http://www.digitaljournal.com/business/q-a-why-cash-still-matters-in-the-digital-age/article/542864

Q&A: Why cash still matters in the digital age Special

Posted Feb 9, 2019 by Tim Sandle
Despite technological advances on mobile devices and mobile applications, there are still a wide variety of consumers who want to avoid the bank or credit card interaction and use electronic cash. Danny Shader, PayNearMe, explains why.
Cash in $100 bills.
Cash in $100 bills.
Photo by Philip Taylor (CC BY-SA 2.0)
Danny Shader is the CEO of PayNearMe and he has found that there is a growing unbanked/underbanked base of individuals who have moved away from the traditional banking and credit card infrastructure towards the original payment source - cash.
Who are the consumers who want cash and what are their options? Danny Shader explains.
Digital Journal: What are the reasons for people avoiding banks?
Danny Shader: The biggest reason such a large a segment of the population does not have a bank account is that they’re expensive: minimum account balances and fees can consume a large percentage of many consumers’ assets. These consumers often lack the financial stability required to maintain minimums, and can be significantly harmed by unexpected fees when they lack sufficient funds to cover their checks.
Other Americans simply don’t trust financial institutions. They are skeptical that the banks have their best interests in mind and are highly suspicious of hidden or excessive fees. They prefer to use cash; 1.94 trillion in cash is spent annually.
Still others are blocked from opening an account because they have some sort of adverse history in their files that leads banks to reject them as customers.
For those who lack bank accounts and/or prefer to pay with cash, PayNearMe enables cash payments 24/7 at locals stores that are credited in real-time to rent, loan repayments, utilities and other commercial and government bill payments.
DJ: What is the extent of people not having access to banks or being refused banking services?
Shader: The number of U.S. households without a bank account fell to 6.5% in 2017, according to an FDIC survey. This represents 8.4 million households and roughly 14.1 million adults. An additional 18.7% of U.S. households (24.2 million) are underbanked, meaning they leverage alternative financial services such as payday loans, money orders, or GPR cards. These households may have a banking relationship, but are using other services on a regular basis to manage their finances.
DJ: Why is cash still important in this time of digital payments?
Shader: Cash is still the most convenient form of payment. And, a percentage of the population (millions) is paid in cash and prefers to use that cash to pay their bills.
The one quarter of population that is un- or underbanked doesn’t just use cash to pay their bills. We see them migrate routinely between tender types depending on their personal situations at any specific time. For this reason, payment systems must accommodate all forms of tender - cash, credit, debit, or ACH. Because every payment matters, payment systems must be extremely reliable and process every form of tender.
DJ: For which goods and services is cash most commonly used?
Shader: Cash is by far the most popular choice of payment for peer-to-peer money transfer: 75% of consumers use cash for gifts and paying other people. It is used most often for small value purchases. By digitizing cash, PayNearMe enables businesses and government agencies to collect cash in real-time from consumers via our network of 27,000+ participating retail locations. And when consumers prefer to pay with cards or ACH, we can process those payments too.
DJ: Which types of companies are addressing this need?
Shader: Cash-preferred customers have limited options for paying bills today. They can use walk-up services such as MoneyGram and Western Union, which are generally more expensive, time-consuming and error-prone than PayNearMe’s automated approach. Or, they can utilize a money order and a stamp which can be slow, clunky and can’t be used at the last minute. And, since most businesses and government agencies are charged for each manual deposit, money orders can be expensive to receive.
PayNearMe has digitized the cash experience by sending a barcode to a consumers’ smart phone to pay with cash at a nearby 7-Eleven, CVS Pharmacy, Family Dollar, Casey’s General Store, or ACE Cash Express. Consumers use that barcode to pay their bills with cash almost any time, in their neighborhood, and, most importantly, at their own convenience. Consumers simply present the barcode for scanning and hand cash to the store associate. The transaction is completed in real-time, right there at the checkout counter. PayNearMe is the only company that enables businesses and government agencies to accept all payment types, card, ACH and cash from a single platform, enabling every consumer to pay how and wherever they wish.
PayNearMe provide both payees and consumers exactly what they need. Cash-preferred users can still make cash payments in a safe and secure setting, while businesses receive funds electronically in an automated way that’s virtually hassle-free with no risk of fraud or chargebacks.
DJ: How will the market for cash services grow?
Shader: As the world grows increasingly digital, cash won’t go away. Instead, services like PayNearMe will be required to bridge the payment gap when in-person payments are no longer feasible. Cash remains the most frequent method of payment in the U.S., representing roughly 31 percent of consumer transactions, more than electronic, credit, debit or checks. PayPal CEO Dan Schulman recently told the New York Times, "I would never predict the death of cash over the next decade or two. I think cash is going to be with us for a long time to come."
No government agency and most businesses can’t decide not to accept cash. About 25 percent of US households continue to pay at least some bills with cash, and that percentage rises as incomes decrease. PayNearMe will continue to process all kinds of payments, including cash, as the world continues to digitize.