Pros and cons of cashless society

What connects Sweden and India? Weather conditions? No. Cuisine? No. Film industry? No. So what is it?! Attempted to make their economy cashless? Yes, that’s right. Cashless!

Let’s start with a couple of interesting observations:

  • In Sweden more than 95% of transactions are digital. In 2016, Sweden saw the highest year-on-year increase in card fraud in Europe at 18%
  • In 2016, India pulled 86% of existing currency from circulation (c.$240bn) in order to demonetize the country’s shadow economy.   99% of the demonetized cash was legitimately exchanged for new denomination notes.

The cashless economy is politically complicated, especially in developing economies. 

Uber, which has transformed the travel sector (and business models in general), was an early adopter of cashless payments via the Uber mobile app.  However, Uber introduced cash payments as an option in many countries because, as the company discovered, cash is still many people’s preferred payment option and by excluding cash payers the company was excluding a significant section of society.  

So, what are the pros and cons of cashless society?

 

Pros

  • Transaction Convenience
    • cashless payments can be swifter and, perhaps, easier than making cash payments and people do look for convenience (the least effort) in their day-to-day activities.  
  • Transaction Visibility
    • cashless transactions are traceable from source to destination which may help to counter money laundering and the use of proceeds of crime
  • Transaction Accountability
    • visibility of transactions means that avoidance of tax becomes more difficult and assets can be traced to the source owner

Cons

  • Transaction security 
    • fraudulent use of stolen card details is on the increase globally. In the UK card fraud rates have risen every year from £341m in 2011 to £618m in 2016
  • Transaction data
    • the security of transaction data can be compromised. Combined with other data sources it would be possible to build a detailed profile of any transactions (date, time, frequency, even location) and the parties involved  
  • Systems integrity
    • power outages and system failures, although relatively uncommon, do occur and when they do the cashless economy grinds to a halt

For people in rural and undeveloped areas cash will remain the only viable way of payment for the long term. Here at Pip IT, our goal is to provide an equal opportunity for payment options and money transfer. Learn more about our services and feel free to reach out for any type of question.

Role of cash and digital payments in UK

With the rapid development of technology and new ways of payment, governments are compelled to either revise current or develop new legislative frameworks and laws regarding cash, digital payments and lately cryptocurrencies. Recently, the United Kingdom’s HM Treasury opened a consultation on Cash and digital economy.

Through that document the government is seeking to get insights on:

  • How to support people and businesses who use digital payments
  • How to ensure that those who need to are able to pay with cash
  • How to prevent the use of cash to evade tax and launder money

The consultation is a first step in a debate regarding cash within the UK.  It’s clear, to the government, that digital payments can be supported without implementing restrictions on cash. It’s clear to the government as well that “ As an alternative to cash, digital payments offer consumers and businesses convenient, tailored, and flexible ways of purchasing goods and services.They enable transactions to be made online, over the phone, or in store, quickly and securely.”

Nevertheless, cash is still playing an important role for payments. For example, due to strict rules for opening a bank account, a high number of immigrants arriving to the UK each year, for whom cash is the main way of payment, are forced to use cash while they don’t have the required residency status.

In 2016, the value of Bank of England notes in circulation increased by 10%, reaching over £70 billion in the run-up to Christmas: the fastest growth in a decade”; said Chief Cashier Victoria Cleland at the Future of Cash Conference held in Vienna. It’s obvious that both cash and digital payments are on the rise. One shouldn’t exclude the other but support it, and provide UK citizens with a fair and transparent payment landscape.

Here at Pip IT we’re helping expats with services like  International Bill Pay and eDeposit. Feel free to reach out to us and together we can drive changes on financial market.

Cash Payments Disappearing in Developed Countries?

For a country as advanced and developed as Canada we would presume that cash payments are rare and that cash as a method of payments is obsolete and with one foot in the grave. But is that really the case? What do you think?

Despite the growth in alternatives such as debit and credit cards, Canadians still use cash to process more than half of all transactions, the Bank of Canada calculates. Cash may no longer be king for big purchases, but a majority of all transactions in Canada still happen with paper money. Consumers seem to rely on physical money for the smallest purchases, with the median amount of a cash transaction valued at $8.04. Debit and credit card transactions are higher at $28.33 and $43.85, respectively.

Most merchants seem to prefer cash and debit card payments, the report found, as they are less costly to accept than credit cards. Only two-thirds of small- and medium-sized businesses accept debit and credit cards, it said, while nearly all large businesses do.
For some of the smaller and medium companies, transaction costs may be higher than benefits, the report pointed out, so they may decide to not accept cards or only do so for larger purchases.

Even though the Ecommerce numbers are surging year after year due to technology and logistics improvements, cash domination blocks Ecommerce overtaking of offline shopping. Two major factors are involved:

  • Not everyone has a bank account or a credit card; especially not immigrants who lately entered the country
  • Fear of theft or card fraud

PiP iT Solution

To avoid those problems PiP IT offers a solution that helps both merchants and customers to safely execute the sell/ buy through Ecommerce. The customer does not need a bank account, debit/credit card and there is no risk of fraud. The process goes as follows:

  • A customer selects a product as normal on your website.
  • At checkout they are given the option to use ‘PiP iT’ as their payment method. This automatically generates a barcode which is sent to their mobile phone or can be printed out.
  • You then reserve your customer’s order for a set period of time to allow them to call in to any Post Office in the UK, where the barcode is scanned at the counter and the payment is made in cash or by debit card.
  • PiP iT notifies you that payment has been received and you fulfil the order.

