japan professor Soichiro Takagi told me. 

The government in Japan is trying to move in the direction of more digital payments, however.  In part, due to the 2020 Summer Olympics which will be held in Tokyo.  Consideration is being given to rewarding business with cash incentives for digital transactions:

There’s a tussle going on right now in Japan that may change this picture: The government is pushing for greater cashless-ness to make its economy more consumer-friendly and increase the country’s productivity. The government is thinking of refunding 2 to 5 percent of the cost for products and services purchased from small- and medium-sized businesses, if those transactions are cashless.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post The Culture of Cash in Japan appeared first on PaymentsJournal.

Across the globe, countries are waging a war on cash, with the likes of Sweden and China rapidly transitioning to digital currency as a primary form of payment. While digital currency was started by payment providers and banks to increase corporate profit, small businesses aren’t reaping the benefits. They’re pushed towards a completely digital society without knowledge of increasing swipe fees and processing rates, ultimately footing the bill for a digital revolution that does them more harm than good.

Digital is often seen as a safer and more streamlined payment process, but small business owners are misinformed and misguided by credit card companies whose goal is to increase their own profits. While large chains like Starbucks can make up for the processing fees with sheer sales volume when they go cashless, small businesses do not have that luxury.

However, digital transformation does not mean that a cashless society will happen overnight. Cash still accounts for more than 80 percent of the world’s transactions, so it is far from obsolete. If cash is still prevalent among the majority of the population, businesses need to maintain flexibility by accepting cash while also adopting strategies that will prepare them for an increase in credit card processing fees as consumers do make the switch to digital.

The Cashless Society: More Risk Than Reward 

Wall Street is the biggest winner in a cashless society, with increasing swipe and processing fees from business owners bringing profits to banks and credit card companies. If the world turns away from cash, small businesses could potentially be at the mercy of the major financial institutions’ hidden merchant fees, further driving Main Street into debt and preventing economic growth.

Luckily some small businesses have seen relief that may lead to overarching changes in the payments industry.

For example, Visa and Mastercard, along with several big banks, recently came to a $6.2 billion settlement with merchants across the nation for violating antitrust laws and illegally inflating swipe fees. However, just as a cashless society won’t happen overnight, change to the payments industry will not suddenly appear either. To look out for their bottom line, small business owners need to make proactive, operational changes to protect themselves against processing fees from credit card companies and big banks, while adapting to an increasingly digital world.

Strategies to Increase the Small Business Owner’s Bottom Line

As the cashless society goes mainstream, merchants will continue to foot the bill. Certain preventative strategies will help small business owners avoid going into deep debt as a result of transaction and swipe fees and instead maintain or grow their bottom line.

A basic understanding of the payments industry is a good starting point for most business owners. To ensure the most transparency, they can implement strategic partnerships that work harder for small business. For example, a payment processor that runs on an interchange-plus pricing model will ensure that merchants are working with an equal partner that has clear margins to offer them the lowest rate possible for accepting credit cards. Business owners must educate themselves about this model in order to make an informed decision before entering into an agreement with a payment partner.

Additionally, cutting overhead expenses and regularly reviewing budgets will help manage unnecessary costs. Regular financial review allows merchants to look at which expenses are hurting their business the most. This will help business owners find efficiencies in daily operations, from credit card processing fees to inefficient technology. While it might seem like a no-brainer, it is often forgotten as business owners’ schedules quickly fill up with more pressing matters. Making a regular expense review a priority allows merchants to get ahead of any detrimental issues, ultimately saving the bottom line.

Cash Is Still King

The cashless society will be heavily debated for the foreseeable future, especially as more people embrace digital currency. However, business owners do have the ability to educate themselves about the current status quo of the payments industry so they understand what partnerships with major financial institutions might entail. It is important to keep in mind that cash is not yet obsolete – it still amounts to one-third of transactions in the U.S. alone, and is a savior for small businesses that fall prey to high swipe and processing fees.

Digital transformation will ultimately affect every aspect of daily life, and merchants need to adopt defensive strategies to protect the businesses they’ve worked hard to build. Understanding the pitfalls of a cashless society will allow small business owners to advocate for themselves and push for a more transparent payments market. Utilizing a partner that views them as an equal will allow merchants to better advocate for themselves and strengthen their bottom line.

About Austin Mac Nab:
Austin Mac Nab is a Managing Partner at VizyPay, a company revolutionizing the payments industry by offering a transparent credit card processing model that focuses on powerful payments solutions. With over 14 years of experience in the bankcard industry, Mac Nab has set out to change the way business owners make pricing and payment decisions. With a passion to build a company that makes a difference for small to medium size businesses, Mac Nab and the Vizypay team are here to solve the problems in the payments industry. It’s by transforming the industry through a credit card processing model that focuses on powerful solutions, real human customer support and simple payments services that VizyPay has created a transparent payments market for businesses across the United States.

The post In A Cashless Society, Why Are Merchants Footing the Bill? appeared first on PaymentsJournal.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – U.S. Consumers and Debit: Shift to Online May Inhibit Use

About this report