Recently I’ve been looking a lot at payments in eCommerce – and in particular in the role that cash plays, both currently and in the future eCommerce world. It’s a strange dichotomy, an old world payment method in the cutting edge shiny world of internet shopping, but the inherent value of cash and the immediacy of payment once made are as interesting to merchants today as it they always have been.
As I discussed in an earlier blog (here), in remote transactions, the payment creates a bond of trust that allows the trade to happen. Cash has traditionally done this in face-to-face environments, and was also a component of the payment mix for Mail and Telephone orders (MO/TO) either through local agents or invoicing. However, cash-in often creates a lack of immediacy and manual processing costs.
In many markets, postal providers have been the backbone of the cash infrastructure by offering cash-on-delivery (COD) services, cash-in at counter and cash bill payment facilities. However, the greatest challenge has been in making these services workable in a cross-border environment such as the SEPA zone, or even for inter-continental transactions.
On a national level, there is clearly a space for cash – particularly when clicks-and-mortar retailers employ a method of online sales coupled with in-store collection (so called ‘click and collect’). However, this breaks down the retailer has few branches or wishes to outgrow it’s physical geography. While web merchants have already begun taking advantage of local collect points such as Kiala or the UK Post Office’s Local Collect service there is typically no cash element to this – in short, the local point is simply there to hold goods until they are collected. Why not add a COD element to this? Have the collection point collect cash and remit it to the web merchant. The intermediary becomes the trusted party on behalf of both the merchant and the consumer. Add a small margin for the intermediary coupled with the ability to pass the revenue through their books and it becomes an interesting service for all players (and also equally applicable to card payments to reduce CNP transactions!). This could be good business for any organisation with a strong branch network.
The next evolution in this could be coupled to the evolution in Click and Collect services – where postal providers are delivering the packages to automatic lockers. The consumer receives notification of delivery and then goes to collect their package from the locker, the notification including a unique code to open it. Why not add a payment facility to these lockers? Cash-in is already very common in vending and surely this is just an extension of vending?
But why facilitate cash? Why not just push consumers to cards, PayPal and OBeP services? These all have their place, but if eCommerce truly wants to compete with the High Street, it needs to be just as convenient and allow consumers to pay the way that they want to pay. For the High Street, this means typically over 50% of transactions in cash – the web needs to catch up.