For more information regarding the process feel free to reach out.

PiPiT eDeposits: Helping the Unbanked migrant to send money home

With the development of the technology sending money home has never been easier. The World Bank estimates that international remittances to low- and middle-income countries have increased by 8.5 per cent in 2017, reaching USD 466 billion (Ratha et al., 2018). This sum is estimated to grow by 4.1 per cent to reach USD 485 billion in 2018.

 

Remittances, usually understood as the money or goods that migrants send back to families and friends in their home countries, are often the most direct and well-known link between migration and development. Global estimates of financial transfers by migrants include transactions beyond what are commonly assumed to be remittances, as the statistical definition used for the collection of data on remittances is broader (see IMF, 2009).

Following the technology evolution people are now more connected with relatives and friends back home and they are now sending more money to meet emergencies, pay school fees, pay for health insurance for their families etc. With the highest number of immigrants, India is top of the list with sent remittances worth $69 billions in 2017, followed by China ($64 bil.) and Philippines ($33 bil.) Overall, low- and middle-income countries like India received record overseas funds of $466 billion.

A common problem when moving to a new country is to get a bank account. Procedures to get one varies from country to country but the common problem is that it takes time to get the back account.

The PiP iT eDeposits solution provides an opportunity to send money back home without having an account in the bank. Through our collection network, individuals can now lodge cash from the UK into their own bank account back home. They can go online and generate a barcode via one of our partners e.g. Pay Afrique. The code is sent to their phone or emailed. This is accepted in any UK Post Office and cash lodged over the counter.

For more information about eDeposit feel free to contact us today!

The importance of Cash in the eCommerce World

As retail business moves online, it’s only logical for payments to be transacted online, and not in cash. But we can’t wish away cash as a payment option. There are several countries where cash payment, also called COD (Cash on Delivery), is one of the most preferred options.

The Importance Of Cash In The Ecommerce World
Why Is it Necessary to Have Cash as a Payment Option?

The answer is simple: some customers demand it. For instance, cash is the preferred method of payment across Mexico’s economy. In fact, cold hard cash is so vastly preferred that even the nation’s eCommerce market — typically the domain of digital payments — is not immune to this reality.

Introducing cash payments in a largely digital business model can be challenging, but eCommerce players are increasingly stepping up to the plate. They’re doing so by enabling customers to pay with cash and pick their goods up at various brick-and-mortar locations.

Last year, retail giant Amazon reportedly took the top spot among retailers in Mexico’s quickly growing online sales industry with $502.2 million in sales, nearly double that reported the previous year.

According to a recent report on Mexican eCommerce statistics 32% of online sales are paid for in cash. That equates to a significant $160 million per annum.

As another example globally of the importance of cash payments, in India we see most of the transactions are opted for COD by the customers. According to Nielsen’s Global Connected Commerce Survey (Business Insider) about 83% consumers in India preferred using cash on delivery as a mode of payment for online purchases.


What are the issues with Cash on Delivery?

Increasingly customers are refusing to hand over cash if they are unsatisfied with an item resulting in pointless delivery costs for the merchant. There are also issues with theft of cash during transit and worse still, the threat of physical ham to delivery staff.


Use PiP iT as a better solution to Cash on Delivery

Our PiP iT eCommerce solution ensures that the merchant is paid for the goods before they are dispatched. This means there are no risks of goods being rejected on delivery and there is no potential security issue of cash being transported. There is no threat to delivery staff as they are not handling cash.

By implementing cash payments in the eCommerce sector, retailers are including more potential customers into their sales funnel and if you’re aiming to do the same find out more about Pip it’s Ecommerce Service here.

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Interested in this topic? READ THIS BLOG –> PiP IT Partners ZymPay To Offer GAIN Cash & Carry Vouchers

What’s the deal with Myanmar and Cash?

It’s 2018. and the most of Myanmar’s population doesn’t have a basic bank account. In Myanmar cash is untouchable when it comes how to pay a product or a service. It goes so far the people are paying by cash for cars rather than use bank transactions.


In 2013, only 17% of had a bank account with only 4% of them keeping their savings in bank. Even though Myanmar is experiencing economic growth 6-8% per year since than, today stats are not significantly better. Reasons for that should be searched with following; in the Southeast Asian country, people lack trust in banks, according to research by the Milken Institute, a US-based think tank. People still remember that the military government had nationalized all private banks in 1962, and after private banks were allowed back into the country in the early 1990s, the banking system was severely hit by financial crises in 1997 and 2003.

Myanmar’s rise on the mobile market which grew from 7% in 2011 to 90% in 2016 is opening a whole new market in the country. Market of mobile banking. The foreign companies’ interest in Myanmar is understandable. A study conducted by Jay Rosengard, a lecturer at the Harvard Kennedy School, shows that mobile banking is picking up in underdeveloped countries where most people don’t have a bank account. Rosengard says that mobile-banking tools offer financial services “to the masses in a cheap, accessible way.”

Due to combination of mobile technology penetration and cash fondness PiP It as a FinTech Platform can actively uplift the paying experience in developing countries such as Myanmar. Find out more about our services here.

Interested in this topic? READ THIS BLOG –> Cash Is Still King In India