While electronic services have changed the landscape of financial services, consumers are still using a full range of payment methods, including cash. Though the use of e-commerce and mobile channels continues to grow, consumers continue to turn to cash for purchasing goods and services and paying bills.
In a market where consumers routinely use multiple channels for transactions, it is advisable for financial businesses to offer their customers multiple channels for payments. They can also realize benefits for their own companies in creating payment solutions that respond to consumers’ preferences — and that means cash, too.
Consumers Still Like Cash
Consumers appreciate having multiple choices for payment methods, and cash is included in their preferences. According to the Cardtronics’s 2017 Health of Cash Study, U.S. Edition, “cash is resilient.” The study found that people of all age groups still use cash regularly, with 72 percent of the respondents saying they used cash almost daily. Cash has an “enduring bond” with consumers. Consumers feel safe when they have cash on hand and trust the process of cash transactions at reputable businesses.
Cardtronics results echo the Federal Reserve Board’s findings in the 2015 Diary of Consumer Payment Choice – that cash is still the most frequently and most widely-used consumer payment instrument. The Federal Reserve Payments Study 2016 found that 200 million people used walk-in payment stores to pay their bills in person in 2015.
Unbanked and Underbanked Consumers
There is a growing population of unbanked and underbanked consumers who manage their finances outside traditional financial institutions. The 2015 FDIC National Survey of Unbanked and Underbanked Households estimated that approximately nine million households in the US were unbanked — with no account in an insured institution — and another 24.5 million households were underbanked, where households might have a savings or checking account but also made transactions outside the banking system.
These consumers rely on cash to a greater degree than those who are fully banked. Altogether, the survey found that 16.7 percent of unbanked and underbanked people paid bills with cash in a typical month, compared to 9.4 percent of the fully banked.
Benefits of Walk-in Payments for Billers and Finance Companies
More than 20,000 retail locations around the world accept cash payments, giving consumers the option to pay bills in person quickly. With the technological capacity to post cash payments into the core system — often in real time — it’s just as beneficial for billers and finance companies as it is for consumers:
Secure, safe payments
Payment information is sent with encryption and certificates as necessary to keep consumers’ and billers’ data protected.
Efficiency
With cash payments, there is no risk of chargebacks, returned checks or fraud.
Improved cash flow
When consumers have more options to pay and more convenient locations, on-time bill payments increase, reducing costs associated with late payments, such as second notices and collections.
Lower overhead
Thousands of payment locations can be added for the consumer while the collections team can be enlarged, reaching more consumers — all without increasing overhead costs for the business.
Ease of transition
Walk-in payment services integrate seamlessly with other payment systems. It’s not necessary to change the accounting system, and the daily accounts receivables file continues to be updated and accessible.
Easy, affordable customer notification
Notifying consumers of the changes in payment locations is straightforward and affordable. Flyers and posters can advertise the change, and the printed monthly bill can include the notice and the barcode that customers use for payment.
Improved customer service
Multiple industries, including businesses, government and utilities, that partner with walk-in bill payment providers are able to devote office space and staff to resolving other issues that are important for consumers, instead of using those resources to process cash payments.
Improved customer experience
Adding options for paying bills in cash that are fast and convenient is proving to be a positive experience for consumers. 97 percent of consumers responding to a survey after a municipality implemented a third-party, walk-in payment system gave the system a favorable rating, with 51 percent rating it as excellent.
Customer retention
Offering walk-in cash payment services in multiple, available locations helps simplify customers’ decision-making and makes the experience with the business reliable, accessible and consistent — characteristics that are part of the recommended strategy to increase customer retention, as noted by The Working Capitol.
Nearly 25 percent of people in the United States still want to pay bills in cash, and businesses need to keep the option available for consumers. At the same time, consumers don’t want the option to be more inconvenient than cash alternatives.
Offering cash payment services in the office is complicated and can be an inefficient use of resources for businesses and government. Third-party, walk-in payment services make the experience quick, easy and convenient for consumers and reduces costs for businesses.
Walk-in cash payment services also capture the segment of the population that is unbanked and underbanked. That can help incorporate those consumers into the mainstream economy and pave the way towards a more positive relationship with traditional financial institutions. Growth in the customer base is a real possibility when financial businesses respond effectively to customers’ needs with walk-in cash payment options.
See the original version of this article on PaymentVision.
