Are expectations of a cashless future realistic? - TechCentral

Are expectations of a cashless future realistic?

Chipo Mushwana

As the growth of digital commerce explodes, merchants are seeking ways to transform their operating models rapidly to enable seamless omnichannel experiences for their customers.

Being able to offer low-cost contactless payment acceptance solutions is an integral part of this evolution, as it unlocks significant opportunities for merchants and their customers. Not only can these merchants provide better, and continually improving, payment experiences to their increasingly digitally savvy customers, they can also grow their customer bases exponentially, with minimal expense or capital investment required.

While getting payments right is critical to both retaining existing customers and attracting new ones, for many merchants it is easier said than done. But as digital payments become the norm, society is contemplating whether a cashless future may just be a reality. And merchants are actively seeking ways to ensure that if such a reality materialises, they won’t be left behind.

Many sellers and buyers are eager for this type of fundamental shift, anticipating seamless payment experiences without the security risks, administrative burden or time commitment often associated with having to handle cash. Others are wary of the possibility of a cashless society, questioning whether it really is a more secure option, and pointing out that there are still far too many people and communities in the world that rely on cash, or have no alternative but to use cash as their primary payment mechanism. There are also concerns about the privacy of individuals in a world where money is digital.

These concerns are undoubtedly relevant. The simple truth is that accepting and processing digital payments is still a mammoth task for many small and microbusinesses, which make up most payment recipients globally. Like their larger counterparts, and competitors, these businesses and merchants have the desire to offer their customers seamless and hassle-free payment experiences, but they are far more sensitive to the costs associated with setting up the systems and infrastructure required to be able to do so.

Less intimidating

In recent years, these challenges have become less intimidating for most smaller merchants, not least because of the evolution of truly mobile payment solutions that leverage smartphone and smartwatch technologies to enable anytime, anywhere secure digital transactions.

Of course, the merchant is only one half of the payment transaction. Any successfully completed digital payment also requires a consumer with the means to make such a payment. And in the African context that brings up another range of challenges. That is because a large proportion of the continent’s population still finds itself on the fringes of mainstream financial services.

Widely referred to by the term “underbanked”, most of these individuals have a basic transactional bank account of some sort, but still do not have the means of completing a digital payment transaction. There are a myriad reasons, but it is mostly because there are few digital payment facilities where they live and shop, making these types of payments impossible for them. The result is that large sections of African society still rely wholly on cash as their primary payment method, despite associated security risks.

This is by no means a new challenge for Africa. The issue has plagued businesses and consumers on the continent for generations and has encouraged financial services institutions to find workable solutions. As innovation, technology and payments intersect, solutions for this challenge are finally becoming apparent, thanks to the rapid advancement of technology and the rapid pace of cellphone adoption. And banks have an opportunity, and responsibility, to bring these two factors together to develop accessible and affordable payment solutions that serve customers and businesses alike.

Nedbank’s Tap on Phone capability represents our response to the responsibility we have to help drive this socioeconomic development imperative via inclusive digital payment solutions. The Tap on Phone solution allows any merchant to receive a payment directly on their Android phone, without having to purchase any additional hardware or install any costly infrastructure. Emerging digital payment innovations must not focus on being “smart” merely for the sake of being technologically impressive, but must be relevant.

Recently, the impetus behind digital payments has strengthened even more. The heightened global focus on hygiene and social distancing brought about by the Covid-19 pandemic has cast a spotlight on the need for banks to make such digital, contactless payments a key priority in their sustainable business strategies. On the back of Covid-19, even those who previously questioned the need for a cashless society must now be contemplating the importance and value of moving there. And banks undoubtedly have the responsibility to drive this paradigm shift and make safe, secure, contactless and cashless payments a cornerstone of the new normal.

  • Chipo Mushwana is divisional executive of emerging payments at Nedbank

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