Local retail shops are the new Fintechs as on/off-ramps for money in a digital world

Money
January 9, 2020

These days in the financial technology world, everyone is moving towards being a bank. That is mostly due to the fact that the center of ones’ financial life often revolves around banking and being able to capture more of that attention is a way to onboard high value customers. This is a reality in many developed countries, however for the rest of the world's population, cash is king

Despite what consultants and the media will tell you, cash in circulation is actually rising as a percentage of GDP in every continent in the world. It is therefore more important than ever to address the reality that the vast majority of the world is cash only and instead of trying to bypass it and force people down the road of digital payment lock-ins, providing more digital solutions tailored towards cash is a far larger addressable market and opportunity for businesses and Fintechs.

Cash is all around you

Often new Fintech companies face a last mile barrier when dealing with payment scalability.  There are so many payment methods out there and with each country being different, it can be difficult to tailor a product that can be utilised and paid for by everyone. 

Take for example the many SAAS companies in Silicon valley selling better tools for sending emails, design software or food delivery - all of these companies require a credit card to use and with credit card penetration in Asia being in the low single digit percentages it walls off a huge potential addressable market. 

The fallback for many is just to support bank transfers in something like USD and assume that will be good enough to onboard as many customers as possible. But again, for the majority of the world, having a bank account is not a reality and making overseas payments is often not possible.  

The largest users of cash are all around us - the retail store you visit daily to buy bread, drinks, movie tickets, kitchen utensils, almost all of whom are managing cash daily. It is therefore the first port of call that Fintechs should look at as fertile ground for receiving payments. 

Western Union recently started a partnership with Amazon whereby one can pay in cash at select WU agent for goods on Amazon, it has been a big money maker according to their recent quarterly reports and is something they are looking to further scale. It is a clear example of making the physical cash ecosystem relevant for online retailers and service providers. 

Banking without banks

The functions of a bank most people engage in solely is that of receiving a salary and paying for living expenses. That could be thought of as cash coming in, being stored and cash going out. This is very similar to what a retail shop does daily with the cash in their till. Retail outlets are therefore ideal locations for the on-ramps and off-ramps for money in the digital world. 

Not everyone has credit cards or mobile payments apps in every country but what they do have is cash - physical pieces of paper in every country of the world making it the biggest and most used settlement mechanism. 

Retail outlets are therefore a critical asset to increasing financial coverage of the world and enhancing productivity by enabling people to be able to get paid, store value and pay for things they need anywhere in the world with one system that works the same everywhere. Having one system that works the same way everywhere is critical to scalability. 

To quote Faisal Khan, a prominent payments consultant at the 2018 IMTC conference: 

“there are over 2000 payment systems in the world and only 3% of them are connected together.” 

Cash is a common layer for connectivity everywhere and yet there are almost zero Fintech companies focusing on cash. 

Building cash on- and off- ramps for all businesses

At Bitspark we love cash and are working hard on being the cash on-ramp and off-ramp for businesses around the world providing one system that works the same everywhere for people to pay at or get paid instantly. Online businesses looking to expand to new markets could utilise Bitspark’s cash payment network to accept payment for their goods and services in a form of money that is relevant to their customers. 

Likewise, for physical retailers who join the Bitspark network they open up a new revenue stream for their business without needing any new capital costs or changes to their existing cash management workflows. Cash is the world’s most popular and most used payment mechanism, all it takes is some love from the digital world to really help change peoples lives for the better.   


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